CEC Bank profit to exceed 100m euros in 2008

Including the money from Asiban, its is likely the profit of the Loan and Savings Bank (CEC) to exceed 100 million euros this year, said CEC Bank president, Gratian Ghetea, in an interview for daily Business Standard on September 17.
The CEC official said that the expenditures on rebranding and provisions are not likely to harm the profit target for 2008, because the financial institution has funds from the sale of a 25% stake in Asiban. From the operational activity, the bank met all the goals as regards the interest bearing assets. Ghetea said the funds deriving from the sale of the stake in Asiban will consolidate in the profit and, according to the law, the shareholder may let the institution up to 100% of the profit.
CEC Bank reported for the first half of this year, a cumulated net profit worth 7.6 million euros, down 40% compared to the same period in 2007. Ghetea said that the reduction of profit in H1 was sort of planned. ‘’’Firstly, we had costs because the change of image including spending for advertising. The renovation of the units does not mean only the equipment with computers, but includes consumables, which represents costs. Besides, the impact comes from the commissions which had to be established by the credit institutions,’’ said the bank’s representative.
The impact was stronger at CEC Bank, said the bank’s official, because of the high volume of loans extended to individuals. The share of loans extended to individuals in the total of loans is of 70% and the regulations on provisioning changed in this very direction. According to Ghetea, the provisions established to reclassification stand at 15 million lei, plus the provisions from other segments, but this is not alarming because the provisions are also CEC’s money.”

CEC Bank reported a gross profit of 11 million euros over January-July 2008. Compared to the results of H1, July was a relatively good month, the profit reported being of 2 million euros.
The Loan and Savings bank extended over January-July 2008, loans worth half a billion euros, up 26% above the predicted level, the overall balance of loans being of 7 billion lei.
CEC Bank aims to increase the accession of European funds. The bank’s president said that the bank has already won an auction of 116 million lei, which are European funds. The contribution of CEC Bank in these projects is of 150 million lei, the funds being destined for programmes Farmers II and for fishing. „We aim to draw as many corporations as possible with current account operations, so that we derive higher revenues from commissions to operations of payments.
The activity in the corporate segment grew 2.5 times, by the mid-year. We are trying to prove that we became a commercial bank, which targets all the categories of customers, not only individuals. We are aiming to balance the ratio of loans extended to individuals and corporations, considering the share of loans held by the population is of 70%,’’ said Ghetea.
At the end of July, the loans extended to individuals stood at 4.8 billion lei, the remainder, 2.2 billion lei, representing the loans extended to companies. In the segment for population, the bank launched a company activating in the mortgage loan sector before the implementation of the new regulations. The bank’s official said that the loans extended to population have increased over this period.
As regards the stage of talks with the European Bank for Reconstruction and Development (EBRD) and whether it plans to become shareholder, CEC’s President Radu Ghetea said that CEC Bank will resume the talks with the EBRD and he hopes an agreement could be reached by year-end. The European Bank for Reconstruction and Development might adopt any of the following solutions: participation to the capital, subordinated loan, technical assistance or financing lines.
We do not have so far a clear conclusion that they want something in particular,’’ said Radu Ghetea, president of the Loan and Savings Bank.
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