Romexterra Bank has concluded the first nine months of the year with triple net profits in euros thanks to the strong growth of its lending business, which grew faster than attracted resources.
The decline in interest rates offered to commercial banks by the National Bank of Romania has strongly affected profitability this year for banks that did not have high exposure to lending.
Romexterra Bank posted net profits of 12.1 million RON (3.3 million euros) in the first nine months, compared to 4.5 million RON (1.1 million euros) in the same time last year.
The bank''s assets increased 30% in RON over the last 12 months to a total of 753 million RON (208 million euros) at the end of September. The credits granted by the bank rose 123% in RON over the same period to 404 million RON (111 million euros).
Most of the bank''s loans are aimed at business customers, accounting for 80% of the total. The bank''s strategy is to keep developing on the retail segment. "We will continue our strategy to boost the share of the retail component in our business, but without reducing our focus on lending to companies," says Adrian Radu, the Romexterra Bank chairman.
The bank''s goal is to grow its retail component to 25% of its business. Romexterra accounted for 0.7% of the market in terms of assets midway through this year.
The Standard & Poor''s rating agency recently assigned a "B" grade to the bank''s short-term and long-term loans, with a positive outlook rating.
Of the positive things about Romexterra, S&P mentioned its satisfactory financial position, which includes its adequate capitalisation and liquidity level. On the other hand, S&P says the improvement in Romexterra''s rating is constrained by its market position, its modest results and the new strategy it adopted, which is still untested.
Other factors limiting the ratings include the fierce competition in the sector, especially from foreign lending institutions, and the slow pace of profit growth.
"There are a number of investors interested in the bank, but a decision on how they could become shareholders will probably be made next spring," explained Radu.
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