Annual Report 2010 - ProCredit Bank

20
Annual Report 2010
Total assets decreased by 11.4% (2009: 6.2%),
mainly due to a better and stricter liquidity management.
The bank optimised its liquidity by repaying a
syndicated loan in local currency before maturity.
We also arranged funding agreements with
EFSE and Dexia Micro-credit Fund to replace loans
which had reached maturity and funded the development
of our EUR loan portfolio. Our most
important source of funding is customer deposits,
which cover 81% of the gross loan portfolio.
ProCredit Holding provided support for shortterm
liquidity whenever necessary.
Our shareholders reaffirmed their support to
the bank by participating in a pro-rata capital increase
of EUR 5 million, which resulted in a capital
adequacy ratio of 14.1% in 2010 (compared
to 13.4% in 2009). The shareholder structure did
not change this year.
Interest income decreased by 17.1%, driven by the
change in structure of the loan portfolio, which
reflects the bank’s increased focus on small and
medium clients and the decline of the loan portfolio.
It accounted for 135% of our total operating
income. Interest expenses decreased by 44.9%,
due to the falling interest rates for local currency
deposits and to the bank’s efforts to tighten its
liquidity management.
Net fee and commission increased by 0.91% as
a result of increased efficiency, despite a drop in
the total number of transactions. Overall, operating
income grew by 13.7%, reaching a level of
RON 109 million (EUR 26.0 million). Administrative
expenses, including personnel expenses,
were reduced by 2.19% thanks to the bank’s efforts
to raise efficiency levels.
The net financial result of 2010 was a loss of RON
13.3 million (EUR 3.16 million) Consequently, return
on equity fell to -14.4% (2009: -22.6%). The
cost-income ratio decreased in 2010 to 95.1%
(2009: 112%).
Outlook
Romania was one of the countries to be hardest
hit by the financial crisis, and the negative effects
are likely to persist in 2011 and possibly beyond.
While there are indeed signs of recovery, they
are mainly due to increases in exports (the value
added on the goods and services sold is relatively
low, however), and the macroeconomic situation
is not expected to change dramatically. Consumption
will be subdued, as cost-cutting measures in
the public sector will dampen spending. In addition,
investments are forecast to be only half
of what they were in 2008. The increase of GDP
for 2011 is expected to be between 1-2%. At the
same time, the exchange rate is projected to be
stable since the current account deficit has been
adjusted to a sustainable level; the target of the
National Bank for 2011 is 4.1-4.3 RON/EUR.
Considering both the lessons learned from the
past and current external market trends, in 2011
the bank will work hardest to cultivate its small
business and agricultural segments. To this end,
we will strive to be the house bank for Small business
clients by building up a strong Small business
client portfolio, as well as the bank of choice
for rural enterprises by continuing to develop
agricultural lending for all client segments. Agricultural
loans are expected to grow to 26% of our
loan portfolio in 2015.
Although we plan to approach the Very Small
segment defensively in 2011, these customers
will continue to play a key role in the fulfilment
of our development mission. With respect to
medium-sized enterprises, we intend to achieve
moderate loan portfolio growth, but will take a
defensive approach; however, we will continue
to devote the necessary attention and resources
to this segment, especially in order to continue
supporting our Small business clients as they
develop into Medium enterprises. Concerning
our Private Individuals business, deposit mobilisation
and the provision of basic banking services
will be our primary objectives. Private individuals
will remain at the heart of our success,
since their deposits provide the lion’s share of
gross loan portfolio coverage.