During 9M 2023, Banca Transilvania recorded NII growth of 20.6% YoY, NFCI increase of 10.5%, a net banking income growth of 27.1%, and a net income to majority of RON 2.2bn, a 37.5% increase YoY. Furthermore, during Q3 2023, the Group recorded an NII increase of 13.5%, NFCI growth of 11.1%, a net banking income increase of 22.5%, and a net income to majority of RON 688.9m, a 14.5% increase YoY.
Starting off with the net interest income, it amounted to RON 3.79bn during 9M 2023, a 20.6% increase YoY, and RON 1.26bn during Q3 2023, a 13.5% growth. This came as a result of an increase in the lending activity to both households and corporate clients, as well as interest rates being higher compared to last year (average 3-month and 6-month ROBOR at app. 7% during 9M 2023). In terms of the net fee and commission income, during 9M 2023, it increased by 10.5% YoY to RON 941.7m, while during Q3, it grew by 11.1% to RON 334.9m. This was supported by the increase in the number of transactions, the number of clients, and the diversification of the operations available to customers. The last component, net trading income, decreased by 5.1% YoY to RON 524.8m during 9M but increased by 12.3% to RON 195.9m during Q3 2023. The 9M decrease came as a result of lower income from interest rate and exchange rate derivatives, which was partially offset by higher income from foreign exchange transactions.
Taken together, this led to a net banking income of RON 5.63bn during 9M 2023, a 27.1% increase YoY, and to RON 1.95bn during Q3, a 22.5% increase. In terms of operating expenses, they grew by 10.4% YoY to RON 2.75bn during 9M 2023, and by 17.5% YoY to RON 1bn during Q3 2023. Breaking this down further, employee expenses grew by 20% YoY both on the 9M and Q3 basis, amounting to RON 1.45bn and RON 471m, respectively. This increase came due to salary increases, benefits granted to employees to support them against the backdrop of inflationary pressures, as well as an expansion in the employee base. In fact, during 9M 2023, the Group recorded a 4.4% higher number of employees. Banca Transilvania also recorded lower impairment (or rather a reversal of impairment) of financial assets not measured at fair value through P&L, which declined by 38.8% to RON 225.8m, also positively influencing the 9M result. During Q3, this number grew slightly, by 2.5% to RON 168.3m.
Due to all of these developments, the net income to majority also grew significantly, increasing by 37.5% YoY to RON 2.2bn during 9M 2023, and by 14.5% YoY to RON 688.9m during Q3 2023.
Banca Transilvania key financials (9M 2023 vs. 9M 2022, RONm)
Source: Banca Transilvania, InterCapital Research
Banca Transilvania key financials (Q3 2023 vs. Q3 2022, RONm)
Source: Banca Transilvania, InterCapital Research
Moving on to the balance sheet, during 9M 2023, the total assets amounted to RON 157.6bn, an increase of 12% YoY. Delving into this further, the largest increase came from financial assets measured at FV through OCI, which increased by 121% YoY to RON 44.9bn. This basically means that the various debt and equity instruments increased in value as compared to last year. In terms of other categories, loans and advances to customers grew by 7% YoY to RON 69.3bn, placements with banks and public institutions increased by 50% YoY to RON 8bn, while on the other hand, debt instruments decreased by 80% YoY to RON 5.1bn. Finally, Cash and current accounts with Central Banks grew by 20% YoY to RON 19.8bn, reflecting better conditions currently offered on deposits at the Central Banks.
On the other hand, total liabilities grew by 11% YoY to RON 145.2m during 9M 2023. This came primarily as a result of higher deposits from customers, which grew by 14.5% YoY to RON 129.9bn. Subordinated liabilities also increased, by 57.6% YoY to RON 2.8bn, reflecting higher bond issuances, while deposits from banks decreased by 82.7%, to RON 315m. Finally, other financial liabilities increased by 95.5% YoY to RON 3.6bn, which was supported by higher amounts under settlement, and higher amounts of dividends payable.
If you would like to read the entire 9M 2023 report, click here.
Yesterday, the Romanian National Institute of Statistics released the October 2023 CPI information. According to the report, the Romanian CPI grew by 8.1% YoY, and 0.6% MoM during October 2023.
