Banca Transilvania 4Q 2010 results

NIM has narrowed somewhat from around 5.1% to 5% while trading income was the best performer, probably on the back of higher revenues from T-bills. We do not like the fact that non-interest expenses have posted quite a high growth rate on a yearly basis, TLV blaming this on its strategy to expand its operations. As usual, the bank has not disclosed a proper metric of its NPLs, but we expect them to have increased only modestly compared to 3Q 10. On the other hand, TLV has probably raised the coverage ratio which might explain the higher provisions compared to our estimate. All in all, we view these results as neutral and consider them as a confirmation of our scenario that risk costs will start to decrease in 2011 which will lead to a strengthening of the bottom line.