Crisis sinks bank profits to 190 million euros, one sixth of 2008 level

The banking system managed to stay profitable last year, but the net cumulated income was worth up to 800 million RON (189 million euros), almost six times lower than the record 4.4 billion RON posted in 2008, as many small and medium-sized players posted losses by Romanian accounting standards (RAS).

"The system remained profitable in 2009, but the profit was worth up to 800 million RON," Nicolae Cinteza, the head of the Supervision Department of the NBR (Romania's central bank) told ZF.

Banks therefore continued to make profit, though small as it was, in the fourth quarter, after the system-wide income amounted to 680 million RON after the first nine months of 2009. The banking system had posted losses for the first time in the first quarter, pressured by the very high costs required by loan-loss provisions. It was not until the third quarter that banks posted significant profit, given that they benefited from the change in NBR's regulations, which allowed them to reduce the exposure to clients by up to 25% of the value of the collateral held in case of loans booked as "losses", for which provisions had to be made in full.

The data the banks report to the NBR are calculated in line with the Romanian accounting standards, which require a much stricter treatment of troubled loans and lead to higher provision-related expenses compared with the international financial reporting standards used by banks in their reports to foreign shareholders.

Profit in the system is still concentrated around major players, while smaller banks are posting losses. BCR, the biggest local bank, posted 47.5 million euros in net profit (by RAS) last year, banking sources say.

BRD, the second-largest bank announced 156 million euros in net profit nine months into the year, calculated again in line with RAS. The net profit of the Austrians at Raiffeisen stood at 67 million euros. UniCredit Tiriac, another top player, made 53.5 million euros in the first nine months (RAS), while Banca Transilvania made merely 11 million euros (RAS).

On the other hand, Volksbank, the third-biggest bank by assets is posting losses according to the local accounting standards, despite the profits in the range of tens of millions of euros reported to the shareholders in Vienna.