July 31 (SeeNews) - Romania's last state-owned bank CEC targets to raise its market share after its first-half gross profit nearly tripled, a company official said.
CEC had very good results for the first six months of 2007, including a 57 million lei ($24.7 million/18 million euro) gross profit compared to some 20.16 million lei a year earlier, CEC's president Radu Gratian Ghetea told SeeNews in a recent interview.
He said the bank is aiming at a market share of six percent by 2011 from 4.2% at the end of 2006, under a development plan from May 2007.
"In our targeted segments we intend to have a 20 to 25 percent share", Ghetea said. "We target to attract and maintain clients and become a market leader in towns and rural areas with population of less than 50,000 people. So far we have more than 1,400 branches countrywide."
According to CEC's president, currently there is no market need of banking services in certain locations, but, considering the forthcoming financing from the European Union's structural and cohesion funds for various sectors of the economy, the living standard, including that in rural areas, will grow along with demand for banking services.
Romania stands to receive 19.67 billion euro from the EU between 2007 and 2013.
"We would also like to diversify our portfolio and become a universal bank by 2011, […] so we have another main target and that is to bring new products and services to the small and medium enterprises," Ghetea said, but did not elaborate.
CEC's total assets reached 8.0 billion lei at the end of June from 6.1 billion lei in June 2006. Its credit portfolio grew to 4.2 billion lei from 2.58 billion a year earlier. Deposits reached 6.5 billion lei in the first six months of the year, Ghetea said.
Ghetea did not provide forecasts for 2007 and said the bank is going to amend its budget for this year and draft the 2008 one soon. The revision for the current year was prompted by the failed privatisation of the bank.
The Romanian government held a tender to sell the bank in 2006 but cancelled it in December after getting just one bid, from the National Bank of Greece.
"At the end of last year a decision was taken not to privatise the bank as projected. The offer received was not good enough," Ghetea said.
He declined to comment on the possible re-launch of the bank's privatisation, saying it was up to the majority shareholder to decide what, when and how to proceed with the bank he currently presides.
CAPITAL INCREASE RULED OUT
Romania injected 500 million lei in the bank in December to raise its share capital to 649.7 million lei. CEC does not plan another capital hike soon, Ghetea said.
"At the moment we do not feel need of another hike. We have to use the money we already have efficiently, so we will continue to promote credit products," he added.
"We want to operate in areas where other banks have not entered yet," he said.
LOCAL CURRENCY APPRECIATION
Asked about the recent appreciation of the Romanian currency, Ghetea said that in his personal opinion the leu was overpriced on the local forex market and that was mainly due to activities with "speculative taste".
"I would be happy about a leu appreciation only in case of strong economic performance," he said.
"Speculative does not mean illegal, it concerns the so-called "hot money", entering the Romanian economy," Ghetea said.
"Hot money" are funds which enter a country to take advantage of the favourable interest rates. This tends to strengthen the exchange rate of the recipient country, but because being held by speculators, they are highly volatile and can be flowed to another foreign exchange market when relative interest rates make this shift more profitable.
According to Ghetea, this matter is already on the agenda of the Central Bank and the Ministry of Economy and Finance, which have to find the best solution for the leu to be quoted at its real value.
"In few months time we will witness an appreciation of the euro," Ghetea said.
The leu added a nominal 8.0% against the euro in the first half of the year, rising by 4.2% in June alone. However, a downward trend was observed beginning with last week, as the local currency returns to rates from mid-June.
(1 euro = 3.1633 Romanian lei)