A 53% INCREASE IN EARNINGS AT THE END OF Q3 2011 Profit of "Banca Transilvania" exceeds market expectations

• Analysts: The surprise element was the reduction of net loan provisions by 95.75 million lei

• TLV shares rise 7.7%

"Banca Transilvania" (symbol: TLV) made a net profit of 106.90 million lei, in the first nine months of the year, up 53% YOY, according to a press release of the bank.

Robert Rekkers, the General Manager of Banca Transilvania, said: "In spite of the economic context which has remained difficult, the earnings of Banca Transilvania met our expectations. Our profit, solvency and liquidity, as well as lower provisions are just some of the aspects of our strategy for this year".

Capital market analysts were pleasantly surprised by the report presented by Banca Transilvania, considering the difficult international context in the banking system.

"The earnings of Banca Transilvania have exceeded our most optimistic expectations", the daily report of NBG Securities Romania states: "The earnings of the bank for the first nine months, and implicitly in the banking sector have provided a breath of oxygen amid the turbulences of the international banking sector". Analysts of NBG Securities say that they were expecting provisions to continue to shrink, but the results exceeded their expectations, relieving the pressure on the bank"s final results.

"As a result, the earnings of TLV provided a surprise through the released provisions, but they were in line with expectations for operations and the net result", the report by NBG states.

Magda Sirghe, financial analyst at "Tradeville", said that the profit of TLV has exceeded analyst expectations which expected an average increase of 38.6%.

According to her, "the element which influenced the net result was the rate of growth of provisions was the decrease in the rate of setting up loan loss provisions, with the expenses recorded on September 30th, 2011, amounting to 384.9 million lei, down 95.8 million lei over the same period of 2010".

Shares of TLV yesterday rose 7.7%, yesterday on the Bucharest Stock Exchange, closing 1.049 lei/unit, as the BET index, of the ten most liquid shares listed, climbed 4.17%, and shares of BRD rose 1.41%.

Magda Sirghe had the following comment on the evolution of "Banca Transilvania": "The price of the shares of TLV rose in today"s trading session (ed. note: yesterday), after the earnings were announced. I believe however, that the factor which had the strongest effect on the evolution of the shares was the announcement of the Eurozone leaders that they have reached a consensus on the measures intended to keep the sovereign debt crisis under control. In the next few days, the evolution of the shares will probably be more closely correlated with the foreign financial markets than with the earnings posted by the bank".

Banca Transilvania (TLV) is the first major listed company to publish its Q3 2011 earnings, said Nicu Grigoraş, broker at "Intercapital Invest". He added: "Today"s rise (ed. note: yesterday) of 7.7.% comes from this positive piece of news concerning the earnings, as well as on the back of a trading session when ruled by investor optimism, as the indexes of the BSE rose more than 4%".

In the first nine months of the year, the operating revenues amounted to 1,094.62 million lei, approximately unchanged YOY, mostly influenced by the decrease in the revenues from financial operations.

Interest revenues increased 2% YOY, from 734.96 million lei, to 747.72 million lei. Commission revenues amounted to 271.26 million lei compare to 265.86 million lei, at the end of September 2010. Financial operations revenues climbed to 59.18 million lei, compared to 86.43 million lei, at the end of Q3 2010. The bank"s operating profit is 528.72 million lei.

At the end of the first nine months, operating expenses reached 566 million lei, up 8% YOY. The increase in operating expenses stems from the bank"s expansion of its branch network, as the number of branches increased to 546 at the end of September 2011. Other factors behind the increase in operating expenses were the hike of the contribution to the Bank Deposit Guarantee Fund from 0.2% to 0.3% of the total volume of deposits, as well as by the hike of the VAT rate from 19% to 24%, the bank"s official says. Also as a result of the expansion of the operations of Banca Transilvania, staff expenses increased 5% YOY, from 264.86 million lei to 278.04 million lei.

The bank"s assets increased from 21,589 million lei at the end of September 2010 to 23,570 million lei at the end of Q3 2011. The loan portfolio has increased 12% over compared to December 31st, 2010, predominantly in lei, reaching 14,967 million lei on September 30, 2011. The loan portfolio has the following structure: corporate loans account for 62.28%, and 37.72% are loans granted to individuals.

Provisions stood at 1,699 million lei at the end of the third quarter, up from 1,356 million lei at the end of Q3 2010. Out of that amount, 292 million lei are non-tax deductible supplementary provisions. Non-performing loans, which are more than 90-days overdue, amount to 8.67% of the total loan portfolio, at the end of Q3 2011.

The solvency ratio of Banca Transilvania is 11.61%, higher than the level imposed by the NBR. The loan/deposit ration remained below 1 (0.78 at the end of September 2011), as liquidity remained at a comfortable level. Out of the total liquid assets, 50% are bonds. Government bonds which are part of the portfolio of BT are exclusively issued by the Romanian state and represent 97% of the bank"s total volume of investments in securities.