Banca Transilvania: Q3 results help it meet its profit target

Banca Transilvania (symbol: TLV) reported a net profit of 48.27 million lei at the end of Q3 2009. The increase came on the back of results for the third quarter, when the bank had a net result of 48,277,882.00 million lei, up 37.2 million lei from H1 results of 11 million lei, according to reports published yesterday by the bank.

Tight cost control brought with it improved earnings for the bank in the third quarter, as well to the bigger spread between deposits and lending interest rates, said Robert Rekkers, general manager of Banca Transilvania, who added: "We paid special attention to efficiency and were extremely cautious in the first three quarters, and now all our efforts are focused on reaching our objectives for this year, as the fourth quarter won"t be easy".

The gross profit budgeted by the bank for 2009 is 85 million lei. The 73 million lei earned in gross profit earned in the first three quarter helped it make 85% of its annual target. The bank"s operating profit, before provisions, was 418 million lei, up 83% over last year"s similar results.

Banca Transilvania had operating earnings of over 930 million lei at the end of Q3 2009, up 23% YOY, thus leading to a gross profit of around 73.08 million lei (which also includes the exceptional revenues of 13.8 million lei, resulting from the sale of its stake in BT Aegon).

The bank"s assets increased 7% over the end of 2008, to 18.24 billion lei, whereas the bank"s solvency remained at 13.53%.

"I think results so far are acceptable to our shareholders", said for BURSA, Robert Rekkers, who added that it"s impossible to make an estimate for Q4, which is expected to be a difficult period.

• Brokers: TLV earnings, influenced by the exchange rate

The bank"s earnings matched broker estimates, which were expecting a much larger profit than the one for H1 2009.

"This is a positive evolution and I am convinced that provisions diminished significantly the bank"s profit", said Mihai Chişu, broker at IFB Finwest, who mentioned that the third quarter is generally more favorable for banks.

Also according, analysts say that the exchange rate will have a major effect on banking operations.

"A possible slide of the exchange rate would cause serious issues in terms of cost management", said Mr. Chişu.

Total revenues of "Banca Transilvania" increased by 27%, to 3.71 billion lei, compared to 2.93 billion lei, in the January - September 2008 period, whereas total expenses increased by 48%, to 3.63 billion lei.