Banca Transilvania, back to business

Sustained business growth and operational efficiency in the first quarter of this year

• Lending to companies and individuals grew steadily at BT: nearly 35,000 new loans were granted (retail, SME and Corporate)
• The bank’s operating efficiency improved, while maintaining favorable pricing for customers
• The number of transactions processed through BT rose by 13% compared with the same period last year
• The card portfolio reached 2.6 million; card transactions increased by nearly 25%
• Banca Transilvania accelerated the pace of modernizing its branch network

After an atypical 2015 in Banca Transilvania’s history, the first quarter of this year marked a back to business approach for BT, with a series of new projects aimed at increasing operational efficiency, laying the groundwork for multi‑channel sales and digitization, and modernizing the branch and agency network.

BT’s operating income reached 599.1 million lei, up 10.7% from 541.3 million lei in the same period of 2015. BT’s net profit at 31 March 2016 was 228.5 million lei, up 50.8% versus the same period of 2015.

Banca Transilvania’s assets stood at 46.12 billion lei, of which net loans were 25.5 billion lei, up 1.5% versus the net loan balance at year‑end 2015.

Banca Transilvania continued to support Romanian entrepreneurship through financing: in the first quarter of this year, nearly 35,000 new loans were granted to companies and individuals, with a total value of over 1,377 million lei.

Ömer Tetik, Chief Executive Officer of Banca Transilvania, said: “The first quarter of 2016 shows solid, sustainable growth in lending and in the number of transactions. Our goal is to use the foundation provided by our strong financials to invest in new projects, modernize the branch network, digitize, automate and streamline processes, so that our bank becomes a convenience store. We want to grow revenues through higher volumes, without increasing costs for customers.”

BT’s core business results in Q1 2016:

• BT’s net profit is 228.5 million lei;
• The number of transactions carried out through BT accounts increased by more than 13% compared with the same period in 2015, while fee income from operations grew by 16%;
• BT continued to focus on the SME segment, granting clients nearly 4,000 new loans in Q1 2016;
• The loans‑to‑deposits ratio improved, rising from 65% at year‑end 2015 to 69% at the end of the first quarter of 2016;
• BT’s operating efficiency improved significantly, with a cost‑to‑income ratio of 45.2%, even though the expense for the Deposit Guarantee Fund contribution, covering the full year, was booked in this quarter;
• As at 31 March 2016, Banca Transilvania had a portfolio of 2.6 million cards, which generated transactions almost 25% higher than in the same period a year earlier. The bank’s market share by card transaction volume is 19%. BT has 286,000 credit cards through the STAR loyalty program.

Other financial information:

• As at 31 March 2016, BT recorded net impairment and provision expenses of 59.6 million lei (including the impact of the 296 million lei write‑off from the balance sheet);
• Non‑performing loans, more than 90 days past due, represent 9.04% of BT’s total loan portfolio;
• Coverage of non‑performing loans by specific provisions and collateral remains at a comfortable level of 119.84%, in line with the bank’s risk appetite;
• The total balance of valuation adjustments (provisions and other adjustments) was 3,456 million lei at 31 March 2016, representing 11.9% of total loans;
• BT’s capital adequacy ratio, taking into account the Q1 2016 profit and the special dividend proposal, is 18.20% (17.40% excluding profit).

Key resolutions of BT’s General Meeting of Shareholders

On 27 April this year, Banca Transilvania held its General Meeting of Shareholders; the key resolutions were as follows:

• Increase the bank’s share capital by 620,000,000 lei through the issuance of 620,000,000 new shares with a nominal value of 1 leu per share. This will be carried out by capitalizing reserves constituted from the 2015 net profit, for the benefit of shareholders registered in the Shareholders’ Register kept by the Central Depository on the 31 May 2016 record date.
• The appointment of a new member to BT’s Board of Directors, to fill a vacancy, for the remainder of the current Board’s term, namely until April 2018. The appointee is Doru Lionachescu, Chairman‑Founder and Principal Partner of Capital Partners.

Financial statements

The financial statements as at 31 March 2016 are unaudited and unreviewed; those as at 31 December 2015 are audited.