During Q1 2025, Banca Transilvania recorded net interest income growth of 27% YoY, net fee and commission income increase of 13%, net banking income growth of 20%, and a net income to majority of RON 877m, a 23% decrease YoY.
Starting off with the net interest income, it amounted to RON 1.96bn, growing by 27% YoY. While Banca Transilvania does not provide the net interest margin for its interest-bearing assets, it does provide us with the other side of the equation, i.e., loan production and other interest-bearing assets. As of the end of Q1, loans and advances to customers amounted to RON 92.2bn, growing by 2% YoY. Cash and cash equivalents held at the Central Banks grew by 9% YoY to RON 23.9bn, while the debt instruments the bank holds grew by 10% YoY to RON 24.7bn. On the other hand, loans issued to other banks and public institutions decreased by 35% YoY to RON 8.9bn. Given that the Romanian National Bank hasn’t changed (reduced) key interest rates since August 2024, compared to the ECB, which has cut heavily, the strong growth in NII would have come from several sides. Firstly, the new loan production, but more importantly, the repricing of older loans at higher rates. However, it should be noted that higher levels of investments into deposits at the Central Bank and bonds do indicate a slowdown in the new loan production, which was to be expected due to the still high rates. Lastly, the Group recorded financial lease receivables increase of 44% YoY to RON 156m, mostly as a result of the organic performance of the Group’s lease-related subsidiaries.
Moving on, net fee and commission income amounted to RON 382.3m, growing by 13% YoY. The increase came due to higher transaction fees, which amounted to RON 507m, increasing by 17% YoY (part of fee and commission income, not reduced by expenses and thus higher than overall NFCI number), higher guarantee-related fees, which grew by 48% YoY to RON 21.9m, and higher asset management income, which grew by 57% YoY to RON 15.3m. However, this was somewhat offset by higher commissions from treasury and inter-bank transaction fees, which increased by 13% YoY to RON 174.8m, higher client transaction costs, which grew by 28% YoY to RON 68.6m, as well as RON 14.3m of higher fees related to lending activity (Q1 2024: RON -261k).
Net trading income also grew by 28% YoY to RON 244.6m, mainly as a result of higher income from FX transactions. Due to all of these factors, net banking income grew by 20% YoY to RON 2.66bn. Moving on, OPEX amounted to RON 1.65bn, growing by 58% YoY. The main growth drivers here are higher levels of impairments, which amounted to RON 292m (Q1 2024: RON 7.5m), mainly as a result of higher risk associated with loans, as well as personnel expenses, which grew by 25% YoY to RON 722m, mainly as a result of higher wages. Banca Transilvani also recorded a ”bargain gain” of RON 132.7m in Q1 2024, which refers to the acquisition of BCR Chisinau. Due to higher OPEX and the lack of this gain in Q1 2025, the net income to majority actually decreased by 23% YoY to RON 877m. It should be noted that all of the results were also supported by the acquisition of OTP Bank Romania last year (30 July 2024), which certainly positively contributed to the net banking income result.
Banca Transilvania key financials (Q1 2025 vs. Q1 2024, RONm)
Source: Banca Transilvania, InterCapital Research
Besides financials, Banca Transilvania also approved the dividend distribution last month, with a payout ratio of 45%, implying a gross dividend of RON 1.73 per share, with a DY of around 6%.
