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Banca Transilvania First Impression 1Q 2010 RAS results (neutral)

Banca Transilvania (TLV) 1Q 10 unconsolidated net result under RAS come in above our estimate but below consensus. Operating revenues were better than expected, mainly due to stronger trading revenues. Risk costs were up again, but their growth rate seems to decelerate.

Loan book expanded: We are pleased by the fact that TLV has posted a loan growth of 1.5% qoq, as the bank stepped up its aggressiveness. Deposits base expanded 1.8% qoq, while loans/deposits ratio stayed flat at 81.8%. The bank increased again its T-bills portfolio by more than 18% qoq.

NIM stayed almost flat: NIM remained at a very high level, 5.08%, helped by a further easing of funding costs. F&C were weak suggesting a still struggling economy, while trading income was stronger, probably on the back of robust results from T-bills portfolio and capital market. Cost/income ratio for the quarter stood at 44%, the best ever of the bank as cost control remained a priority.

Risk costs went up: Risk costs increased slightly to 619 bps from 600 bps in 4Q 09. We suspect that TLV built up provisions in excess of the regulatory requirement, as suggested by the very high effective tax rate (such provisions are not tax deductible). The bank has not disclosed an appropriate measure of NPLs, but we expected it to have climbed from 16.3% in 4Q 09 to 18% (we remind that NPLs under RAS include also loans with overdue more than 60 days). TLV said that capital adequacy ratios stood at 12.97%

Outlook and recommendation: All in all, we rate these figures as neutral, as they do not change our view. We expect an acceleration of the loan growth latter in the year, a modest decrease of NIM together with a slight drop of risk costs. Based on the reported results results, we maintain our recommendation and TP for TLV shares.

Sursa: http://www.rciro.ro

Tags: costs results

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