BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
December 31, 2023
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE STATEMENT OF FINANCIAL POSITION
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
2
Group
Bank
Note
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
ASSETS
Cash and due from Central Bank
5, 37
11,778,143
7,624,933
Due from banks
6
6,113,975
7,204,987
Derivatives and other financial instruments held for trading
7
2,110,661
2,337,311
Financial assets at fair value through profit and loss
8
11,376
8,132
Financial assets at fair value through other comprehensive income
9
13,429,670
13,439,596
Financial assets at amortised cost
10
45,384,120
38,272,985
10.1
40,201,690
35,542,279
10.2
5,182,430
2,730,706
Finance lease receivables
11
-
-
Investments in subsidiaries, associates and joint ventures
12
103,872
129,964
Property, plant and equipment
13
1,051,237
1,046,443
Investment property
13
14,536
15,503
Goodwill
14
50,130
50,130
Intangible assets
15
504,221
405,667
Current tax assets
25
-
23,563
Deferred tax asset
25
303,152
478,893
Other assets
16
519,151
473,958
Assets held for sale
17
7,106
10,912
Total assets
81,381,350
71,522,977
LIABILITIES AND SHAREHOLDERS' EQUITY
Due to banks
18
1,146,540
636,888
Derivatives and other financial instruments held for trading
7
1,272,450
1,443,546
Due to customers
19
62,641,838
56,915,740
Borrowed funds
20
4,834,225
3,567,262
Subordinated debts
21
1,245,400
1,238,651
Current tax liability
25
35,074
-
Provisions
22
333,810
380,172
Other liabilities
23
1,406,990
763,682
Total liabilities
72,916,327
64,945,941
Share capital
24
2,515,622
2,515,622
Other reserves
(1,157,341 )
(2,054,109 )
(1,157,341)
(2,054,109)
Retained earnings and capital reserves
7,106,742
6,115,523
Non-controlling interest
-
-
Total equity
8,465,023
6,577,036
Total liabilities and equity
81,381,350
71,522,977
The financial statements have been authorized by the Group’s management on March 14, 2024 and are
signed on the Group’s behalf by:
Jean-Pierre Georges Vigroux
Chairman of the Board of Directors
Maria Rousseva
Chief Executive Officer
Etienne Loulergue
Deputy Chief Executive Officer
Simona Prodan
Finance Executive Director
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE PROFIT OR LOSS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
3
Group
Bank
Note
2023
2022
2023
2022
Interest and similar income
26
4,024,293
2,790,043
Interest and similar expense
27
(1,494,670 )
(570,852 )
(1,432,436)
(550,845)
Net interest income
2,591,857
2,239,198
Fees and commission income
28
1,142,224
1,079,100
Fees and commission expense
28
(430,732 )
(368,727 )
(423,361)
(359,906)
Fees and commissions, net
718,863
719,194
Gain on derivative, other financial instruments held for
trading and foreign exchange
29
337,774
313,165
Gain from financial instruments at fair value through
other comprehensive income
-
2,415
Gain from financial instruments at fair value through
profit and loss
4,873
2,554
Net income/(loss) from associates and joint ventures
38,452
(30,075)
Other income/(expense) from banking activities
30
(3,065 )
30,690
42,412
Net banking income
3,722,509
3,288,863
Personnel expenses
32
(962,958 )
(898,901 )
(914,991)
(839,169)
Depreciation, amortisation and impairment on tangible
and intangible assets
33
(248,423 )
(228,889 )
(243,868)
(223,599)
Contribution to Guarantee Scheme and Resolution Fund
31
(68,094 )
(69,171 )
(68,094)
(69,171)
Other operating expenses
34
(615,670 )
(547,641 )
(587,845)
(508,946)
Total operating expenses
(1,895,145 )
(1,744,602 )
(1,814,798)
(1,640,885)
Gross operating profit
1,907,711
1,647,978
Cost of risk
35
(95,106 )
47,924
(92,699)
Operating profit
1,955,635
1,555,279
Profit before income tax
1,955,635
1,555,279
Current tax expense
25
(324,514 )
(280,610 )
(316,546)
(264,300)
Deferred tax expense
(16,113 )
(1,817 )
(4,909)
(5,041)
Total income tax
(340,627 )
(282,427 )
(321,455)
(269,341)
Profit for the period
1,634,180
1,285,938
Profit attributable to equity holders of the parent
-
-
Profit attributable to non-controlling interests
-
-
Basic earnings per share (in RON)
36
2.3449
1.8452
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE STATEMENT OF COMPREHENSIVE INCOME
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
4
Group
Bank
Note
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Profit for the period
1,634,180
1,285,938
Other comprehensive income
Net comprehensive income that may be reclassified
to profit and loss in subsequent periods
(1,682,643 )
902,290
(1,682,643)
Net gain/(loss) on financial assets at fair value through
other comprehensive income
(1,682,643 )
902,290
(1,682,643)
Reclassifications to profit and loss during the period
(99 )
(2,884 )
(99)
(2,884)
Revaluation differences
(2,000,170 )
1,074,273
(2,000,170)
Income tax
(171,884 )
(171,884)
320,411
Net comprehensive income not to be reclassified to
profit and loss in subsequent periods
(5,522 )
(5,522)
13,914
Gain / (Loss) on defined pension plan
23
(6,574 )
(6,574)
16,564
Income tax relating to defined pension plan
25
(2,650 )
1,052
(2,650)
Other comprehensive income for the period, net of
tax
(1,668,729 )
896,768
(1,668,729)
Total comprehensive income for the period, net of
tax
(331,641 )
2,530,948
(382,791)
Attributable to:
Equity holders of the parent
(340,721 )
-
-
Non-controlling interest
-
-
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
Group
Attributable to equity holders of the parent
Non-controlling
interest
Total equity
Other reserves
Issued capital
Reserves from
financial assets at
fair value through
other
comprehensive
income
Reserves from
defined pension plan
Retained earnings
and capital reserves
December 31, 2021
(401,602 )
Total comprehensive income
(1,682,642 )
(331,641 )
(1,682,642 )
(1,668,729 )
Equity dividends
(2,579,510 )
(7,977 )
(2,587,487 )
December 31, 2022
(2,084,244 )
Attributable to equity holders of the parent
Non-controlling
interest
Other reserves
Issued capital
Reserves from
financial assets at
fair value through
other
comprehensive
income
Reserves from
defined pension plan
Retained earnings
and capital reserves
Total equity
December 31, 2022
(2,084,244 )
Total comprehensive income
(5,522 )
(5,522 )
Equity dividends
(642,961 )
(7,391 )
(650,353 )
December 31, 2023
(1,181,954 )
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
Bank
Issued capital
Other reserves
Retained earnings
and capital reserves
Total equity
Reserves from
financial assets at
fair value through
other
comprehensive
income
Reserves from
defined pension plan
December 31, 2021
2,515,622
(401,602)
16,222
7,409,095
9,539,338
Total comprehensive income
-
(1,682,642)
13,913
1,285,938
(382,791)
-
-
-
1,285,938
1,285,938
-
(1,682,642)
13,913
-
(1,668,729)
Equity dividends
-
-
-
(2,579,510)
(2,579,510)
December 31, 2022
2,515,622
(2,084,244)
30,135
6,115,523
6,577,036
Other reserves
Issued capital
Reserves from
financial assets at
fair value through
other
comprehensive
income
Reserves from
defined pension plan
Retained earnings
and capital reserves
Total equity
December 31, 2022
2,515,622
(2,084,244)
30,135
6,115,523
6,577,036
Total comprehensive income
-
902,290
(5,522)
1,634,180
2,530,948
-
-
-
1,634,180
1,634,180
-
902,290
(5,522)
-
896,768
Equity dividends
-
-
-
(642,961)
(642,961)
December 31, 2023
2,515,622
(1,181,954)
24,613
7,106,742
8,465,023
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE STATEMENT OF CASH FLOWS
as of and for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
Group
Bank
Note
2023
2022
2023
2022
Cash flows from operating activities
Profit before tax
1,955,635
1,555,279
Adjustments for:
Depreciation and amortization expense
33
243,868
223,599
(Gain)/Loss from reevaluation of investment in associates and
joint ventures
(4,362 )
-
38,752
(Gain) from revaluation of assets at fair value through profit and
loss
8
(3,708 )
(1,172 )
(3,244)
(1,184)
Net (gain)/loss sale from associates
(21,412)
-
Impairment adjustments and provisions
35
124,174
277,466
Adjusted profit
2,299,021
2,093,912
Changes in operating assets and liabilities
Due from Central Bank
(4,162,386 )
(781,782 )
(4,162,383)
(781,746)
Deposits with banks
(760,772 )
(470,642 )
(761,383)
(471,281)
Treasury bills at amortised cost
(2,451,724 )
(2,730,706 )
(2,451,724)
(2,730,706)
Sales of financial assets at fair value through profit and loss
8
-
-
Acquisition of financial assets at fair value through profit and
loss
8
(6,143 )
-
-
Financial assets at fair value through other comprehensive
income
