The quarterly profit of Banca Transilvania exceeded 10 million euros at the end of last year for the first time ever, reaching 10.3 million euros in the fourth quarter of 2006. This is according to preliminary unconsolidated data sent to the Bucharest Stock Exchange.
The bank managed to increase its profit in euros by no less than 42% in the final quarter of the year compared with the same period of 2005. This happened in a year when the growth of the Romanian banks showed serious signs of a slowdown, mainly due to the reduction of the spread between the interests on deposits and interests on loans, as well as to the extensive investments in territorial expansion made by many banks in the system.
The profits recorded by banks increased by less than 11% across the entire banking system last year.
Banca Transilvania, too, experienced the slowdown in profitability growth, having posted an about 15% increase in the net profit nine months into the year. The bank's chief executive, Robert Rekkers, had anticipated that the profit growth would pick up speed three months ago. He stated at that time that "we can see a higher speed," although the profit for the third quarter had gone up by 20%, slower than in the previous years.
The significant growth of the bank's profit in the fourth quarter took the full-year profit growth of the bank to 20%, in comparison with 2005. The bank's profit stood at 120.2 million RON (35.3 million euros) for the entire 2006.
The bank's assets exceeded 2 billion euros in the fourth quarter, reaching 2.4 billion euros (8.1 billion RON) at the end of December. Banca Transilvania recorded one of the highest asset increases among the Romanian banks last year, which propelled it to the fifth spot in the bank ranking by assets. The bank's market share amounted to 4.7% at the end of 2006 compared with 3.4% in December 2005.
One of the main strategy changes of the bank over the last few years has been also to focus its business on the sector of small and medium-sized enterprises, which many players on the banking market would have ignored a few years ago. This was a reaction to the high risk involved, in comparison with other sectors of the market. The loans the bank granted to companies accounted for the bulk of the bank's loan portfolio, 57% of a 1.44 billion euro total.
Transilvania also continued to aggressively expand across the country, with the number of branches and offices increasing to 341. This is an increase of almost 60% compared with the figure for the end of 2005. The total investments the bank made last year amounted to 93 million RON (more than 27 million euros).
The bank continued to get funds from financial institutions, which complemented the resources attracted from domestic customers. The amount attracted from international institutions stood at over 80 million euros last year.
The shares of Banca Transilvania have experienced a hesitating performance on the Bucharest Stock Exchange over the last few months, despite the growth of the other two banks on the market, BRD and Carpatica. The shares of Banca Transilvania have been among the most profitable on the Stock Exchange in recent years, thanks to the strong organic growth and the policy to distribute bonus shares and subscription rights.
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