Although it revealed a rising profit in the first half, Banca Transilvania could not stop its shares from going down on Tuesday. It posted 111.4m-RON (30.3m-euro) net profit, 40% higher than in the same time last year. Impact on the Stock Exchange: shares were down 1.5%, though they did rebound by 3.63% on Wednesday.
"The trend of shares proves how illogical the market is being now. The fact that figures were published so soon points to a certain despair of the bank's management, after the stock has declined considerably lately. They wanted to show everything is going well," says Adriana Marin, an analyst with UniCredit CA-IB Securities.
According to analysts, the reported figures are showing the first signs of the growth slowdown the bank has witnessed in recent years. "Unfortunately, the only relevant figure of the profit and loss account revealed was the profit. One can notice a slowdown, both in terms of profit and loans, but, more alarming, in terms of deposits, too," says Alexandru Combei, an analyst with Raiffeisen Capital & Investment.
The bank's net income rose by 28% in RON in Q2, to 62.1m RON (17m euros), compared with a 58% increase in Q1. In euros, income advanced by 13% in Q2. Analysts also say the published figures do not show the trend of risk costs, which are expected to soar.
"Banca Transilvania opened 41 new branches in the first half of the year, reaching 496 branches, the third biggest network among the private commercial banks of Romania, with this being, however, a considerable amount of fixed costs, given the slower lending growth. We expect revenue growth to slow down in the second half of 2008, in line with the market," explains Florin Ilie, head of the capital markets department of ING.
TLV posted a 21% advance in its loan portfolio in H1, compared with an 18% market increase. According to analysts, the banking market and particularly small banks are still seeing solid growth, despite rising lending costs both for euros and RON.
Moreover, Banca Transilvania will conclude the sale of the 25% stake in Asiban insurer to Groupama in Q3, which will drive income up. The bank will collect 87.5m euros for the stake. In H1, the bank had no one-off revenues.
"I am very proud of the registered figures, particularly in the unfavourable market context. The entire profit we announced comes from operations, with no revenues from the sale of stakes such as that in BT Asigurari being registered," stated Robert Rekkers, Banca Transilvania CEO.
"We were hurt by the dropping prices of T-bills, bonds and shares that we have in our portfolio and we posted losses of 22m RON. We have a T-bill portfolio of around 500m euros. However, despite the difficult period, we managed a 40% income increase, whereas banks across the entire world are reporting losses," concluded Rekkers.
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