912,216
4,741,587
Loans and advances to customers
(4,402,936 )
(3,640,922 )
(4,731,090)
(3,615,134)
Lease receivables
(285,777 )
(195,110 )
-
-
Other assets including trading
(709,426 )
316,009
(676,926)
Assets held for sale
(206,080 )
3,806
284
Due to banks
509,652
480,078
Due to customers
5,726,098
3,997,854
Other liabilities
(193,497 )
(196,097)
1,029,378
Total changes in operating assets and liabilities
(5,003,449 )
(4,834,896)
1,973,388
Income tax paid
(270,364 )
(375,065 )
(257,908)
(360,361)
Cash flow from operating activities
(2,894,891 )
(2,793,783)
3,706,939
Investing activities
Sales of investments in associates
47,504
-
Acquisition of investments in associates and joint ventures
(9,798 )
-
(9,800)
Acquisition of tangible and intangible assets
13, 15
(325,754 )
(269,491 )
(324,846)
(268,348)
Proceeds from sale of tangible and intangible assets
12,536
932
Cash flow from investing activities
(265,714 )
(278,357 )
(264,806)
(277,216)
Financing activities
Proceeds from borrowings
3,753,094
190,895,147
Repayment of borrowings
(3,462,156 )
(189,776,959 )
(2,479,382)
(188,814,828)
Repayment of principal lease liabilities
13
(79,189 )
(84,665 )
(76,692)
(81,319)
Dividends paid
(7,391 )
(2,587,492 )
-
(2,579,510)
Net cash from financing activities
(359,506 )
1,197,020
(580,510)
Net movements in cash and cash equivalents
(1,861,567 )
(1,861,569)
2,849,213
Cash and cash equivalents at beginning of the period
37
8,999,611
6,150,398
Cash and cash equivalents at the end of the period
37
7,138,043
8,999,611
Additional information on operational cash flows from interest and dividends:
Group
Bank
2023
2022
2023
2022
Interest paid
1,283,819
457,273
Interest received
3,971,486
2,881,812
Dividends received
67,390
45,894
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
as of and for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
1. Corporate information
.
The Bank commenced business as a state owned credit institution in 1990 by acquiring assets and liabilities
of the former Banca de Investitii. The Bank headquarters and registered office is
BRD together with its subsidiaries (the “Group’) offers a wide range of
, as allowed by law. The Group accepts deposits from the public and grants loans
and leases, carries out funds transfer in
financial services for its commercial and retail customers.
The ultimate parent is
The Bank has as at December 31, 2023 423 units throughout the country (December 31, 2022: 460).
The average number of active employees of the Group during 2023 was 6,066 (2022: 6,158), and the
number of active employees of the Group as of the period-end was 6,070 (December 31, 2022: 6,126).
The average number of active employees of the Bank during 2023 was 5,817 (2022: 5,846), and the number
of active employees of the Bank as of the period-end was 5,854 (December 31, 2022: 5,833).
The active employees are the full time employees (excluding maternity leave and long-term sick leave).
BRD–Groupe Société Générale has been quoted on Bucharest Stock Exchange (“BVB”) since January 15,
2001.
The shareholding structure of the Bank is as follows:
December 31, 2023
December 31, 2022
Societe Generale
60.17%
60.17%
Fondul De Pensii Administrat Privat NN
5.56%
5.56%
Fondul de pensii administrat privat AZT Viitorul Tau
4.15%
3.98%
Infinity Capital Investments SA
3.95%
3.95%
Fondul de pensii administrat privat Metropolitan Life
3.56%
3.23%
Transilvania Investments Alliance S.A.
2.02%
2.19%
Legal entities
14.74%
15.43%
Individuals
5.85%
5.49%
Total
100.00%
100.00%
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
9
2. Basis of preparation
a)
Basis of preparation
In accordance with European Regulation 1606/2002 of July 19, 2002 on the application of International
Accounting Standards, and Order of the National Bank of Romania no. 27/2010 with subsequent
amendments, BRD prepared the consolidated and separate financial statements of the Bank and its
subsidiaries for the year ended December 31, 2023 in accordance with the International Financial Reporting
Standards (IFRS) as adopted by the European Union (“EU”).
The consolidated financial statements include the consolidated statement of financial position, the
consolidated profit or loss, the consolidated statement of comprehensive income, the consolidated statement
of changes in shareholders’ equity, the consolidated cash flow statement, and consolidated notes.
The separate financial statements include the separate statement of financial position, the separate profit or
loss, the separate statement of comprehensive income, the separate statement of changes in shareholders’
equity, the separate cash flow statement, and separate notes.
The consolidated and separate financial statements are presented in Romanian lei (“RON”), which is the
Group’s and its subsidiaries’ functional and presentation currency, rounded to the nearest thousand, except
when otherwise indicated. The consolidated and separate financial statements has been prepared on a
historical cost basis, except for financial assets at fair value through profit and loss, financial assets through
other comprehensive income, derivative financial instruments, other financial assets and liabilities held for
trading, which have all been measured at fair value.
The Group and Bank’s management has made an assessment of the Group and Bank’s ability to continue
as a going concern and is satisfied that the Bank has the resources to continue in business for the foreseeable
future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt
upon the Bank’s ability to continue as a going concern. Therefore, the consolidated and separate financial
statements are prepared on the going concern basis.
b) Basis for consolidation
The consolidated financial statements comprise the financial statements of BRD–Groupe Société Générale
and its subsidiaries as at December 31, 2023. The financial statements of the subsidiaries are prepared for
the same reporting period, using consistent accounting policies.
A
subsidiary is an entity over which the Bank exercises control. An investor controls an investee when it is
exposed, or has rights to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. The consolidated financial statements include the
financial statements of BRD–Groupe Société Générale and the following subsidiaries: BRD Sogelease IFN
S.A. (99.98% ownership, 2022: 99.98%), BRD Finance IFN S.A. (49% ownership, 2022: 49%) and BRD
Asset Management SAI S.A. (99.98% ownership, 2022: 99.98%).
According to IFRS 12 9(b), the Group controls BRD Finance IFN S.A. even though it holds less than half
of the voting rights, through the power to govern the financial and operating policies of the entity under
various agreements. All intercompany transactions, balances and unrealized gains and losses on
transactions between consolidated entities are eliminated on consolidation.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Bank obtains
control, and continue to be consolidated until the date such control ceases.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
10
2. Basis of preparation (continued)
b) Basis for consolidation (continued)
Equity and net income attributable to non-controlling interest are shown separately in the statement of
financial position, statement of comprehensive income, statement of changes in equity and statement of
comprehensive income, respectively.
The Bank is accounting the investments in subsidiaries, associates and joint ventures in the separate
financial statements at cost less impairment adjustment.
Group
Associates
Field of activity
Address
%
BRD Asigurari de Viata SA
Insurance
58-60 Gheorghe Polizu Street, Bucharest Corporate Center
building, floor 8 (zone 3) and floor 9, district 1, Bucharest
49.00%
Biroul de Credit S.A.
Financial
institution
29 Sfanta Vineri Street, floor 4, district 3, Bucharest
16.38%
BRD Societate de Administrare a Fondurilor
de Pensii Private SA
Pension fund
management
58-60 Gheorghe Polizu Street, floor 8 (zone 1, 2 and 4),
district 1, Bucharest
26.95%
BRD Sogelease Asset Rental SRL
Operational leasing
1-7, Ion Mihalache Street, Bucharest
20.00%
Joint ventures
CIT One SA
Protection and
guard
319L Splaiul Independentei Street, Paris Building/A1, 1st
floor, district 6, Bucharest,
33.33%
Bank
Associates
Field of activity
Address
%
BRD Asigurari de Viata SA
Insurance
58-60 Gheorghe Polizu Street, Bucharest Corporate Center
building, floor 8 (zone 3) and floor 9, district 1, Bucharest
49.00%
Biroul de Credit S.A.
