Erste’s BCR Posts First-Quarter Loss as Bad-Loan Costs Rise

Banca Comerciala Romana SA, Romania’s largest bank by assets, said it incurred a loss in the first quarter as bad-loan costs almost doubled while net interest income fell.

BCR had a loss of 307.8 million lei ($93 million) compared with a profit of 76.1 million lei in the same period of last year, the Bucharest-based bank said today in an e-mailed statement. Net-interest income, or the difference between money paid on deposits and earnings on loans, dropped 12.6 percent to 750.4 million lei from 859 million on lower demand for loans and falling interest rates.

BCR is majority-owned by Austria’s Erste Group Bank AG.

Romanian banks, which recorded a cumulative loss of about 100 million euros ($133 million) in 2011, the second consecutive year of losses, have been struggling since 2009 to cut rising bad-loan costs as demand for new credits remains weak following a slow economic recovery. The country will probably enter a new technical recession in the first quarter, according to the outgoing Finance Minister Bogdan Dragoi.

Provisions for bad loans almost doubled to 933.7 million lei from 457.4 million as Romanian companies and households face an economic slowdown, the bank said.

Bad loans stood at 22.4 percent of lending in the first quarter. Most new bad loans came from businesses in the first quarter as some large companies defaulted again, while small enterprises are still facing high liquidity constraints, BCR said.

Total assets dropped 1.6 percent to 75.5 billion lei, the bank said. BCR’s solvency ratio stood at 12.3 percent, more than the 10 percent requested by the Romanian Central Bank.

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