July 31 (Bloomberg) -- Romanian bank stocks fell for a second day after the country’s return to recession left the two biggest banks with second-quarter losses.
BRD-Groupe Societe Generale SA, the largest publicly traded bank and the second-biggest in the country after Banca Comerciala Romana SA, fell as much as 1.2 percent to 8.4 lei in Bucharest today before paring losses. Banca Transilvania SA, Romania’s second-largest traded bank, declined as much as 1.5 percent to 0.985 lei, before recovering. Erste Group Bank AG, the owner of BCR, dropped as much as 2 percent to 67.3 lei and was down 1.5 percent to 67.7 lei.
“The second-quarter earnings have negatively surprised the market so the decline in stocks is justified,” said Andrei Radulescu, an analyst at Bucharest brokerage SSIF Broker SA. “As the deterioration of the economic environment because of internal political turmoil and the European crisis continues, the third quarter could also be very bad for banks, which haven’t yet reached the bottom.”
BCR, Romania’s biggest bank by assets, reported today its second consecutive quarter of losses because of higher bad-loan costs as the economic contraction made it difficult for citizens and companies to repay back loans, prompting owner Erste to cut costs.
BRD said yesterday its first-half profit fell 88 percent to 39.4 million lei ($10.6 million) from 322.6 million lei a year earlier on rising bad-loan provisions, resulting in a quarterly loss of about 44 million lei in the second quarter after a profit of 83.4 million lei in the January-March period, according to Bloomberg calculations.
“BRD’s results are disastrous considering the bank’s capacity to generate profit until now,” Radulescu said.
Banca Transilvania is expected to release its first-half earnings tomorrow.
Transilvania shares were trading up 1 percent at 1.01 lei as of 10:42 a.m. in Bucharest. BRD shares were unchanged at 8.5 lei.
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