Ghetea, CEC Bank: Provisions remain an unknown, I don't think they will be lower than in 2010

Provisions are set to be problematic this year, as well, making it virtually impossible to approximate the net profit, says Radu Ghetea, chairman of CEC Bank, the only top-ranking bank held by the state.

“We cannot think that we will set up lower provisions than last year. Just as we are talking now and an insolvent client may decide to go bankrupt. Things are very uncertain,” Ghetea told a press conference on the release of the bank’s 2010 results.

CEC Bank last year posted a 65 million-lei (15 million-euro) gross profit, up 30% in lei terms against 2009. The bank had 365 million lei (87) in provision spending, nearly 9% more in lei terms than in the preceding year.

“2011 did not start better than last year, things are still bad.”

The pessimism displayed by Ghetea, who is also chairman of the Romanian Banking Association, is at odds with the somewhat more optimistic message sent by other bankers, who are hopeful companies’ businesses will rebound at least in the second half of the year. Bankers were optimistic in the spring of 2010, as well, but the tough measures taken by the Government in the summer to adjust the budget (the 25% cut to public sector wages and raising VAT from 19% to 24%) upset everyone’s plans.