ITALIAN banking group UniCredito and Germany’s HVB will start merger negotiations in May, Austrian and German media reported on April 28.
Analysts said that prospects were good that the negotiations would end in a deal, which would end in UniCredito acquiring HVB. A possible merger would create one of the largest banking groups in Europe and would certainly give birth to the biggest player on the fast growing market in Central Europe, with a share of 20 to 25 per cent.
UniCredito is the owner of Bulgaria’s Bulbank, and through its subsidiary, Bank Austria Creditanstalt, HVB owns Biochim and Hebros Bank. In the event of a merger, their group will become the largest in assets and market share in Bulgaria. Together they now operate assets of six billion euro here, or 25 per cent of all local banking system assets.
In what was seen as a form of confirmation of the possible merger, on April 27 Bulbank chief executive Levon Hampartzoumian told the Bloomberg news agency that further consolidation in Bulgaria would depend on mergers between the foreign owners of the local banks.
Bulbank, the second largest Bulgarian bank, posted a consolidated net profit of 86.3 million leva for 2004, which represented 20 per cent of the profit of the Bulgarian banking system.
Bulbank announced a net profit of 85.9 million leva last year, with UniCredit Leasing Bulgaria, 100 per cent controlled by Bulbank since March 2004, contributing to consolidated results with a 406 000 leva net profit.
In 2004 Bulbank achieved a 27.9 per cent increase in total assets, which reached 3.6 billion leva at the end of the period. The structure of assets changed for another successive year, moving from treasury components to commercial banking. Customer deposits rose by 34 per cent to more than 2.9 billion leva. Shareholders equity amounts to 574 million leva, up by 4.4 per cent on end-2003.
Capital adequacy remained strong with Tier 1 ratio at 20.4 per cent, same as last year, the loan/deposit ratio reaching 48 per cent. Return on assets stood at 2.8 per cent and return on equity at 15.7 per cent.
Bulbank reported growth in revenues of 16.8 per cent, with net interest income increasing by 26.8 per cent to 134 million leva (from 106 million leva in 2003). Fee income reached 39.8 million leva constituting a 20.6 per cent increase from 2003.
Revenue growth was sustained by strong growth of lending operations with the total loan portfolio increasing by 55 per cent in net terms and reaching 1,353 million leva (37 per cent of all the bank’s assets).
The amount of consolidated profit is 3.9 per cent lower than in the previous year, due to the introduction of a more precise method for calculation of depreciated costs on commercial loans, higher IT-related costs linked to the completion of the new IT system and a large non-recurring provision write-back in 2003. On a normalised basis Bulbank reports an 18.7 per cent growth in net profit compared to 2003.
The shareholders voted a 59.2 million leva dividend for the year (69 per cent dividend payout), representing 0.355 leva dividend per share. The annual general meeting of shareholders, which took place on April 27, voted KPMG Bulgaria to be chosen auditor of the bank for 2005.
Bulbank is optimistic regarding its development in 2005, the first quarter results showing strong increase of revenues and acquisition of more than 10 000 new clients. Bulbank’s plans include further development of the network by opening new outlets in Sofia and other cities plus opening new lending centres.