The two banks’ long-term foreign currency credit ratings were maintained at “BBB+” with a stable outlook, reflecting the support the banks can receive from their majority shareholders, the Austrian Erste Group Bank and, respectively, Societe Generale (France), a release by the financial rating agency informs. The agency also confirmed BCR’s and BRD’s short-term foreign currency credit ratings at “F2” and their support ratings at “2”. As regards BCR, the biggest bank in Romania, its long-term local currency credit rating was maintained at “BBB+” with a stable outlook, and its individual rating was confirmed at “D”. The two parent-banks remained committed to activities in Central and Eastern Europe and particularly to their Romanian subsidies, despite their poor results in the past three years.
Long-term credit ratings are restrained by Romania’s country ceiling rating and the stable outlook reflects the sovereign rating. Any modification of the country ceiling will lead to a corresponding alteration of BCR’s and BRD’s ratings.
Underperforming loans accounted for 20.8 pc of BCR’s portfolio by the end of September 2011, rising from 16.8 pc at the end of 2010. The steady rise in the rate of underperforming loans suggests that provisions may remain high in 2012.
On the other hand, BCR’s earnings before the deduction of provisions remain strong, backed by the bank’s efficiency and largely account for the absorption of losses. This factor, alongside moderate provisions for underperforming loans, allowed BCR to remain lucrative between 2009 and September 2011.
The bank’s liquidity level is comfortable, even if BCR remains reliant on Erste for EUR and long-term funding and the ratio between loans and deposits amounted to 135 pc by the end of September.
BCR’s position as leader on the loan and deposit market acted as a plus in the evaluation of the bank’s financial situation, according to Fitch. BCR accounted for 21 pc of the Romanian banking sector’s assets at the end of the first half of 2011.