Financial institution
29 Sfanta Vineri Street, floor 4, district 3, Bucharest
16.38%
BRD Societate de Administrare a
Fondurilor de Pensii Private SA
Pension fund
management
58-60 Gheorghe Polizu Street, floor 8 (zone 1, 2 and 4), district
1, Bucharest
26.95%
Joint ventures
CIT One SA
Protection and guard
319L Splaiul Independentei Street, Paris Building/A1, 1st floor,
district 6, Bucharest
33.33%
Subsidiaries
BRD Sogelease IFN SA
Financial lease
1-7, Ion Mihalache Street, floor 12, district 1, Bucharest
99.98%
BRD Finance IFN SA
Financial institution
1-7, Ion Mihalache Street, floor 15, district 1, Bucharest
49.00%
BRD Asset Management SAI SA
Fund administration
2 Doctor Staicovici Street, district 5, floor 5, Bucharest
99.98%
In July 2023 the Bank and Group sold the investment in associate Fondul de Garantare a Creditului Rural
and as a condition precedent to the sale the dividends accumulated over the years and for the year 2022
were distributed to the shareholders. The sale of the participation was reflected also in the Statement of
cash flow and in Note 12.
Additionally, the Bank and Group did not participate to the increase of the share capital of BRD Societate
de Administrare a Fondurilor de Pensii Private in July 2023 and therefore the ownership percentage was
reduced from 49% to 26.95% following the approval from ONRC in October 2023.
In November 2023 the Bank and Group sold for a price of 33,721 the investment in associate ALD
Automotive SRL within the Groupe Société Générale as a result of the reorganization after the acquisition
of Lease Plan at Groupe Société Générale level.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
11
2. Basis of preparation
b) Basis for consolidation (continued)
As at December 31, 2023 BRD Finance IFN SA is in a run off process and entered into a process for selling
its entire loan portfolio. The management intends to cease the activity and from this perspective it has
assessed that the going concern basis for the preparation of its financial statements is not appropriate.
Therefore, as at December 31, 2023 the BRD Finance IFN SA financial statements were prepared in
compliance with IFRS, but no longer as a going concern basis. The entity has been included in the
consolidated financial statements of the Group on this basis.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
12
2. Basis of preparation (continued)
c) Changes in accounting policies and adoption of revised/amended IFRS
The accounting policies adopted are consistent with those of the previous financial year except for the
following amended IFRSs which have been adopted by the Group/Bank as of 1 January 2023. The impact
of the application of these new and revised IFRSs has been reflected in the financial statements and was
estimated as not being material, except disclosures already presented in the Notes.
●
IFRS 17: Insurance Contracts
●
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting policies (Amendments)
●
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates (Amendments)
●
IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments)
●
IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (Amendments)
The amendments are effective immediately upon issuance, but certain disclosure requirements are
effective later. The Organization for Economic Co-operation and Development’s (OECD) published
the Pillar Two model rules in December 2021 to ensure that large multinational companies would be
subject to a minimum 15% tax rate. On 23 May 2023, the IASB issued International Tax Reform —
Pillar Two Model Rules – Amendments to IAS 12. The amendments introduce a mandatory temporary
exception to the accounting for deferred taxes arising from the jurisdictional implementation of the
Pillar Two model rules and disclosure requirements for affected entities on the potential exposure to
Pillar Two income taxes. The Amendments require, for periods in which Pillar Two legislation is
(substantively) enacted but not yet effective, disclosure of known or reasonably estimable information
that helps users of financial statements understand the entity’s exposure arising from Pillar Two income
taxes. To comply with these requirements, an entity is required to disclose qualitative and quantitative
information about its exposure to Pillar Two income taxes at the end of the reporting period. The
disclosure of the current tax expense related to Pillar Two income taxes and the disclosures in relation
to periods before the legislation is effective are required for annual reporting periods beginning on or
after 1 January 2023, but are not required for any interim period ending on or before 31 December
2023.
In Romania Pillar Two legislation has been enacted through Law no 431 / 29 December 2023 on
minimum effective taxation for multinational enterprise groups and large-scale domestic groups. The
legislation will be effective for the Group’s financial year beginning 1 January 2024 with reporting to
the tax authorities no later than June 30, 2026. At the date of issuing of the present financial statements,
the Romanian tax authorities have not yet published relevant methodology or clarifications regarding
the implementation of Pillar Two (for example related to covered taxes), in addition to the law
transposing the Pillar Two Directive itself into the local law. Based on the information available as at
the date of issuing the present financial statements the Group has performed an assessment of the
Group’s potential exposure to Pillar Two income taxes. This assessment is based on the most recent
information available regarding the financial performance of the constituent entities in the Group.
Based on the assessment performed, the Pillar Two effective tax rates for all the Group entities that
operate in Romania, are above 15% and management is not currently aware of any circumstances
under which this might change. Therefore, the Group does not expect a potential exposure to Pillar
Two top-up taxes.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
13
2. Basis of preparation (continued)
d) Standards and Interpretations that are issued but have not yet come into effect
●
IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-
current (Amendments)
●
IFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendments)
●
IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments Disclosure - Supplier Finance
Arrangements (Amendments)
●
Amendments to IAS 21
The Effects of Changes in Foreign Exchange Rates: Lack of
Exchangeability (Amendments)
●
Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates
and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture
Management has assessed that the amendments will not have a material impact.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
14
2. Basis of preparation (continued)
e) Significant accounting judgments and estimates
In the process of applying the Group and Bank’s accounting policies, management is required to use its
judgments and make estimates in determining the amounts recognized in the consolidated and separate
financial statements. The most significant use of judgments and estimates are as follows:
Fair value of financial instruments
Where the fair values of financial assets and financial liabilities recorded on the statement of financial
position cannot be derived from active markets, they are determined using a variety of valuation techniques
that include the use of mathematical models. The inputs to these models are derived from observable market
data where possible, but where observable market data are not available, judgment is required to establish
fair values. The judgments include considerations of liquidity and model inputs such as volatility for longer
dated derivatives and discount rates, prepayment rates and default rate assumptions for asset backed
securities. The valuation of financial instruments is described in more detail in Note 42.
Expected credit losses on financial assets at amortised cost and FVOCI
The measurement of impairment losses across all categories of financial assets requires judgement, in
particular, the estimation of the amount and timing of future cash flows and collateral values when
determining impairment losses and the assessment of a significant increase in credit risk. These estimates
are driven by a number of factors, changes in which can result in different levels of allowances. The Bank
reviews its loans and advances to customers at each reporting date to assess whether there is any objective
evidence of impairment. The main considerations for the loan impairment assessment include whether any
payments of principal or interest are overdue by more than 90 days, whether a severe alteration in the
counterparty’s financial standing is observed, entailing a high probability that the debtor will not be able to
fully meet its credit obligations, whether concessions in the form of restructuring were consented under the
circumstances of financial hardship experienced by the debtor, whether legal procedures were initiated or
the debtor was transferred to specialized recovery structures (regardless of the number of days past due).
The Bank’s expected credit loss model (ECL) relies on several underlying assumptions regarding the choice
of variable inputs and their interdependencies, which affect the level of allowances:
-
The internal credit grating model, which assigns probabilities of default (PDs) to the individual
grades
-
The criteria defined (both in relative and absolute terms) for the assessment of significant increase
in credit risk since initial recognition and consequently the computation of allowances based on
life time expected credit loss (LTECL)
-
The grouping of financial assets when their ECL is measured on a collective basis
-
The development of ECL model, including the various formulas and the choice of inputs
-
The macroeconomic scenarios and their probability weightings based on which ECL is derived
-
The inputs and models used for calculating ECL may not always capture all characteristics of the
market at the date of the financial statements. To reflect this, the Bank assesses the need/opportunity
for additional amounts of provisions in the form of overlays, in order to address:
o
Sector of activity specific risks (adjustment of ECL on sectors that have a different
default behavior from the whole calibration segment)
o
Visible macroeconomic threat impossible to be captured by the models (typically, when
the predicted stress did not occur in the observed past serving as a base for models)
-
For individually significant loans and advances, the Group and Bank identify and quantify the
expected future cash flows to be used for a total or partial reimbursement of the obligations, based
on the capacity of the client/business to generate revenues, proceeds resulting from sale of
collaterals and other clearly identified sources of repayment. The individual assessment threshold
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
15
2. Basis of preparation (continued)
e) Significant accounting judgments and estimates (continued)
is defined in between 500 - 1,500 thousands EUR, depending on the client type and customers’ management
departments.
