During H1 2025, Banca Transilvania recorded NII growth of 25% YoY, NFCI increase of 14%, net banking income growth of 19%, and a net income to majority of RON 1.94bn, a 5% decline YoY.
Last week, Banca Transilvania published its H1 2025 results, and today, we’re bringing you the main highlights. Starting off with the net interest income, it amounted to RON 3.9bn, growing by 25% YoY. The growth was driven by several factors. Firstly, the loan book expansion, with the loans to customers growing by 28% YoY to RON 94.9bn on the Group level. Loan growth was also recorded on the YTD basis, with loans growing by 5%, indicating a slowdown in the recent period, but also continued growth. Besides this, the key interest rate by the National Bank of Romania has been held at 6.5% for a long while now, with 8 consecutive Central Bank meetings confirming this rate level.
As such, loan volume expanded, but the rates also remained high. The existing portfolio also recorded repricing, improving interest income. Also influencing this are the higher returns on government securities, as bonds also have high yields at the moment in the country. On the other hand, interest expenses also grew by 10% YoY to RON 2.28bn, but slower than the interest income growth, leading to the NII improvement. Even though it isn’t mentioned specifically, from these data we can extract that the overall NIM also improved during this period.
Moving on, net fee and commission income amounted to RON 794m, growing by 14% YoY, supported by the growth in the overall business activity. Breaking this down further, the main driver of development was the client transactions, which grew by over RON 126m to RON 1.04bn, and this category includes card, payments, collections, custody, and other fees. Growth was also supported by higher treasury and inter-bank operations, higher income from financial guarantee contracts, as well as higher income from the asset management side.
Net trading income also supported the overall results, growing by 11% YoY to RON 529m. All taken together, this has led to a net banking income of RON 5.45bn, growing by 15% YoY. Moving below the banking income, impairments and provisions amounted to RON 489.7m, growing by over 730% YoY, due to several factors. Firstly, the larger net impairment allowance on assets, which grew by RON 390m to RON 585m in H1, is mostly tied to higher impairments on loans and advances to customers. At the same time, portfolio growth, as well as stage migrations under IFRS 9, also grew, with the provisioning base growing by app. RON 700m to RON 6.3bn on a YTD basis. Tied to this, the Group also maintains conservative macro outlook scenarios, which again, impacts the risk level of the overall assets, thus requiring higher provisioning levels. In other words, besides the Group and its performance itself, the uncertainty surrounding the Group in Romania is the main driver of higher provisioning, rather than a deterioration in the portfolio’s quality.
Besides impairments, personnel expenses also grew strongly, increasing by 16% YoY to RON 1.36bn, mainly as a result of high salary growth. As a result of these developments, net income to majority amounted to RON 1.94bn, declining by 5% YoY.
Banca Transilvania key financials (H1 2025 vs. H1 2024, RONm)
Source: Banca Transilvania, InterCapital Research
Taking a quick look at the balance sheet, as mentioned, loans to customers grew by 28% YoY, 5% YTD to RON 94.9bn. On the other hand, loans to other banks declined by 48% YTD to RON 7.1bn, while issued debt instruments amounted to RON 25.5bn, growing by 14% YTD. As a result, total assets did not change much, growing by 1% YTD to RON 208bn. On the other hand, Total liabilities amounted to RON 190bn, remaining roughly unchanged (+0.3% YTD). Inside this, total deposits from customers declined by 2% YoY to RON 164bn, while the largest increase was in the “other financial liabilities”, mostly due to amounts under settlement growing strongly. As the largest banking Group in Romania, good results could be expected going forward from the Group. The interest rates remain elevated, demand for loans has slowed down, but is still ongoing, while costs are mostly tied to growth & macroeconomic uncertainty. If the latter is resolved, which it could be with good and continued reforms, then the overall scenarios would improve and almost “magically” reduce the impairments and thus improve the bottom line.