Inflation rates in Romania remain elevated, especially compared to other European (and especially Eurozone) countries. Last month, the country recorded 8.8% YoY CPI growth, which has slowed to 8.1% this month. However, the CPI continues to grow on a MoM basis, by 0.6% as compared to 0.8% in the same period last month. As such, the slowdown in the CPI is far from over, and the CPI “decrease” on a YoY basis could also be a result of a higher base during the same period last year, as Romania recorded one of the largest CPI growth YoY during 2022.
Romanian CPI (January 2020 – October 2023, YoY, %)
Source: National Institute of Statistics, InterCapital Research
On the harmonized index of consumer prices (HICP) basis, the CPI recorded a 0.6% MoM increase and an 8.3% YoY increase. Compared to other European countries, Romania actually recorded the largest HICP increase, followed by Slovakia at 7.8%, Croatia at 6.7%, and Slovenia, at 6.6%.
HICP YoY change comparison with select European countries (October 2023, YoY, %)
Source: National Institute of Statistics, Eurostat, InterCapital Research
Breaking the CPI growth down by components, on a MoM basis, Food goods grew by 0.7%, Non-food goods by 0.4%, and Services by 0.8%. Meanwhile, on a YTD basis, Food goods prices grew by 5.7%, Non-food goods by 5.5%, and Services by 10%. Finally, on an annual basis, Food goods increased by 8.7%, Non-food goods by 6.2%, and Services by 12.2%.
Romanian CPI growth by categories YoY (left), YTD (right) (October 2023, %)
Source: National Institute of Statistics, Eurostat, InterCapital Research
By the end of October 2023, the industrial producer prices on the domestic market declined by 1.1% MoM, and 0.5% YoY.
According to the latest report by the Croatian Bureau of Statistics, during October 2023, the industrial producer prices on the domestic market have recorded a stagnation after over 2 and a half years of continued growth. As such, the industrial producer prices on the domestic market declined by 1.1% MoM, and 0.5% YoY.
Industrial producer prices YoY growth (January 2021 – October 2023, %)
Source: DZS, InterCapital Research
Meanwhile, the industry producer prices, excluding Energy, recorded a 0.1% decline MoM, but a 2.1% increase YoY. Breaking the growth down by categories, on a MoM basis, producer prices in Non-durable consumer goods grew by 0.2%, they remained stable in Intermediate goods and Durable consumer goods, while they decreased in Capital goods, by 1.1%, and in Energy, by 3.3%. Moving on to the YoY basis, producer prices in Non-durable consumer goods grew by 4.8%, and in Durable consumer goods by 2.9%. At the same time, the prices decreased in Energy, by 5.6% YoY, in Capital goods, by 1.3%, and in Intermediate goods, by 0.4%.
At the same time, looking at the breakdown according to industrial sections, on an MoM basis, producer prices in Mining and quarrying grew by 3%, and they remained stable in Water supply; sewerage, waste management, and remediation activities (Water supply), while they decreased in Electricity, gas, steam and air conditioning supply, by 4.1%, and in Manufacturing, by 0.6%. On the other hand, on a YoY basis, producer prices in Electricity, gas, steam, and air conditioning supply increased by 1.6%, in Manufacturing by 0.9%, and in Water supply by 0.6%. Meanwhile, in Mining and quarrying, the industrial producer prices declined by 42.7% YoY.
Total industrial producer prices growth by categories vs. 2015 (October 2023, 2015=0, %)
Source: DZS, InterCapital Research
Since 2015, producer prices in the overall industry have grown by 45.9% as of October 2023. Excluding Energy, the growth amounted to 17.5%. Breaking this down further, prices in Energy increased by 126.5% since 2015, in Intermediate goods by 19.9%, in Non-durable consumer goods by 19.7%, in Durable consumer goods by 18.1%, and in Capital goods by 7.5%.
The news regarding the stagnation in the growth of industrial producer prices is a positive one. However, as we can see from the past 2 years, it takes a prolonged period of elevated prices for them to influence consumer prices. As such, a longer period of decreases in producer prices, especially on a MoM basis is required. If this happens, a reduction in the CPI could also be expected.