In Q1 2024, Banca Transilvania recorded NII growth of 24% YoY, NFCI increase of 17%, net banking income growth of 27%, and a net income to majority of RON 1.05bn, increasing by 31% YoY.
Starting off with the net interest income, it amounted to RON1.54bn in Q1 2024, growing by 24% YoY. This was supported by several categories, including larger amounts of cash and cash balances with Central Banks, which increased by 41% YoY to RON 25.2bn, higher loans issued to customers, which increased by 13% YoY to RON 73.3bn, as well as larger amounts of loans issued to other financial institutions, which grew by almost 1.6x YoY to RON 11.3bn.
Of course, the increase in the net interest income came not only due to the higher volume of loans issued but also due to the higher interest rate on said loans. While Banca Transilvania (BT) does not provide details for its net interest margin, the deposit interest rate at the Romanian Central Bank is currently held at 7% (and has been for a while now), to combat inflation. As such, it could be expected that most of the loans issued are issued at higher interest rates as well.
One other interesting tidbit provided by Banca Transilvania is the fact it issued 74k loans in Q1 2024, which is up 26% YoY, while at the same time, the number of BT customers grew by 50k, o/w 42k were retail clients, and 8k were companies. Moving on to net fee and commission income, it amounted to RON 337.7m, growing by 17% YoY, supported by the higher number of transactions as well as more digital services usage by the Bank’s clients. In fact, in Q1 2024, the no. transactions through Banca Transilvania amounted to almost 0.5bn in Q1, up 35% YoY. This is of course to be expected, as Banca Transilvania is the largest bank in the country.
As a result of these developments, the consolidated net banking income amounted to RON 2.2bn, growing by 27% YoY. In terms of OPEX, it grew by 35% YoY to RON 1.04bn. This came mainly due to higher personnel expenses, which grew by 22% YoY to RON 580m, mainly as a result of higher wages, but also due to higher other op. expenses, which themselves increased across many different categories. One other category that recorded a noteworthy change was the impairment or reversal of impairment on financial assets not measured at FV through P&L, which amounted to RON -7.5m in Q1 2024, as compared to RON 45m in Q1 2023. The difference here is that BT recorded higher impairment on assets this year while recording lower recoveries on written-off loans than last year.
Banca Transilvania also recorded a bargain gain of RON 132.7m, from Volksbank S.A., although this purchase was made all the way back in 2015. The full explanation is provided on page 21 of the Q1 2024 report. As a result of all of the above-mentioned developments, Banca Transilvania recorded a net income to majority of RON 1.05bn, growing by 31% YoY.
Banca Transilvania key financials (Q1 2024 vs. Q1 2023, RONm)
Source: Banca Transilvania, InterCapital Research
Taking a quick look at the balance sheet, BT’s total assets grew by 19% YoY to RON 176bn, mainly as a result of the developments described above, related to the loans issued to individuals and banks, as well as Cash and current balances with Central Banks.
On the other hand, total liabilities grew by 17% YoY to RON 160.9bn, mainly as a result of higher deposits from customers, which grew by 11% YoY to RON 141.2bn, as well as higher amounts of loans received from banks and other financial institutions, which increased by over 1.3x to RON 10.2bn. One other category that also recorded an increase was the other financial liabilities, which grew by 1.5x YoY to RON 4.7bn, mainly as a result of higher amounts under settlement, which themselves increased by over 1.6x YoY to RON 4.3bn.
Finally, total equity grew by 39% YoY to RON 14.3bn, as a result of higher retained earnings (+23% YoY, to RON 6.5bn), share capital increase (+13% YoY, to RON 8.1bn), as well as lower reserves on financial assets measured at fair value through other comprehensive income (-54% YoY, to RON 1.45bn).
