ING, the Romanian branch of the biggest Dutch financial group,saw its RON-denominated profit fall by 20% last year, to 84 millionRON (19.8 million euros) after the bank set up 250 million RON inprovisions to cover prospective losses from non-repaid loans.
"The credit risk cost (with loan-loss provisions) will be lowerthis year. It is early to think about releasing provisions," saysMisu Negritoiu, general manager of ING Bank. Banks have to set upprovisions when they notice that a client has trouble repayingtheir loan, with the provisions being booked as costs, which leadsto a lower profit. If the client is later able to fully repay theloan, the provisions can be released, and registered asincome.
Non-performing loans reached 3% of corporate funding, but accountedfor just 0.5% of mortgage-backed retail loans. The bank managed tosee a significant rise in its operating revenues, which climbed by30%, to a 695 million-RON all time high, although the balance sheetremained practically unchanged from 2008.
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