Romania’s biggest bank BCR, part of Austrian Erste Group, reported a net profit of EUR 135 million in the first half of 2015, up from EUR 63 million losses in the same period of last year, as its risk costs went down significantly.

BCR’s results were heavily affected last year by portfolio restructuring and the removal of non-performing loans (NPLs) from the balance sheet, which generated some EUR 293 million losses in the first six months alone. In the first half of this year, BCR’s net impairment loss was under EUR 6 million.

The substantially lower risk costs stand on better quality of the performing book, lower NPL inflow on mortgage portfolio, as well as lower defaults and higher recoveries in corporate business against the basis set up in H2 2014, following extensive portfolio screening, according to BCR. The NPL ratio went down to 23.1%, as of June 30, 2015, from 29.3%, in June 2014.

The bank’s operating result also went down by 29%, to EUR 175 million, as a result of lower operating income and slightly higher expenses.

Net interest income was down by 17.5%, to EUR 225 million, on the back of accelerated NPL portfolio resolution, efforts to price competitively in the market, in a context of continuous shift in new retail loans towards secured production and a lower interest rate environment, according to BCR’s representatives.

Net fee income was down by 5.2%, to EUR 76.9 million, on lower fees from loan management and current accounts, while the net trading result decreased by 40%, to EUR 27.7 million, on the back of reduced trading activity.

BCR’s net loan portfolio stood at some EUR 7.3 billion, at the end of June, slightly down compared to December 2014. However, the bank’s lending activity increased in the first half of 2015. “In bank retail business, strong performance in volume generation by the franchise resulted in sales of secured loans increasing by 34% annually, with Prima Casa new production 66% yoy,” according to a BCR statement.

Deposits from customers were slightly down by 1.5% to EUR 8.79 billion, as of June 30, 2015, as the positive development in retail deposits was offset by a seasonal decrease in corporate deposits.

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editor@romania-insider.com