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2018 Q3 Report

Release Date: 11/15/2018 6:51:09 PM

IRIS Code: B775F


Communication regarding the financial results of Patria Bank as of 30.09.2018

The third quarter of the year marks the return of the Bank's financial results to profit after a period of consolidation of the commercial and operational model. Financial results recorded a positive trend from one quarter to the next, although it continues to be under pressure, mainly due to the under-optimal structure of assets in the Bank's balance sheet generated by the excess of liquidity, but this pressure is decreasing as the Bank implements its credit growth strategy; thus, in the third quarter of 2018, the financial result of RON 3.4 million profit, due to the increase of the operational result, mainly supported by the positive evolution of the banking income on all pillars (net interest income, net commission income, other operating income) while maintaining operating costs under control.

These results confirm the budget forecasts according to which the Bank anticipated positive results in the second half of the year, mainly based on the upward trend of the banking income and on the positive results from the recovery of the reposessed assets and the non-performing assets existing in the Bank’s balance sheet or off balance sheet.

The lending activity continues the accelerated growth trend, in the first 9 months of 2018 being granted new loans amounting to RON 725 million. This volume ensured  implementation of the forecasted loan sales volumes by 104%, together with the increase by 53% of the volume of new loans granted compared to the same period of 2017.

It is also worth mentioning that in the legal entities lending segment, the significant increase of the new credit production is seen in all business sub-segments, both in the Micro and Agro area (116%), as well as in the SME and Small Corporate area (109%), the bank managing to gain monthly a market share related to newly granted loans significantly higher than the market share of the outstanding loans.

The lending portfolio (gross value as of September 30, 2018)  shows an increase of  RON 193 million compared to the end of 2017 (+ 13%) of which:

-              RON 101 million Agro and Micro segments;

-              RON 64 million SME and Corporate segments;

-              RON 28 million Retail segment.


As far as the Micro Sub-segment is concerned, expanding the cooperation with the European Investment Fund (EIF) through the EU guarantee for granting EaSI credits and diversifying alternative sales channels provides the premises for a continuous development.  Through partners, brokers and direct sales agents it is generated 40% of the Micro loan contracts and 48% of the loans volume for this segment.

On the operational level, the Bank continued its strategy of streamlining processes and significantly reducing operational costs by:

Ø continuation of investments in IT infrastructure (data center / communication channels / information storage capabilities / increasing the security of the IT system / adapting the IT system to the GDPR requirements);

Ø completion of the implementation of a dedicated solution to improve the level of cyber security (Mobile – Device –    Management, designed to secure the remote access to e-mail and file-sharing systems of the bank);

Ø implementing security measures according to PSD2 standards for the new Internet Banking platform.

For the next period, the Bank has under consideration:

-  completion of the process of implementing the IBA Mobility solution that will allow the use of the IBA application at the mobile sales force level, as well as the implementation of qualified electronic signature that will allow the transformation of full-paperless flows (impacting on operational efficiency, reducing the time to complete a transaction and, last but not least, significantly mitigating operational risks);

-  the implementation of a new Internet Banking and Mobile Banking solution for retail clients (the deadline being Q1 2019),  followed by the implementation of new modules dedicated to legal entities and Asset Management products; and

-  the Cashback project (cashback functionality through EPOSs and cards), which require obtaining certificates for both payment acceptance and issuance – estimated to be finalised during November 2018, following that the Bank will issue contactless cards in the first quarter of 2019.

In the liquidity and market risk area, the Bank continued to record comfortable levels of the main prudential indicators monitored.

The Bank continued the process of improving the quality of its loan portfolio granted to its clients, both in retail and in the corporate segment, focusing on the quality of the client portfolio attracted by the Bank, both in the funding stage as well as in the subsequent monitoring process, in order to prevent possible difficulties that clients may encounter as a result of legislative changes, economic cycles or seasonal activities.

Also, the process of valorification of the repossesed assets taken over for the receivables, as well as the process of recovery of non-performing loans from the balance sheet as well as write-offs was continued, in the fourth quarter a transaction for the sale of a portfolio amounting to RON RON 245 million was completed, as described in section 4.  In the compliance area, the Bank has begun a process of improving the infrastructure and processes used to combat the money laundering and for „know your customer” procedures, which will continue over the next quarter.

The total operating income of RON 114 million is over the budgeted level (+2%, + RON 2 mil.) and compared to the same period of 2017, the net interest income shows a slight decrease (due to a higher level of incomes from the fair value adjustments recorded in the first nine months of 2017 related to the loan portfolio acquired from the former Banca Comerciala Carpatica (BCC)). Operating expenses: RON 118 million with a saving of 1%, RON 1.5 million compared to the budgeted level, registering a decrease  compared to the first two quarters of the year, due to the continuous process of monitoring and optimization of the cost base. The cost of risk: slightly under the previous year level (Sept. 2017) with 3%, provided that the net loans portfolio increased compared with the same period of last year with RON 255 million, +20%. The collection and workout activities have been intensified thus maintaining an annualized cost of risk of 1.4%. 

The Common Equity Tier 1 Rate (CET1) on September 30, 2018 was 10.90%, above the TSCR (6.12%) and OCR (8%) for this capital adequacy ratio. The Total Capital Adequacy Ratio (individual level) on September 30, 2018 was 12.59%, exceeding the TSCR limit (10.93%), but below the OCR level of 12.81% (TSCR plus 1.88% capital buffer) and registering an increase compared to 11.61% level at the end of 2017, supported by the share capital increase process completed on June 26, 2018. The TSCR limit has been increased starting with February 2018 from 10.57% to 10.93% following the completion of the Surveillance and Evaluation Process (SREP) conducted by the National Bank of Romania in 2017. Based on the completion of the capital increase process in October and improvement of the  financial performance, the Bank anticipates compliance with the OCR at the individual level at the end of October 2018.

The Bank continued the capital infusion process with a second capital increase operation in the current year, approved by the General Shareholders' Meeting no. 3 / 02.08.2018 and which was completed on October 23, 2018, the capital being increased by the amount of RON 37,367,365.30.


The integral version of the report on the financial results of Patria Bank S.A together with the Statement of Financial Position and Statement of Financial Performance as at 30.09.2018 shall be accessible on the bank's website at https://en.patriabank.ro/about-patria-bank/investors/reports-and-results/financial-reports or on the website of the Bucharest Stock Exchange at the link below starting with 15.11.2018.



 About Patria Bank and Patria Bank Group

Patria Bank is a Romanian bank, listed on the Bucharest Stock Exchange, with a presence in 63 towns, through 81 branches, over 180,000 clients and 3.5 billion lei in assets, being dedicated to increasing banking degree in Romania and supporting local entrepreneurs.

The Patria Bank Group is owned by the Emerging Europe Accession Fund (EEAF), a private equity fund whose main investors are the EBRD (European Bank for Reconstruction and Development), the EIF (European Investment Fund, part of the European Banking Group Investments), DEG (Development Bank, part of the KFW BSTDB (Black Sea Development Bank). Patria Bank Group includes Patria Bank, Patria Credit IFN and SAI Patria Asset Management..



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