Provisions for other risks and charges
The Bank operates in a regulatory and legal environment that, by nature has a heightened element of
litigation risk inherent to its operations and, as a result it is involved in various litigations or is subject to
various obligations arising from legislation in force.
When the Bank can reliably measure the outflow of economic benefits in relation to a specific case and
considers such outflows to be probable, the Bank records a provision against the case, as mentioned in this
note. Where the probability of outflow is considered to be remote, or probable, but a reliable estimate
cannot be made, a contingent liability is disclosed.
Generally, the first step is to establish the existence of the present obligation followed by the estimation of
the amount needed to settle that obligation taking into account a number of factors including legal advice,
the stage of the matter and historical evidence from similar incidents. Significant judgment is required to
conclude on these estimates.
In case of litigations:
i)
For a single individual litigation the Bank assess whether there is more likely than not to
have an unfavorable court decision considering the factors mentioned above; then it
estimates the amount at risk; in case there are several scenarios possible with different
outcomes, the amount at risk is the weighted average of the amounts at risk for each
scenario using the probability distribution for all scenarios (100% is allocated to the
possible scenarios) and provisions 100% of the estimated amount;
ii)
For multiple litigations, the assessment of “more likely than not” could be substantiated
for the entire population using statistics and provision computation to be made at pool
level.
In case of obligations arising from various legislation, the bank assesses first if there is no realistic
alternative of settling that obligation, and if not, it estimates the amount needed to settle that obligation
(using similar approach as above) and books provisions representing 100% of the estimated amount.
Please refer to Note 22 and Note 41 for more details.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
16
2. Basis of preparation (continued)
e) Significant accounting judgments and estimates (continued)
Impact of climate risk
The Bank considers climate-related matters in its estimates and assumption.
As part of ESG (“Environmental, Social and Governance”) risks assessments, climate risk is considered
and it includes physical and transition risks. In accordance with the TCFD (“Task Force on Climate-related
Financial Disclosures”), the physical risk refers to acute risks (caused by one-off events) or chronic risks
(long-term changes) related to temperature, wind, water or solid waste. In the same manner, the transition
risk refers to the financial risks that could result from the process of migrating to a low-carbon economy.
Changes in policy, technology and physical risks could lead to a reassessment of the value of a wide range
of assets as costs and opportunities become apparent. We also consider the liability risk which means the
impact that could occur if parties who have suffered loss or damage due to the effects of climate change
seek compensation from those they hold liable. In line with the Société Générale Group's policy, BRD has
introduced in 2020 the calculation of a climate vulnerability index (CVI) that reflects the transition risk
associated with a client or group of clients, perimeter that has been extended further in 2022 (reducing the
applicable threshold). CVI is represented on a 7-step impact scale (high positive, moderate positive, low
positive, no impact, low negative, moderate negative and high negative), for certain following portfolios:
oil and gas, electricity generation, metals and mining , automobiles, shipping, aircraft. Thus, if and when
the case, the Bank is in a dialogue with its customers, especially with those classified moderately and high
negatively, on their climate vulnerability, in order to develop a strategy to mitigate the transition risk. In
2023 the methodology of this indicator has been changed, subject to an extension of perimeter (to all the
sectors), scope (clients) and tool to be used for its application. The process of extension of scope (physical
risks, biodiversity risks, transactions, assets etc.) will evolve in 2024.
In 2020, BRD implemented an environmental and social risk assessment process for certain categories of
customers and transactions, a process approved by the Bank's management committee and which has been
enhanced yearly. The process is based on the principle of the 3 lines of defences. BRD takes into account
at onboarding of its clients and in its lending decisions related to corporate clients, environmental, social
and governance risks, applying in this sense the standards of Société Générale Group and other international
standards to which the latter has adhered. The assessment of the ESG risks associated with corporate clients
is performed for certain categories of clients, while the application of exclusion criteria (dictated by specific
activities), and refers to all clients of this type.
The items and considerations that are most directly impacted by climate-related matters are:
• Expected credit losses (ECL): Customers and portfolios with exposure to climate risk may have a
resultant deterioration in creditworthiness and a consequential impact on ECL. For example the
measurement of ECL may be affected by physical climate-related risks such as floods or outbreaks of fire
which may negatively affect a borrower’s ability to repay the loan, or result in a deterioration in the value
of underlying collateral pledged. Transition risks may result from government or institutional policy
changes, with consequential credit quality deterioration in sectors or countries affected.
• Fair value measurement: The Bank has assumed that any climate change variables incorporated in
fair value measurement are those that market participants would consider when pricing the asset or liability,
in line with IFRS 13 Fair Value Measurement. Consequently the Bank concluded that climate risk has been
adequately reflected within the fair value of its assets and liabilities. Where prices are observable, it is
assumed that the fair value already incorporates market’s participants’ view of climate risk variables.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
17
2. Basis of preparation (continued)
f) Segment information
A segment is a component of the Group and Bank:
-
That engages in business activity from which it may earn revenues and incur expenses (including
revenues and expenses relating to transactions with other components of the same entity);
-
Whose operating results are regularly reviewed by the chief operating decision maker to make
decisions about resources to be allocated to the segment and assess its performance, and;
-
For which distinct financial information is available.
The Group and Bank’s segment reporting is based on the following segments:
Retail
and Small Business,
Non-retail
and
Corporate Center
lines mentioned above (fixed assets, taxes, equity investments, etc.).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
18
3. Summary of significant accounting policies
a) Recognition of income and expenses
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group
and the benefits can be reliably measured. The following specific recognition criteria must also be met
before revenue is recognized:
i) Interest and similar income
For all financial instruments measured at amortized cost and interest-bearing financial instruments
classified as FVOCI, interest income or expense is recorded at the effective interest rate, which is the rate
that exactly discounts estimated future cash payments or receipts through the expected life of the financial
instrument. The effective interest is applied to the gross carrying amount for assets classified in Stage 1 or
2 and to all financial liabilities. For financial assets classified as Stage 3 or POCI the effective interest rate
is applied to the net carrying amount.
The calculation takes into account all contractual terms of the financial instrument and includes any
origination fees and incremental costs that are directly attributable to the instrument and are an integral part
of the effective interest rate. The net carrying amount is calculated based on the original effective interest
rate and the change in carrying amount is recorded as interest income or expense.
ii) Fee and commission income
The Group and Bank earns fee and commission income from a diverse range of services it provides to its
customers. Fee income can be divided into the following two categories:
(i) Fee income earned from services that are provided over a certain period of time are accrued over that
period. These fees include asset management, custody and other management and advisory fees.
(ii) Fee income from providing transaction services: Fees arising from negotiating or participating in the
negotiation of a transaction for a third party – such as the arrangement of the acquisition of shares or other
securities or the purchase or sale of businesses. These fees are recognized on completion of the underlying
transaction. Fees or components of fees that are linked to a certain performance are recognized after
fulfilling the corresponding criteria.
iii) Dividend income
Revenue is recognized when the Group and Bank’s right to receive the payment is established, generally
when the shareholders approve the dividend.
iv) Net trading income
Net trading income comprises gains less losses related to assets and liabilities held for trading and
derivatives and includes all realised and unrealised fair value changes, interest, dividends and foreign
exchange differences. Interest income from all interest-bearing trading financial assets required to be
measured at FVPL is recognised part of the net trading income.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
19
3. Summary of significant accounting policies (continued)
a) Recognition of income and expenses (continued)
v) Levies
IFRIC 21 “Levies” clarifies the accounting for a liability to pay a levy. For an entity, the obligating event
that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy, as identified
by the legislation. The liability to pay a levy is recognised progressively if the obligating event occurs over
a period of time. Furthermore, if an obligation to pay a levy is triggered when a minimum activity threshold
is reached, the corresponding liability is recognised when that minimum activity threshold is reached.
The main related taxes which fall under the provisions of IFRIC 21 are as follows:
●
The Bank annual contribution to Deposit Guarantee Scheme is fully recognised in the income statement
at 1st January of the year in which the payment is made.
