REKKERS' SECRET Profit of Banca Transilvania up 35% Y/Y

Last year, Banca Transilvania had a net profit of 131.87 million lei, up 35%, over 2011, according to the earnings of 2010, according to a press release by the bank. The gross profit of the bank increased 38% in 2011, compared to the previous year, to 185.77 million lei.

The bank's earnings are considered by some analysts as good, considering that 2011was a difficult year and the Romanian banking system had a loss of almost 430 million lei (100 million Euro), compared to a loss of 516 million lei in 2010.

Also, the rising earnings of Banca Transilvania seems paradoxical after the departure of Robert Rekkers, the bank's general manager, a secret which withstood all of our attempts to uncover it, and which has yet to be made public. There were rumors that Robert Rekkers resigned from Banca Transilvania because he had received a better offer from another bank, or that he had disagreements with the shareholders of BT, concerning the bank's strategy.

According to the press release of the bank, its 2011 results can be explained by interest revenues, the continued increase in lending, the drop of the net spending and the continued cost optimization.

Horia Ciorcilă, the president of the Board of Directors of BT said: "We are happy to have beaten our expected 2011 numbers, and Banca Transilvania came out a winner last year, once again proving that its operations are growing. The annual results were predictable, especially since between July and September 2011 this was the greatest quarter the bank had in the last three years. We are well prepared for 2012 and we will continue to grow in the same prudent and healthy manner, just like we did over the last three years. We believe in our mission to support the economy and the domestic entrepreneurs, precisely because we are the largest bank with majority Romanian stockholders and the third largest bank in Romania".

In 2011, the operating revenues of the bank have remained similar to those of 2010, amounting to 1,484.28 million lei. As a result of the increase in the activity of the bank, the operating expenses increased 8%, reaching 766.74 million lei on December 31st, 2011. The cost/revenue ratio was 51.65%, at the end of last year, as the bank continued to implement cost cutting measures.

Banca Transilvania reduced its net provisions expenses to 531.77 million lei in 2011, compared to 640 million in 2010. Out of the amount of 531.77 million lei, the net credit risk costs amounted to 461 million lei in 2011, compared to 598 million lei, in 2010.

The assets of BT increased 19% in 2011, to 25.745 million lei.

The balance of the loan portfolio during the reviewed period was 15,358 million lei, up 15% over the beginning of the previous year. Corporate loans accounted for 62.95%, and individual loans accounted for 37.05%. As for the currency that the loans were granted in, 63.72% were denominated in lei and 36.28% were denominated in foreign currencies. Non-performing loans (more than 90-days overdue) accounted for 8.62% of the total loan portfolio. The balance of provisions for loans increased compared to 2010, from 1,356 million lei to 1,806 million lei, of which 354 million lei representing provisions that were fiscally non-deductible, which the bank set up in order to have a careful approach of the credit risk, given the current economic conditions. The non-performing loan to supply ratio amounted to 108.94%.

The loan /deposit ratio stood at 0.76, as resources attracted from customers was 17% in 2011. The bank's solvency ratio was 11.87%, profit included.

The number of customer transactions increased 11% in 2011 compared to 2010, a number which also includes the card segment, which saw a 16.9% increase in transactions compared to 2010.

At the end of last year, the share capital of BT reached 1,773,658,066 lei, after a share capital increase of 303,057,068 lei, using sources such as reserves created using the net profit and contributions in cash.