“In 2019 we were determined to learn and adapt, aiming to support the real economy, promote financial education and bring prosperity to our customers. We have channeled our passion and efforts towards building digital processes to the core to the benefit of all our people and channels.
I want to thank our colleagues for embracing the digital journey and our customers for being open to adopt our new solutions, with a faster and leaner banking experience. We will continue to innovate and simplify our way as it is our aspiration to make banking easy and pleasant to the benefit of the people we interact with”, Sergiu Manea, CEO Banca Comercială Română said on the occasion of the release of financial results for 2019.
BCR impact in the economy
In retail banking business, BCR generated total new loans in local currency to individuals and micro business of over RON 7.8 billion (EUR 1.7 billion) in 2019 driven by mortgage, cash loans and loans to micros. New loans to micros went up by 31.5% year-on-year, due to the significant contribution of loans granted within Start-Up Nation. Unsecured lending sales increased by 3.4% year-on-year due to cash loans and increase in credit cards and overdrafts.
In corporate banking business, BCR (bank standalone) approved new corporate loans of RON 7.4 billion (EUR 1.6 billion). The stock of financing for SME segment (including BCR Leasing subsidiary) increased by 12.3% year-on-year to RON 6.1 billion (EUR 1.3 billion) as of 31 December 2019, as a result of a high focus on new business and advance in leasing. Real Estate segment has registered a strong performance, up by 34.3% year-on-year, boosted by financing selected new office and commercial projects.
The number of total customers increased to 3.3 million at the end of last year, as compared to 3.1 million in 2018.
BCR has channeled all efforts towards building digital processes to the core. The intelligent banking platform George reached 720,000 users, with 84 new built-in functionalities in both mobile and web. The George universe has registered a 76% increase of the digital products sold, as compared to 2018. BCR has launched George Credit, the first fully digital unsecured loan, with 3,800 cash loans granted online in just three months, and the first online credit refinancing facility.
BCR continued the strategic partnership with IKEA, through which the bank provided more than 26,200 credit cards in 2019.
The Money School reached a total of more than 370,000 adults and children in one-to-one interactions by BCR colleagues in the past three years.
The shared online platform Casa Mea App, that runs document workflow for proprietary mortgage, launched in 2019, has been already used for one in four new disbursed loans.
2019 financial highlights
BCR registered a net profit of RON 593.2 million (EUR 125 million) in 2019, lower by 50.7% against RON 1,202.3 million (EUR 258.3 million) in 2018, as impacted by the significant one-off provision allocation related to the activity of BCR Banca pentru Locuinte, despite the best operating result in the last five years underpinned by strong loan growth.
The operating result improved by 9.3% to RON 1,786.9 million (EUR 376.5 million) in 2019, from RON 1,635.4 million (EUR 351.4 million) in 2018, supported by better operating income along with strict cost control.
Net interest income increased significantly by 10.2%, to RON 2,256.3 million (EUR 475.5 million) in 2019, from RON 2,047.2 million (EUR 439.9 million) in 2018, on the back of a higher interest rate environment and higher customer loans and deposits, improvement of balance sheet structure and lower funding cost as per early repayment of intragroup funding.
Net fee income advanced by 10.4%, to RON 780.6 million (EUR 164.5 million) in 2019, from RON 706.8 million (EUR 151.9 million) in 2018, mainly driven by higher result in maintenance fees for current accounts and insurance fees coupled with better result from cash activities.
Net trading result decreased by 21.1%, to RON 352.4 million (EUR 74.3 million) in 2019, from RON 446.8 million (EUR 96.0 million) in 2018.
The operating income increased by 6.2% to RON 3,490.4 million (EUR 735.5 million) in 2019 from RON 3,285.6 million (EUR 706.0 million) in 2018, driven by higher net interest income and fee income.
General administrative expenses in 2019 stood at RON 1,703.5 million (EUR 359.0 million), up by 3.2% as compared to RON 1,650.2 million (EUR 354.6 million) in 2018, mainly driven by higher annual contribution to deposit insurance fund in 2019.
As such, cost-income ratio improved to 48.8% in 2019, versus 50.2% in 2018.
Risk costs and Asset Quality
In terms of net impairment loss on non-fair value financial assets, BCR recorded a provision release of RON 61.8 million in 2019, versus a provision allocation of RON 121.2 million in 2018. This result has been triggered by very low new NPL formation mostly in corporate correlated with a good trend of recoveries and healings in both retail and corporate segments.
The NPL ratio reached 4.1% in Dec 2019, the lowest level of the past decade, from 5.8% in December 2018. This evolution is reflecting the strong positive development in loans to customers and continuous improvement in portfolio quality based on sustained NPL resolution and good trend in recoveries and healings. At the same time, the NPL provisioning coverage reached 116.3% as of December 2019.
Capital position and funding
The solvency ratio for BCR Bank standalone (before 2019 profit capitalization), according to the capital requirements regulations (CRR) stood at 20.4% as of December 2019, well above the regulatory requirements of the National Bank of Romania. Furthermore, the Tier 1+2 capital ratio of 19.6% (BCR Group, before 2019 profit capitalization) as of December 2019 is clearly showing BCR’s strong capital adequacy and continuing support of Erste Group. In this respect, BCR enjoys one of the strongest capital and funding positions amongst the Romanian banks.
In December 2019, BCR launched the first senior non-preferred bond issue in Romania and the CEE region, worth RON 600 million and listed on the Bucharest Stock Exchange. This shows BCR’s commitment to further strengthen its fortress balance sheet and to diversify the funding sources and instruments as part of its long term development strategy.
Loans and advances to customers increased significantly by 10.0% to RON 40,049.0 million (EUR 8,373.2 million) as of 31 December 2019 from RON 36,400.1 million (EUR 7,805.3 million) as of 31 December 2018, supported by both corporate (+13.4% year-on-year) and retail (+8.7% year-on-year) segments.
Deposits from customers increased by 4.9% to RON 57,791.8 million (EUR 12,082.8 million) as of 31 December 2019 versus RON 55,099 million (EUR 11,814.9 million) as of 31 December 2018, supported by the increase in both retail and corporate deposits, a press release of the financial institution reveals.