●
The Bank annual contribution to the Single Resolution Fund, is fully recognised in the income statement
at 1st January of the year in which the payment is made.
b) Financial instruments - recognition
i) Initial recognition and date of recognition
The Group applies settlement date accounting policy for all financial assets and financial liabilities (the
financial assets / liabilities are initially recognized on the date of the transfer of funds). Between trade date
and settlement date The Group recognizes off balance sheet commitments.
ii) Measurement categories of financial assets and liabilities
Financial instruments are initially recognised at their fair value including arrangements costs. Trade
receivables are measured at the transaction price.
In accordance with IFRS 9 classification, the Group classifies financial assets in the following measurement
categories:
●
Fair value through profit and loss (FVPL);
●
Fair value through other comprehensive income (FVOCI); or
●
Amortised cost.
Classification and subsequent measurement of financial assets is generally based on the Group business
model to manage the assets and the cash flow characteristics of the assets.
The Group and the Bank classify and measure the financial liabilities at amortised cost.
The Bank classifies and measures its derivative and trading portfolio as FVPL.
The Group measures the equity instruments at fair value through profit and loss. Gains and losses on equity
investments measured at fair value through profit and loss are included in the line “Net gains on financial
assets measured at fair value through profit and loss” in the statement of profit and loss.
In the Bank’s Separate Financial Statement, the equity instruments representing investment in associates
and subsidiaries continue to be measured at cost in accordance to IAS 27 “Separate financial statements”.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
20
3. Summary of significant accounting policies (continued)
c) Financial instruments – classification and measurement
According to IFRS 9, the Group classifies its financial assets that are debt instruments into one of the
following categories based on the assessment of business model and SPPI characteristics, as follows:
●
Financial assets that are held for collection of contractual cash flows and cash flows represent solely
payments of capital and interest (SPPI) are classified and measured at amortised cost. In this category
the Group includes the loans granted to customers, deposits placed with banks, corporate bonds and
repurchase transactions part of banking book portfolio. Treasury bonds in banking book portfolio
purchased starting July 1, 2022 are classified in this category.
●
Financial assets that are held for collection of contractual cash flows and for selling the assets and the
contractual cash flows represent solely payments of capital and interest are measured at fair value
through other comprehensive income. Treasury bonds in banking book portfolio purchased before June
30, 2022 are classified and measured at fair value through other comprehensive income.
●
Financial assets that are held for trading, regardless of the cash flow characteristics are measured at fair
value through profit and loss. In this category the Group includes the sub-portfolio of treasury bonds,
placements made to banks and repurchase transaction held for trading.
1) Business model assessment
The business model assessment is one of the two steps to classify financial assets.
The Group’s business model reflects how it manages its financial assets in order to generate cash flows; the
business model determines whether cash flows will result from collecting contractual cash flows, selling
the financial assets, or both.
The business model is determined at a level that reflects how groups of financial assets are managed
together to achieve a particular business objective. Accordingly, this condition is not an instrument-by-
instrument approach to classification and should be determined on a higher level of aggregation.
The business model assessment is performed on the basis of scenarios that the Group reasonably expects to
occur, without taking ‘worst case’ or ‘stress case’ scenarios. The Group assesses the business model for
newly originated financial assets, considering information about how cash flows were realized in the past
(namely before the date of the origination of new assets) for that specific portfolio of assets, along with all
other relevant information. This means that there is no 'tainting' concept, but if there is a change in the way
that cash flows are realized then this will affect the classification of assets originated after the date of that
change.
In some circumstances, the Bank separates a portfolio of financial assets into sub-portfolios to reflect how
an entity manages them. Those portfolios are split and treated as separate portfolios, provided the assets
belonging to each sub-portfolio are separately defined.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
21
3. Summary of significant accounting policies (continued)
c) Financial instruments – classification and measurement (continued)
2) SPPI test
As a second step of its classification process the Group performs the assessment of the characteristics of
the contractual cash flows aiming to identify whether the contractual cash flows are “solely payments of
principal and interest on the principal amount outstanding” – SPPI test. The SPPI assessment is performed
at the initial recognition of the financial asset as well as subsequently when significant modifications occur.
The principal for the purpose of applying SPPI test is “the fair value of the asset at initial recognition” and
it may change over the life of the financial asset (e.g. if there are repayments of principal).
The most significant elements of interest are typically the consideration for the time value of money and
credit risk. Interest can also include consideration for other basic lending risks (for example, liquidity risk)
and costs (for example, administrative costs) associated with holding the financial asset for a particular
period of time. In addition, interest can include a profit margin that is consistent with a basic lending
arrangement.
To make the SPPI assessment, the Group applies judgements and considers relevant factors such as the
currency in which the financial asset is denominated and the period for which the interest rate is set.
3) Debt instruments at FVOCI
These instruments largely comprise of treasury bonds.
After initial recognition FVOCI financial assets are measured at fair value with gains or losses being
recognized as OCI until the investment is derecognized. The fair value of investments that are actively
traded in organized financial markets is determined by reference to quoted market bid prices at the close of
business on the statement of financial position date. Interest income and foreign exchange gains and losses
are recognised in profit and loss.
The ECLs for debt instruments measured at FVOCI do not reduce the carrying amount of these financial
assets in the statement of financial position, which remains at fair value. Instead, an amount equal to the
allowance that would arise if the assets were measured at amortised cost is recognised in OCI as an
accumulated impairment amount, with a corresponding charge to profit or loss. The accumulated loss
recognised in OCI is recycled to the profit and loss upon derecognition of the assets.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
22
3. Summary of significant accounting policies (continued)
c) Financial instruments – classification and measurement (continued)
4) Derivatives that are not designated accounting hedging instruments
The Group uses derivative financial instruments such as forward currency contracts, currency swaps,
currency options, swaps and cross currency swaps on interest rate, as products offered to its clients but also
to hedge its risks associated with interest rate, liquidity and exchange rate. Such derivative financial
instruments are initially recognized at fair value on the date on which a derivative contract is entered into
and are subsequently re-measured at fair value.
Derivatives are carried as assets when their fair value is positive and as liabilities when fair value is
negative. Any gains or losses arising from changes in fair value of derivatives that are not designated as
hedge accounting instruments are taken directly to profit or loss for the year.
The fair value of forward currency contracts is calculated by reference to current forward exchange rates
for contracts with similar maturity profiles. The fair value of interest swap contracts is determined by
reference to market values of similar instruments.
5) Derivatives that are designated accounting hedging instruments
As a policy choice, the Group has also elected to continue to apply the hedge accounting requirements in
accordance with IAS 39. The Group and Bank designates certain derivatives held for risk management as
hedging instruments in qualifying accounting hedging relationships. The Group and Bank formally
documents the relationship between the hedging instruments and hedged item, including the risk
management objective and strategy in undertaking the hedge, together with the method that will be used to
assess the effectiveness of the hedging relationship.
The Group and Bank makes an assessment, both at the inception of the hedge relationship as well as on an
ongoing basis, as to whether the hedging instruments are expected to be highly effective in offsetting the
changes in the fair value during the period for which the hedge is designated. The actual results of the hedge
as recommended by IAS 39 should be in the range of 80-125 percent, but the Group and Bank uses a more
prudent approach and the range considered is 88-114 percent.
The Group and Bank use fair value hedges. When a derivative is designated as the hedging instrument in a
hedge of the change in fair value of a recognized asset or liability or a firm commitment that could affect
profit or loss, changes in the fair value of the derivative are recognized immediately in profit and loss
together with changes in the fair value of the hedged item that are attributable to the hedged risk.
If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets criteria
for fair value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued
prospectively. Any adjustment up to that point to a hedged item for which the effective interest method is
used, is amortised to profit or loss as part of the recalculated effective interest rate of the item over its
remaining life.
6) Financial assets and financial liabilities held for trading
The Bank classifies financial assets or financial liabilities as held for trading when they have been purchased
or issued primarily for short-term profit making through trading activities or form part of a portfolio of
financial instruments that are managed together, for which there is evidence of a recent pattern of short-
term profit taking. Held-for-trading assets and liabilities are recorded and measured in the statement of
financial position at fair value.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
23
3. Summary of significant accounting policies (continued)
c) Financial instruments – classification and measurement (continued)
Changes in fair value are recognised in net trading income. Interest income or expense is recorded in net
trading income according to the terms of the contract, or when the right to payment has been established.
