Bank loans and Forex operations boost BNR profit

Loans granted to commercial banks and foreign currency operations were the main factors which contributed to the profit that the National Bank of Romania (BNR) registered at the end of 2008, Adrian Vasilescu, Advisor of BNR's Governor Mugur Isarescu, told Business Standard.

Moreover, according to Isarescu, the central bank paid profit tax in April for the first time in the past nine years, due to high earnings in the last two quarters.

According to law, the central bank is exempted from paying profit tax, but sends to the state budget 80 percent of revenues remaining after it covers expenses and losses. Practically speaking, the central bank must first cover its expenses and losses and only then, if money is left, it uses this to pay taxes. By the beginning of the fourth quarter of 2008, all previous losses had been covered, and the bank posted a profit for the past three months.

For the first time in the past nine years, BNR succeeded in covering its losses and expenses, and posted a profit. So far, the central bank has used the money to pay losses and expenses and, considering that these were covered in the first nine months of the previous year, the financial institution posted a profit for the remaining period.

"As of last fall, the fourth quarter, and the first quarter of this year, profits were sky-high. We had expected to register a taxable profit at the end of 2009. The law does not allow us to pay profit tax before covering losses on previous years. (...) Losses were covered a few quarters before, what had remained from losses registered in previous years, and in April 2009 we paid profit tax for the first time since 2001. The profit was significant in the fourth quarter of 2008 and the first quarter of 2009, the profit is significant," Isarescu told the Mediafax news agency.

Business Standard