Banca Transilvania (TLV), the biggest local bank without a foreign majority shareholder, posted 62 million RON (15 million euros) in net profit last year, 85% lower than in 2008, when it made record profits of almost 400 million RON (108 million euros), partly because of the sale of Asiban.
The profit slump was caused by the over five-fold increase in provision spending, to 533 million RON (125 million euros), because of the rise in the share of non-performing loans to 4.8% of a total of 12.17 billion RON (2.9 billion euros). Non-performing loans are those loans for which repayment delays are longer than three months and are therefore rated as losses, with provisions made for the full amount.
"We set up an additional non-deductible provision besides the provision for the loans already rated as non-performing because we believe the economy will still experience hardships in 2010. We really believe these (non-performing i.e.) loans will continue to increase in the first six months," said Robert Rekkers, general manager of Banca Transilvania, who has been running the Cluj-based bank for eight years. He also owns 0.7% in the bank.
As a result of the economic decline, the entire banking system saw overdue loans, and implicitly provisions, increase quite a lot, so that the net profit of all banks fell six times last year to some 190 million euros, from a record 1.2 billion-euro level in 2008.
On the other hand, Banca Transilvania's boss says that the institution resumed lending, especially on the corporate segment, last year. The gross volume of loans granted by Banca Transilvania rose by 8.5% last year, that is some 255 million euros, while non-governmental lending in the entire banking system fell by 3.6% compared with the end of 2008.
"We want to achieve two-digit growth in terms of loans and assets (...), " Rekkers said. He added the bank