Included in this classification are debt securities, repurchase transactions and short positions acquired
principally for the purpose of selling or repurchasing in the near term.
7) Repurchase agreements
Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue
to be recognized in the statement of financial position as securities and are measured in accordance with
the applicable accounting policies. The liability for amounts received under these agreements from banking
book portfolio is included in customers’ or interbank deposits. The difference between sale and repurchase
price is treated as interest expense using the effective yield method. Assets acquired with a corresponding
commitment to resell at a specified future date (reverse repos) from the banking book portfolio are recorded
as loans and advances.
8) Borrowings
Borrowings are initially recognized at the fair value of the consideration received less directly attributable
transaction costs. Subsequently borrowings are stated at amortized cost using the effective interest rate
method. Any discount or premium is integral part of the effective interest rate.
9) Financial guarantees, letter of credits and loan commitments
In the ordinary course of business, the Group and Bank gives financial guarantees, consisting of letters of
credit, guarantees and acceptances and performance guarantees.
Financial guarantees are presented in ‘Other liabilities’ line with the amount of the premium received being
the instruments’ fair value. The financial guarantee are subsequently measured at the higher of the amount
initially recognised less the cumulative amortisation recognised in the income statement and an ECL.
Any increase in the liability relating to financial guarantees is taken to the income statement in ‘Credit loss
expense’. The premium received is recognized in the income statement in ‘Net fees and commission
income’ on a straight line basis over the life of the guarantee.
Undrawn loan commitments and letters of credits are commitments under which, over the duration of the
commitment, the Bank is required to provide a loan with pre-specified terms to the customer. Similar to
financial guarantee contracts, these contracts are in the scope of the ECL requirements.
The nominal contractual value of financial guarantees, letters of credit and undrawn loan commitments,
where the loan agreed to be provided is on market terms, are not recorded on in the statement of financial
position. The nominal values of these instruments together with the corresponding ECLs are disclosed in
Note 22 and in Note 44.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
24
3. Summary of significant accounting policies (continued)
d) Financial assets - derecognition
The Group derecognizes a portfolio of financial assets, a financial asset or a part of a financial asset (herein
after called „financial asset“) when and only when one of the following conditions is fulfilled:
●
The contractual rights to the cash flows expire;
●
It transfers the financial asset and the transfer qualifies for derecognition;
●
Voluntarily renounces its rights over the financial asset due to the asset being considered irrecoverable
or in order to grant a concession to the debtor;
●
Significant modification of a financial asset that generate the extinguishment of the existing financial
asset and recognition of a new financial asset.
Derecognition due to substantial modification of terms and conditions
In certain circumstances, the Group renegotiates or otherwise modifies the contractual cash flows of loans
to customers. When this happens, the Group assesses whether or not the new terms are substantially
different to the original terms. The Group does this by considering both quantitative and qualitative factors
that are substantially changing the size or the nature of lender’s risks associated with the pre-existing loan
contract.
If the new terms are substantially different, the Group derecognises the original financial assets and
recognises a “new” financial asset. The new financial asset is initially recognized at fair value and the
classification and subsequent measurement is reassessed considering the new business model and the
contractual cash flows characteristics. The date of renegotiation is consequently considered to be the date
of initial recognition for impairment calculation purposes. All financial assets that are impaired at the date
of initial recognition (first origination or re-origination due to significant changes) are classified as
purchased or originated credit impaired (POCI).
On initial recognition the difference between transaction price and fair value of new financial asset is
recognised in P&L for loans where the fair value is calculated based on observable inputs (loans not
impaired at the date of modification).
When assessing the new terms in order to establish if they are significantly modified, the Group considers
if the change is made in order to increase recoverability of the pre-existing loan. The renegotiation or
modification of the contractual cash flow of an existing financial asset can generate derecognition of the
financial asset and the recognition of a new financial asset if the respective changes to the financial asset
are significant. Changes made for the purpose of increasing the received cash flows and which are not
considered significant change of the contractual characteristics do not generate derecognition.
The following modifications are considered significant contractual changes:
Quantitative criteria:
●
interest rate margin modification for floating interest rate and interest rate modification for fixed interest
rate higher than 3% over a 12 month period; the threshold is subject to review depending on the market
conditions;
●
tenor prolongation or reduction for non-revolving financial assets for more than 24 months or over 50%
from initial (prior to modification) remaining tenor.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
25
3. Summary of significant accounting policies (continued)
d) Financial assets - derecognition (continued)
Qualitative criteria refer to contractual modifications that are substantially changing the size or the nature
of lender’s risks associated with the pre-existing loan contract and are applicable to all financial assets:
●
change of the denomination currency;
●
change of the type of interest (variable or fixed) for performing loans (commercial renegotiation);
●
contract changed obligor / counterparty;
●
consolidation of two or more loans to one loan (many to 1);
●
split of one loan to two or more loans (1 to many);
●
modification of an SPPI compliant contract by introducing a features that is non-SPPI or modification
of a non-SPPI contract by removing the features that are non-SPPI through commercial renegotiation;
●
change of a commercial product or use of the same product but from updated bank commercial offer
available at the change date for performing loans (commercial renegotiation);
●
renewal of a performing revolving loan (regardless of new tenor) if a substantive risk analysis is
performed.
Derecognition other than for substantial modification
A financial asset is derecognized where either:
●
The rights to receive cash flows from the assets have expired;
●
The Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay
them in full without material delay to a third party under a “pass-through” arrangement; or
●
The Group has transferred its rights to receive cash flows from the asset and either a) has transferred
substantially all the risks and rewards of the asset, or b) has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control of the asset.
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or
expires. Where an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially changed, such an exchange or
modification is treated as a de-recognition of the original liability and the recognition of a new liability, and
the difference in the respective carrying amounts are recognized in profit or loss.
Write-offs
A write-off is performed when the entire loan is deemed uncollectible (very high uncertainty regarding
recoverable amount and timeframe). Write-off is not conditioned by the closure of the legal procedures, nor
does it imply the forfeit of the bank’s claims to the receivables / financial asset. A write-off is performed
only where the chances of recoveries are remote.
The Bank performs permanent write-offs under certain situations, such as:
●
the financial assets are considered immaterial, thus do not justify the initiation of the recovery process;
●
the collaterals which cover the receivables have a recovery value deemed immaterial and no other
recovery sources could be identified;
●
exhaustion of all legal means;
●
end of the statute of limitation period for enforcement rights, etc.
Any recoveries of previously written-off loans and receivables are recognized as income.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
26
3. Summary of significant accounting policies (continued)
e) Financial assets reclassification
The Group does not reclassify its financial assets subsequent to their initial recognition, apart from the
exceptional circumstances in which the Bank acquires, disposes of, or terminates a business line. Financial
liabilities are never reclassified.
f)
Impairment model of financial assets
The Group assesses on a forward-looking basis the expected credit losses (“ECL”) for the following
categories of financial assets: loans and placed deposits measured at amortised cost, debt instruments
measured at fair value to other comprehensive income, loan commitments and financial guarantee contracts,
contract assets and trade receivables.
The group recognises a loss allowance for such losses at each reporting date. The measurement of ECL
reflects:
●
An unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes;
●
The time value of money;
●
Reasonable and supportable information that is available without undue cost or effort at the reporting
date about past events, current conditions and forecasts of future economic conditions.
The ECL calculation considers both the number of days past due recorded by the receivables and the credit
risk analysis performed for clients with granted loans.
For contract assets and trade receivables the Group applies the simplified approach for measuring the
expected credit losses and recognizes lifetime expected credit losses in accordance to the provisions of
IFRS 9 “Financial Instruments”. Based on an assessment of historical information the Bank recognizes
expected credit loss for contract assets and the trade receivables with more than 90 days past due for the
entire exposure amount.
Overview of the ECL principles
The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime
expected credit loss or LTECL), unless there has been no significant increase in credit risk since origination,
in which case, the allowance is based on the 12 months’ expected credit loss (12mECL). The ECL is
computed from the time of origination.
Consequently, financial assets subject to loss allowances can be classified in Stage 1, Stage 2, Stage 3 or
POCI, as described below:
●
Stage 1
Loss allowance shall be equal to 12mECL.
●
Stage 2
when a financial asset shown significant increase in credit risk since initial recognition, though
not impaired; Loss allowance shall be equal to LTECL.
●
Stage 3
financial assets classified as impaired; Loss allowance is represented by LTECL.
