Provisions set up to cover losses from non-payment of loans continued to bite into the earnings of BCR, the biggest financial group on the Romanian market, but their impact fell to 110 million euros in the first three months of 2010, from nearly 188 million euros in the last quarter of 2009, when an all-time high was reached.
Under the circumstances, the BCR group reported a 243 million-RON (58.7 million-euro) net profit, down 26% in RON against the similar period of last year. The result is calculated in line with international financial reporting standards.
“The data indicate a defensive approach of the bank. Risks have been removed from the balance sheet (by outsourcing loans granted to clients i.e.), and the decline has been offset by investments in government securities, which carry a lower risk, but also fetch lower profits. The rise in provisions has been controlled via the same mechanism. The priority has been to improve the risk profile, very likely in order to reduce capital requirements,” comments Florin Ilie, head of the Capital Markets department of ING Bank.
Expressed in euros, the quarterly decline in net profit was 25%, because the RON’s appreciation makes it more favourable to use foreign currency figures for comparisons. The rate of decline has thus significantly improved against the last two quarters of 2009, when it had climbed to 80%, reflecting pressure generated by the deterioration in loan quality.

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