Eight Months Through The Year, EximBank Exceeds Y2008 Profit

• 10 million EUR financing line for EIB planned for near future

Eight months through the year, the Export-Import Bank of Romania - EximBank, reported gross earnings of 130 million RON, up 140 per cent from the entire year 2008, amid a 38 per cent increase in asset value from 31 December 2008, to 4 billion RON, the bank announced yesterday.

EximBank President Ionut Costea said that an important part of the earnings was the result of lower personnel and investment budgets, combined with risk mitigation measures. Specifically, the bank"s expenses decreased by almost 20 per cent in the referenced period. However, the overall exposure increased by 22 per cent in the first eight months of the year to 1 billion RON.

"In the general context of the ongoing crisis, as the other commercial banks restricted lending, we have tried to increase our market share so that better times may find us with a solid customer base," said EximBank President Ionut Costea. EximBank"s market share increased to 1.24 per cent at the end of August 2009, from 0.94 per cent at the end of December 2008.

Costea believes that the end of the crisis in Romania is not yet visible, even though some signs of recovery have appeared on international markets. In his opinion, the Romanian economy cannot possibly resume growth as long as people continue to lose their jobs and production to decrease. "Guarantees need to be in place before things start moving again," he said.

EximBank has reduced certain banking fees by up to 50 per cent and completely cancelled other fees, while introducing new products to better support small- and medium-sized enterprises. Thus, companies suffering from liquidity shortages can apply for financing for paying their overdue taxes, while companies that were in a sound condition before 1 July 2008 and are now facing crisis-specific problems can apply for guarantees of up to 90 per cent of a loan taken from a bank of their choice. This guarantee scheme has been communicated to and approved by the European Commission as an acceptable form of State aid, according to the bank"s press release.

Costea further announced that EximBank was having talks with the Ministry of Finance in view of introducing a type of loan designed for exporters eligible for value-added tax returns.

Most of the loans disbursed by EximBank are long-term loans to small- and medium-sized enterprises. Approximately 70 per cent of such loans financed investments, according to Ionut Costea. "The average interest rate on RON-denominated loans in our portfolio this year decreased from 14.71 per cent in January to 12 per cent in August, whereas the interest rate on ongoing loans in the overall banking system was around 17 per cent for non-financial entities, as an average for the first eight months. Halfway through the year, EximBank reported a bad loan ratio of 0.61 per cent of the overall loan portfolio, compared to a banking system average above 1.03 per cent, Costea added.

According to EximBank Vice President Paul Ichim, most of the bank"s customers are travel companies, construction companies and service providers. As 90 per cent of the bank"s operations are denominated in RON, the bank does not have a need for specific protection against foreign exchange risks.

The bank is currently trying to secure a 10 million EUR credit line for small- and medium-sized enterprises from the European Investment Bank (EIB).

Referring to the bank"s capitalization, a matter that sparked much attention in the media early this year, EximBank President Ionut Costea explained: "The share capital of EximBank will be increased by 20 million EUR, which partially comes from the profit we had in the past years. The money is currently available, accounted as equity, and will be added to the share capital when we have the European Commission"s approval.

EximBank has a network of 11 branches, in Bucharest, Bacau, Brasov, Constanta, Cluj, Craiova, Timisoara, Buzau, Oradea, Deva and Alba Iulia and is planning to open a new branch in Iasi.

• Eximbank To Start Non-Life Insurance Company

State-run EximBank is planning to set up a proprietary non-life insurance company early next year under the name of Compania de Asigurare Reasigurare Exim (the Exim Insurance Re-Insurance Company) Romania (CARE). The bank has filed for a license to operate with the Insurance Supervisory Commission (CSA). The establishment of the insurance company is in line with the latest recommendations of the European Commission to separate the two lines of business.