BRD Q1 net profit up almost three fold to RON 37 mln on lower risk cost

BRD-Groupe Societe Generale said on Wednesday its net profit rose almost three fold to RON 37 million in the first quarter against the same period of last year, sustained by lower risk costs, while demand for new loans in the corporate segment remained in the red.

The net banking income fell 12.3 percent in the first quarter due to the decrease in net interest margin, generated by a lower share of net loans in total assets and the increased liquidity buffer. The net fees and commission added 1.7 percent, supported by syndicated loans, sales of retail packages, custody services and equities brokerage. Meanwhile, the operational expenses fell by 2.8 percent due to optimization processes.

“We will pursue our work for cost of risk normalization; and will continue our efforts on implementation of cost optimization measures. Simultaneously, we will start to capitalize on the fine tuning of our origination processes in order to boost our lending activity to both retail and corporate customers”, said Philippe Lhotte, the lender’s chairman and CEO.  

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BRD has registered a slight increase of 1.3 percent in gross loans to individuals, reaching RON 17.2 million. The amounts on housing loans rose 16.5 percent year-on-year due to the Prima Casa program (the state backed mortgage scheme for first time home buyers). However, corporate lending activity has lost 8.8 percent of gross volume to RON 16.4 billion by the end of March.

The non-performing loans stood at 21.8 percent, in line with the banking system, while the net cost of risk was lowered by 29.7 percent year-on-year to 298 basis points. Provisioning for NPLs slightly went up to 70.9 percent.

“The financing activity on corporate segment remains sensitive to the weak demand, but a more broad-based economic growth in the next coming months of 2014 should be a counterbalancing factor. We count inter alia on the existing and new investors` appetite for the Romanian economy and European funds absorption in order to finance new projects in the private and public corporate area,” said the bank in a statement.

The deposits added 6.9 percent sustained both by the corporate and retail segment, with the net loans to deposits ratio improving to 79.5 percent at the end of March.

Its capital adequacy ratio stood at 15.8 percent, under Basel III regulations. BRD is the second biggest lender in Romania by assets, operating through a network of around 880 branches.

Shares in BRD were flat at RON 8.2500 on Wednesday afternoon trading on the Bucharest Stock Exchange (BVB).

Ovidiu Posirca