National Bank of Romania Books 137 Mln Euro Profit after Years of Losses

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National Bank of Romania Books 137 Mln Euro Profit after Years of Losses

The rising prices of gold and RON decline have driven the balance sheet of the National Bank of Romania (NBR) into the black, Ziarul Financiar reported.

Last year, the National Bank generated net income worth a little more than 137 mln euros, after over the past years it logged massive losses due to the high costs related to the purging of surplus RON on the market in a bid to keep inflation down.

Last year, the NBR generated 868 mln euros in the form of revenues from the management of the international reserve, while expenses related to interest rates paid for the sums raised from banks as part of monetary policy operations amounted to 382 mln euros.

In RON, NBR's net income last year reached 458.4 mln RON, after a 4.3 bln RON loss in 2006. Between 2003 and 2005, the NBR registered losses that ranged between 1 and 3.5 bln RON.

"The income the National Bank derived in 2007 has been entirely distributed to cover losses posted in previous years, thus marking the start of the cycle to recover the losses of 2005 and 2006," reads the Annual Report of the institution, published on Wednesday.

The NBR also expects to generate profit in the coming years and to cover its losses.

The central bank expects smaller efforts to purge surplus RON on the monetary market. Thus, whereas two years ago the NBR had deposits worth over 20 bln RON raised from banks, the volume dropped to 2.6 bln RON (708 mln euros) in April.

The NBR also expects rising profit from international reserve management in the coming years due to an increased volume, on the one hand, and better yields, on the other.

In late May, NBR's international reserves stood at 24.91bln euros, slightly down compared with the start of the year.

Last year, the central bank generated operating income (particularly fueled by revenues from the placement of international reserves) worth 1.37 bln RON (the equivalent of 412 mln euros). In 2006, the operating result pointed to a loss of 490 mln RON (140 mln euros). According to the data presented in the balance sheet, the NBR gets an average yield of 4.3% per annum for placed assets. On the other hand, the central bank paid on average an interest rate of 2.14% to commercial banks for the minimum RON reserves and of 0.93% per annum for foreign currency ones.

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