ATEbank Romania eyes three-fold profit growth in 2009

Ana Săbiescu

ATEbank Romania"s business plan for 2009 estimates its net profit will increase by 190,77%, up to 12 million lei, on the back of total revenues increasing by 16.47% and of some expenses which will only increase 10%, according to information published on the bank"s website. At the end of 2008, the bank"s gross profit was 4.13 million lei.

The bank"s website includes increasing "loan volume by approximately five million Euros, (the equivalent of 21.5 million lei) on the back of cash attracted from customers and of the bank"s new operational units", the 2009 plan states.

ATEbank"s Romanian subsidiary wants to outsource loans worth 20 million Euros, (approximately 86 million lei) to its Greek mother bank.

The bank is looking to attract another 15 million Euros (around 64.5 million lei) in customer deposits.

ATEbank is also looking to expand its range of banking products and services by implementing new savings products and expanding the list of operations that can be done through its ATM network, especially accepting cards issued by other banks.

The bank is looking to launch seven new units in 2009, for which investments begun last year, but will not open new operational units, given the current economic and financial crisis. At the end of 2008 the bank had 25 operational units.

Salaries of ATEbank employees will stagnate in 2009, but the bank"s salary expenses will grow because of the need to staff the new units which will be opened this year.

In 2008, the bank approved and signed a 10 million Euros loan contract with International Finance Corporation (IFC), denominated in lei. The funds will become available to the bank in 2009.

Also, in 2008 the Greek bank has entered a contract for services with Deloitte Business Solutions Greece for the preparation of a business plan for the July 2008 - December 2011 time frame.

In elaborating the business plan for 2009 Deloitte Business Solutions considered the bank"s results at the end of June 2008 and the estimates for the end of December 2008, the bank"s website mentions.

In the end, when elaborating the business plan for 2009, the bank heeded the proposals of Deloitte Business Solutions, the bank"s results at the end of last year and the financial-economic forecast for 2009.

Greek bank Agricultural Bank of Greece controls 74.12% of ATEbank Romania, 15% of the shares are held by IFC, with the remaining shares belonging to the National Union of Handicraft And Production Cooperatives Of Romania UCECOM (7.36%) and other minority shareholders.

• The outlook for 2009 is alarming

ATEbank"s business plan also reviews the outlook for Romania"s economy, that it considers as a cause for worry.

ATEbank"s plan states: "The outlook for 2009 is alarming. The government goal for 2009 is a 3% economic growth, but according to international estimates, it won"t exceed 1%. [..] The yearly estimated inflation rate is 5%, but it will be hard to achieve without a strict control of the state"s public spending. We will continue to see a decrease in exports, company bankruptcies and an increase in unemployment. The deficit for 2009 is estimated to be 2.3%, but amid the worsening of the economic conditions, this target may be missed".

ATEbank experts also consider that this year, the population as well as banks will face serious trouble, because the earnings of the former will decrease and subsequently, customers will have trouble paying back their loans.

"The decrease of the market value of the real estate collaterals (plots of land and buildings), that the bank considered when they gave out loans, will lead to an increase of risk provision expenses and to the decrease of the recovery rate in the case of foreclosures and troubled borrowers", ATEbank"s plan mentions.