CEC Bank Financial Group: Preliminary financial results for 2024

CEC Group reports a net profit of 687.9 million lei for 2024. The group continued to consolidate its market position and recorded an increase in net assets to 99.33 billion lei – up 19% compared to the same period of the last year. The Group’s net assets increased by 19% compared to the same period last year, from 83.61 billion lei to 99.33 billion lei. In the case of the Bank, net assets increased from 83.55 billion lei to 99.25 billion lei.   Net profit: at the Group level, a net profit of 687.9 million lei was recorded in 2024, of which the Bank’s net profit was 668.2 million lei.   The Group’s net interest income increased by approximately 30% in 2024 (by approximately 483 million lei), due to the increase in interest income, generated by the monthly increase in the balance of loans and investments (securities, banks, etc.), in the context in which market interest rates continued to remain at a high level. Thus, interest income increased by approximately 1,149 million lei, while interest expenses also recorded an increasing trend, with a variation of approximately 666 million lei.   Net commission income increased by approximately 11.6% (by approximately 32 million lei), mainly due to the increase in commission income charged by FGCR (+ 70%) as a result of accessing a higher level of government programs, reaching 309 million lei at the Group level (266 million lei at the Bank level).   Administrative expenses recorded a significant increase (around 24.3%) compared to those reported in the similar period in 2023, mainly due to the additional turnover tax. In the absence of this tax (which in 2024 was not transferred to customers through higher margins/rates), the increase would have been only around 12.9%, being generated mainly by the increase in depreciation expenses, as a result of the investments made under the Transformation Program, the investments in the modernization of the territorial network and the ATM/MFM fleet, and the increase in salary expenses.   Based on these developments, the cost-income ratio at the Group level improved compared to the previous year, reaching 48.53% at 31.12.2024, compared to 50.6% at the end of 2023. In the absence of the additional turnover tax, the cost-income ratio at the bank level would have been 44.87%.   Net cost of risk expense increased, in line with the sustained growth of the loan portfolio.   Solid financial position   At the end of 2024, the Group’s total equity ratio stood at 26.69% (26.65% for the Bank), marginally increasing compared to that recorded by the Bank at the end of 2023 (24.15%), thus remaining at a comfortable level in relation to the minimum regulatory requirements.   The return on equity (ROE) at the Group level was 13.35% (13.06% at the Bank level), compared to 12.35% at the Group at the end of 2023 (11.83% at the Bank level). In the absence of the additional turnover tax, the RoE at the Bank level would have been 15.18%, marking a significant increase in the Bank’s profitability compared to 2023.   Primary dealer activity on the government securities market   The bank has strengthened its position as an active player in government securities operations, maintaining its first place in the top of primary dealers compiled by the Ministry of Finance, a ranking that monitors their activity in the last 12 months on the domestic government securities market.   Bond issue   In 2024, the Bank strengthened its presence on the capital market by successfully placing a new benchmark tranche under the Bank’s EMTN Programme worth EUR 1.5 billion: EUR 300 million of MREL eligible Senior Non-Preferential (SNP) 5NC4 bonds, rated BB by Fitch in line with the Bank’s IDR rating. Orders received were more than twice as oversubscribed as compared to the initial announcement of EUR 300 million and came mainly from international investors, indicating that the Bank is starting to benefit from increased confidence and visibility abroad, in line with its expansion strategy.   At the end of 2024, CEC Bank had a balance of issued bonds of approximately 600 million euros, admitted to trading on the regulated markets of the Bucharest Stock Exchange and the Luxembourg Stock Exchange, recording a comfortable level of MREL eligible liabilities (over 10 percentage points above the minimum regulatory requirements).   We support the Romanian economy Over 75,000 new loans were granted in 2024, with a cumulative value of approximately 15.2 billion lei. Over 64,000 Romanian individuals benefited from financing worth 3.4 billion lei, intended for real estate investments or the realization of other personal projects. The volume of loans granted increased by 70% compared to the previous year. New loans granted in 2024 to corporate clients are worth over 11.8 billion lei, of which 4.0 billion lei were granted to clients newly entering the bank’s portfolio. The main areas of activity financed, in correlation with the programs targeting projects of national and regional interest, were: agriculture, industry, trade and construction. To support the increase in the competitiveness of SMEs and their transition to a green economy, CEC Bank added to its product offer loans with free EIF guarantees for the increase in the Competitiveness of SMEs and for the Sustainability of SMEs and small mid-cap enterprises, being one of the first commercial banks in Romania to sign the Guarantee Agreement with the EIF within the Invest EU – Compartment for the Member State Romania.   The digitalization process The transformation and digitalization process, one of the most extensive in the entire Romanian banking system, has advanced significantly in both the area of CRM implementation and the new Core Banking System, according to the agreed plan.   Digitalization of customer operations As a result of accelerated digitalization, in 2024 the number of customers who accessed credit products through 100% online or partially digital flows (online channels and the network of territorial units) tripled compared to 2023, and at the level of territorial units, about 60% of consumer loans were granted to individual customers through short unit flows with a quick response for the customer, on average 30 minutes. Also, in 2024, there was a doubling of the number of customers who accessed online product and service packages or data update services through digital flows (online channels and the network of territorial units) compared to the same period of the previous year. At the level of territorial units, 60% of the packages accessed by customers are opened through short unit flows, 100% without paper consumption.   ESG The bank is in the process of integrating ESG principles across all its activities, and during 2024 it took important steps towards implementing monitoring and reporting systems, both in the governance and environmental and social areas.   Capital increase   The Extraordinary General Meeting of Shareholders of CEC Bank approved on Thursday, April 3, 2025, the increase in the share capital of CEC Bank by the amount of 1 billion lei, through subscription by the Ministry of Finance, as the sole shareholder. The capital increase, approved in March 2025 by the European Commission, which concluded that it does not constitute state aid, is part of CEC Bank’s multi-annual business plan and was initially planned for 2024. The entire capital infusion will be dedicated to expanding banking operations, by increasing lending activities.