●
POCI
financial assets that are credit impaired on initial recognition. Loss allowance shall be equal to
LTECL. ECLs are only recognized or released to the extent that there is a subsequent change in the
expected credit losses.
The expected credit loss may be calculated either individually or collectively in accordance with IFRS 9
perspective. The Bank model for computing the expected credit losses is:
●
Individual or collective assessment for clients in Stage 3;
●
Collective assessment for clients in Stage 2 or Stage 1.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
27
3. Summary of significant accounting policies (continued)
f) Impairment model of financial assets (continued)
Staging criteria
The Bank has established criteria to perform the assessment of significant increase in credit risk since initial
recognition on a monthly basis, considering both relative and absolute thresholds.
For Non Retail portfolio (Corporate and Public Authorities), the staging criteria are:
Stage 3: criteria as provided by EBA default definition as presented below.
Stage 2: assessment of
Relative threshold :
Doubling of the lifetime Probability of default (“PD”) since origination and the absolute
increase exceeds a pre-defined quantitative threshold
Absolute thresholds:
Clients rated with the last three risk classes in term of risk (“sub-standard grade”, as
detailed in Note 44.1), Clients with expired ratings for more than three months, Clients not rated as of
reporting date, Healthy clients with restructured facilities in probation and DPD < 30, Clients with DPD >
30
Stage 1: include all clients not classified in Stage 2 or Stage 3 based on the above conditions
●
For Small Business, the staging criteria are:
Stage 3: criteria as provided by EBA default definition as presented below
Stage 2: assessment of
Relative threshold:
Doubling of the lifetime PD since origination and the absolute increase exceeds a pre-
defined quantitative threshold
Absolute thresholds:
Clients rated with the last three risk classes in term of risk (“sub-standard grade”, as
detailed in Note 44.1), Healthy clients with restructured facilities in probation and DPD < 30, Clients with
DPD > 30
Stage 1: include all clients not classified in Stage 2 or Stage 3 based on the above conditions
●
For Individuals and Professionals, the staging criteria are:
Stage 3: criteria as provided by EBA default definition as presented below
Stage 2: assessment of
Relative threshold:
Doubling of the lifetime PD since origination and the absolute increase exceeds a pre-
defined quantitative threshold
Absolute thresholds:
Clients rated with the last two risk classes in term of risk (“sub-standard grade”, as
detailed in Note 44.1), Healthy clients with restructured facilities in probation and DPD < 30, Clients with
DPD > 30
Stage 1: include all clients not classified in Stage 2 or Stage 3 based on the above conditions
In accordance with EBA default definition, the main considerations for the loan impairment assessment
include whether any payments of principal or interest are overdue by more than 90 days, whether a severe
alteration in the counterparty’s financial standing is observed, entailing a high probability that the debtor
will not be able to fully meet its credit obligations, whether concessions in the form of restructuring were
consented under the circumstances of financial hardship experienced by the debtor, whether legal
procedures were initiated or the debtor was transferred to specialized recovery structures (regardless of the
number of days past due).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
28
3. Summary of significant accounting policies (continued)
f) Impairment model of financial assets (continued)
ECL calculation techniques:
The key elements of ECL calculation are outlined below:
●
PD
Probability of Default
(TTC) marginal PD curve and Adjustment of the TTC curve to incorporate point in time and forward
looking information;
●
LGD
Loss Given Default
recoveries;
●
EAD Exposure at default estimation at each time step is based on internally modelled Credit
Conversion Factor (“CCF”).
●
Point in time and forward looking transformation for ECL parameters.
Forward-looking information
Expected losses are computed based on three macroeconomic scenarios: optimistic, base and stress
scenario. Consequently, expected credit losses are influenced both by changes in portfolio quality as well
as changes in macroeconomic projections. Macroeconomic models are sensitive to GDP, RON/EUR
exchange rate and unemployment rate. Final ECL is derived using the weighted average of the three
scenarios (based on their probabilities of occurrence).
The inputs and models used for calculating ECL may not always capture all characteristics of the market at
the date of the financial statements. To reflect this, the Bank assesses the need/opportunity for additional
amounts of provisions in the form of overlays, in order to address:
●
Sector of activity specific risks (adjustment of ECL on sectors that have a different default behaviour
from the whole calibration segment)
●
Visible macroeconomic threat impossible to be captured by the models (typically, when the predicted
stress did not occur in the observed past serving as a base for models).
Impairment/default principles
Impairment and recoverability are assessed, measured and recognized individually for loans and receivables
that are individually significant, and on a portfolio basis for impaired loans and receivables that are not
individually significant. Loans and receivables for which an objective evidence of impairment was not
identified, regardless the loans are individually significant or not, are included in a portfolio for collective
impairment assessment. The carrying amount of the asset is reduced to its estimated recoverable amount
through the use of an allowance account. The loss amount is recognised into profit and loss. If the amount
of the impairment subsequently decreases due to an event occurring after the impairment, the release of the
allowance is credited to the income statement.
The Group implemented the definition of the default status according to the criteria set by EBA. All the PD
curves used as input elements in the ECL calculation were calibrated by applying the EBA definition
retroactively, in order to ensure the consistency regarding the entry into default status at the time of
calibration.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
29
3. Summary of significant accounting policies (continued)
f) Impairment model of financial assets (continued)
Collateral valuation
To mitigate its credit risks on financial assets, the Bank seeks to use collateral, where possible. The
collateral comes in various forms, such as cash, letters of guarantees, real estate, etc.
Real estate collaterals are regularly valuated. Their market value is estimated by certified evaluators that
can be either external or internal valuators. Depending on the collateral type, revaluation is performed:
●
Yearly, for commercial / industrial / agricultural real-estate, plots of land
●
At least once every 3 years, for residential real estate or with higher frequency if the real estate market
displays a significant negative evolution.
The value of collateral affects the calculation of ECLs through LGD parameter, which is an estimate of the
loss arising in the case where a default occurs at a given time, taking into account all the cash flows collected
from the client, as well as the recovery value of collaterals (net of any cost and additional losses), by
incorporating the effect of time value of money. The recovery value of a collateral is determined by applying
discount coefficients to its market value when computing the provisions on individual assessment basis.
g) Foreign currency translation
Transactions in foreign currencies are initially recorded using the functional currency rate ruling on the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the
functional currency rate of exchange ruling at the statement of financial position date. All differences are
taken to the profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates as of the dates of the initial transactions. Non-monetary items measured at fair value in
a foreign currency are translated using the exchange rates at the date when the fair value was determined.
The exchange rates of the currencies with the most significant impact on the Group and Bank’s consolidated
and separate financial statements as of December 31, 2023 and 2022 were as follows:
31-Dec-23
31-Dec-22
RON/ EUR
4.9746
4.9474
RON/ USD
4.4958
4.6346
h) Cash and cash equivalents
For the purpose of the cash flow statements, cash and cash equivalents comprise cash in hand, current
accounts and short-term placements at other banks, excluding amounts in transit and loans to banks with
more than 90 days maturity from the date of acquisition. The Group and Bank did not include in cash and
cash equivalents the amounts representing minimum compulsory reserve held at National Bank of Romania.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
30
3. Summary of significant accounting policies (continued)
h)
Cash and cash equivalents (continued)
The Bank reviewed the categories of financial instruments that have been included in cash and cash
equivalents and excluded bonds and deposits with more than 90 days maturity from the date of acquisition.
Consequently, the Bank has changed the comparative period (December 31, 2022) amounts in the Statement
of cash flows considering the impact below:
Bank
December 31, 2022
Effect of
restatement
December 31, 2022
Statement of cash flows' lines impacted
as previously
reported
as restated
Deposits with banks
-148,610
-322,671
-471,281
Total changes in operating assets and liabilities
2,296,059
-322,671
1,973,388
Cash flow from operating activities
4,029,610
-322,671
3,706,939
Net movements in cash and cash equivalents
3,171,884
-322,671
2,849,213
Cash and cash equivalents at beginning of the
period
6,301,445
-151,047
6,150,398
Cash and cash equivalents at the end of the period
9,473,329
-473,718
8,999,611
Group
December 31, 2022
Effect of
restatement
December 31, 2022
Statement of cash flows' lines impacted
as previously
reported
as restated
Deposits with banks
-147,971
-322,671
-470,642
Total changes in operating assets and liabilities
2,032,370
-322,671
1,709,699
Cash flow from operating activities
3,809,784
-322,671
3,487,113
Net movements in cash and cash equivalents
3,171,921
-322,671
2,849,250
Cash and cash equivalents at beginning of the
period
6,301,478
-151,047
6,150,431
Cash and cash equivalents at the end of the period
9,473,399
-473,718
8,999,681
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
31
3. Summary of significant accounting policies (continued)
i) Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset.
