Annual Report 2010 - ProCredit Bank

14
Annual Report 2010
tighter lending criteria, rising unemployment and
austerity measures. However, the low demand for
credit from the real economy was offset by the
government’s appetite for funds to finance the
growing budget deficit. On the deposit side, there
was a 6.2% 4 increase, resulting in total deposits
of RON 192.1 billion (EUR 44.8 billion). 5
The quality of the Romanian banking sector’s
loan portfolio fell sharply in 2010, primarily as
the result of the economic downturn. The indicator
of portfolio quality published by the National
Bank, which is similar to portfolio at risk over 90
days (PAR>90), rose swiftly to 11.85% 6 in 2010
(2009: 8% 7 ). The high arrears were especially
detrimental to very small and small companies
and private individuals with un-hedged debts in
foreign currency; almost 60% 8 of private sector
loans are denominated in hard currency.
The banking system did not exert a pull effect
due to the dynamics of its total assets and to the
relatively low level of financial intermediation of
41% 9 loans to GDP and 30% 10 deposits to GDP,
figures that carried over from 2009. In this environment,
the country’s banks focused on managing
their arrears, primarily by restructuring them;
they also tightened their lending criteria and
restricted access to credit, particularly for very
small and small clients.
ProCredit Performance
2010 was a hard year for everyone, including
our clients. Businesses suffered from depressed
consumption and tight liquidity, while private
individuals grappled with unemployment, falling
wages and a sizable jump in sales tax. As a development-oriented
bank committed to supporting
our clients through times of economic hardship,
we offered our customers expert financial
advice and restructured their loans to help them
get back on their feet. And, as always, we offered
convenient, transparent and affordable products
and services.
Thanks to our staff’s hard work, our overall results
were promising despite the many challenges we
faced in 2010. The bank strove to maintain its
outstanding loan portfolio, which at year-end
amounted to RON 766 million (EUR 179 million),
a slight decrease of 1.24% (2009: decrease of
11.0%). Customer accounts followed suit, closing
the year with a total volume of RON 617 million
(EUR 144 million), a 7.9% increase over the previous
year. The quality of the loan portfolio deteriorated
throughout 2010; however, thanks to our
strong institutional focus and efforts to maintain
portfolio quality, it was still clearly better than the
market average at year-end. 11
In keeping with our positioning as the house bank
for small businesses, we reached out to small urban
and rural small enterprises, which are vital
contributors to economic growth. The bank will
continue to devote attention and resources to its
Very Small and Medium clients, but will approach
these segments defensively. As the competition
on the retail market in Romania is mainly dominated
by big players, which even on a post-crisis
landscape continue to heavily engage in consumer
lending, ProCredit Bank’s key strategic goal
regarding private individuals is to strengthen its
reputation as a professional and inclusive savings
institution that provides basic financial services.
Our aim has always been to provide high-quality
service for our clients and to ensure the most appropriate
environment for building up and maintaining
long-term relationships. To this end, in
2010 we optimised our branch structure, establishing
even more efficient and client-friendly processes.
We also created a strong, dedicated client
acquisition force consisting of Business Client Advisers
(BCA), whose role is to establish contact and
4 Ibid.
5 Ibid.
6 Loss 2 category: loans for which payment of principal or
interest is overdue by more than 90 days and/or legal
proceedings against the debtor have been initiated.
7 National Bank of Romania, Financial Stability Report
2010, p. 44.
8 National Bank of Romania, “Statistical Report”, December
2010, p. 37 / Financial Stability Report 2010, p. 39.
9 National Bank of Romania, Financial Stability Report
2010, p. 38.
10 Op. cit., p. 22.
11 According to the statutory reporting principles defined
by the National Bank of Romania (www.bnr.ro), 15.34%
of loans issued by ProCredit Bank were classified as
“doubtful or loss”, compared with 20.81% for the banking
sector as a whole.