Banca Transilvania posted a net profit increase of merely 0.6% in RON and 3.7% in euros in the second quarter compared with the same time last year.
This was caused by the harsher conditions on the banking market. The increasingly restrictive norms of the NBR, as well as the investments the bank made during this interval to boost its market share were the main factors that led to a severe slowdown in the profit's growth.
The net profit of the bank in the second quarter amounted to 31.35 million RON (8.92 million euros), compared with 31.15 million RON (8.6 million euros) in the second quarter in 2005.
'There are a number of factors that affected Banca Transilvania's profit in the second quarter. The high volatility of the capital market, the shrinking interest margins, the increasing competition and the clash for market shares had a definite impact on the results. In addition, NBR's regulations braked the market's growth pace," stated Robert Rekkers, chief executive officer of Banca Transilvania.
Banca Transilvania in the first six months of the year reported net profit of 58.7 million RON (16.58 million euros), an increase of 13% in RON and 16% in euros compared with the same time in 2005. Its net profit in the first quarter had seen a 31% rise in RON compared with the first three months of last year.
The profit the bank posted was in line with the estimates of the analysts on the capital market, whose forecasts ranged from 57m RON (16 million euros) to 67m RON (18.9m euros). Whereas Banca Transilvania's profit almost stagnated in the second quarter, the bank's assets rose by nearly 19% in RON to 6.25 billion RON (1.75 billion euros), at the end of June. This increase in assets helped Banca Transilvania climb from the 9th to the 5th position in the ranking of the banks in Romania, with a market share of 4.34%.
'We made very large investments to boost our market share, by expanding the territorial network, upgrading the computer system and promotion. It is very important that we should boost our market share to occupy a strategic position in the banking system, yet we will not sacrifice profit to attain this goal," Rekkers specified.
Banca Transilvania budgeted gross profit worth 132 million RON (37.2 million euros at an average exchange rate of 3.55 RON/EUR) for 2006, 20% higher than the gross profit achieved in 2005.
Banca Transilvania has focused on the segment of small and medium-sized enterprises and retail this year. It opened 61 new branches in the first half of this year, with the territorial network of the bank reaching 276 branches at the end of June, 2006.
Banca Transilvania's shares stagnated on the Bucharest Stock Exchange yesterday, with the market waiting for the financial results to be announced, and closed at 1.07 RON. The market capitalisation of this bank amounts to approximately 1.1 billion euros.
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