A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration.
Group as a lessor
Finance leases are those which transfer to the lessee substantially all the risks and benefits incidental to
ownership of the leased item and are recognized as assets at the inception of the lease at the fair value of
the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are
allocated both to the principal and the interest income on a pattern reflecting a constant periodic rate of
return on the lessor's net investment outstanding in respect of the finance lease.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets. For short-term leases or leases for
which the underlying asset is of low value, the related lease payments are recognized as an expense on a
straight-line basis over the lease term (please see Note 38).
Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e. the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at
or before the commencement date. Right-of-use assets are depreciated on a straight-line basis over the lease
term. The right-of-use assets are presented within Note 13.
Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments can include fixed payments, variable
lease payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments can also include payments of penalties for terminating the lease.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
32
3. Summary of significant accounting policies (continued)
j) Investment in associates and joint ventures
An associate is an enterprise in which the Group and Bank exercises significant influence and is neither a
subsidiary nor a joint venture.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. The Group and Bank recognizes its interest in a joint venture as
an investment and shall account for that investment using the equity method in accordance with IAS 28
Investments in Associates.
Associates and joint venture are accounted using the equity method for consolidation purposes and cost
method for separate financial statements.
Under the equity method, an investment in an associate and joint venture is carried in the statement of
financial position at cost plus post-acquisition changes in the Group and Bank’s share of net assets of the
associate or joint venture. Goodwill relating to an associate or joint venture is included in the carrying
amount of the investment and is not amortized. The Group and Bank does an assessment of any additional
impairment loss with respect to the net investment in associate or joint venture.
The income statement reflects the share of the results of operations of associates and joint ventures. Where
there has been a change recognized directly in the equity of the associate or joint venture, the Group
recognizes its share of any changes and discloses this, when applicable, in the statement of changes in
equity.
The reporting dates of associates and joint venture and the Group are identical and the associates’ or joint
ventures’ major accounting policies conform to those used by the Group for like transactions and similar
events in similar circumstances.
k) Tangible assets
The cost of tangible asset is recognized as an asset if, and only if: (a) it is probable that future economic
benefits associated with the item will flow to the Group; and (b) the cost of the item can be measured
reliably.
Buildings and other tangible assets are stated at cost less accumulated depreciation and any impairment
loss.
In accordance with IAS 29 “Reporting in Hyperinflationary Economies”, tangible assets have been restated,
as appropriate, by applying the change in the consumer price index from the date of acquisition through
December 31, 2003.
Depreciation is computed on a straight-line basis over the estimated useful life of the asset, as stated below:
Asset type
Years
Buildings and special constructions
10-40
Computers and equipment
3-5
Furniture and other equipment
15
Vehicles
5
Land is not depreciated. Construction-in-progress is not depreciated until used. Expenses for repairs and
maintenance are charged to operating expenses as incurred. Subsequent expenditure on property and
equipment is recognized as an asset under the same general recognition principle used at initial recognitio
n.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
33
3. Summary of significant accounting policies (continued)
k) Tangible assets (continued)
The carrying amount of tangible assets is reviewed for impairment at each statement of financial position
date or whenever events or changes in circumstances indicate the carrying amount may not be recoverable.
An asset’s recoverable amount is the higher of an asset’s or CGU (Cost Generation Unit)’s fair value less
costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from other assets or groups
of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
Tangible assets are derecognized upon disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the
year the asset is derecognized.
l) Investment properties
Assets are classified as investment property
if the property (land or a building - or part of a building - or
both) is held (by the Bank or Group as owner) to earn rentals or for capital appreciation or both, rather than
for: use in the production or for administrative purposes; or sale in the ordinary course of business.
Investment properties are measured initially at cost including transaction costs. Subsequent to initial
recognition, investment properties are carried at cost less any accumulated depreciation and any
accumulated impairment losses.
Investment properties are derecognized when either they have been disposed-off or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its disposal.
Any gains or losses on the retirement or disposal of an investment property are recognized in the income
statement in the year of retirement or disposal.
Transfers are made to investment property when and only when, there is a change in use, evidenced by
ending of owner-occupation, commencement of an operating lease to another party, or ending of
construction or development. Transfers are made from investment property when and only when, there is a
change in use evidenced by commencement of owner-occupation or commencement of development with
a view to sale. The depreciation of buildings included in investment properties is computed using the linear
method over the useful lives as presented in Note 3.k).
m) Assets held for sale
Non-current assets for which the carrying amount is estimated to be recovered principally through a sale
transaction rather than continuing use are classified as held for sale.
Assets held for sale represented by property, plant and equipment are initially and subsequently measured
at the lower of the carrying amount and the fair value at the date of the measurement. For any decrease of
the fair value below the carrying amount, impairment is recognised into profit and loss accounts. The
increase of the fair value of a held for sale asset is accounted for as an impairment release. Fair value
increase is recognised up to the level of the initial carrying amount of the asset.
On the period an asset is classified as held for sale no depreciation charged is recognised. An asset that
ceases to be classified as held for sale is measured at the lower of the carrying amount before the asset was
classified as held for sale adjusted by the depreciation that would have been recognised had the asset was
not classified as held for sale and its recoverable amount.
The Bank and Group presents also in the category Assets held for sale, in the Statement of the financial
position, the financial assets at amortised cost generated by the sale of the loan portfolio of its subsidiary
BRD Finance IFN SA.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
34
3. Summary of significant accounting policies (continued)
n) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the
business combination over the Group and Bank's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses.
Goodwill is reviewed for impairment at each reporting date or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the
recoverable amount of the cash-generating unit, to which the goodwill relates. Where the recoverable
amount of cash-generating unit is less than the carrying amount, an impairment loss is recognized.
o) Intangible assets
Intangible assets are measured initially at cost. Following initial recognition intangible assets are carried at
cost less any accumulated amortization and any accumulated impairment losses. All intangible assets of the
Group and Bank carried as of December 31, 2023 and 2022 have finite useful lives and are amortized on a
straight-line basis over the estimated useful life of up to 5 years. The amortization period and the
amortization method are reviewed at least at each financial year end.
At each statement of financial position date or whenever events or changes in circumstances indicate the
carrying value may not be recoverable, intangibles are reviewed for impairment. Where the carrying amount
of an asset is greater than the estimated recoverable amount, it is written down to its recoverable amount
by recognising impairment. An intangible asset is derecognized upon disposal (i.e., at the date the recipient
obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or
loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in the statement of profit or loss.
p) Employee benefits
Short-term employee benefits:
Short-term employee benefits include wages, salaries and social security contributions. Short-term
employee benefits are recognized as expense when services are rendered.
Social Security Contributions:
The Group and its subsidiaries as well as its employees are legally obliged to make contributions described
in the financial statements as social security contributions to the National Pension Fund, managed by the
Romanian State Social Security (a defined contribution plan financed on a pay-as-you-go basis). The Group
and Bank has no legal or constructive obligation to pay future benefits. Its only obligation is to pay the
contributions as they fall due. If the members of the Romanian State Social Security plan cease to be
employed by either the Group or its subsidiary, there will be no obligation on the Group to pay the benefits
earned by these employees in previous years. The Group and Bank’s contributions are included in salaries
and related expenses.
Post-employment benefits:
The Group and Bank has a contractual obligation to pay to retiring employees a benefit calculated
considering the salary at the date of retirement and the number of years served by the individual. The cost
of providing benefits under defined benefit plans is estimated annually using the projected unit credit
actuarial valuation method and is recognized to the income statement on an accruals basis. Differences
arising from changes in calculation assumptions (early retirements, discount rates, etc.) or differences
between actuarial assumptions and real performance are recognized as actuarial gains and losses.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
35
3. Summary of significant accounting policies (continued)
p) Employee benefits (continued)
Actuarial gains and losses, excluding amounts expensed as net interest on the net defined benefit liability
are components used to re-measure the net defined benefit liability. These components are immediately and
fully recognised as unrealised gains and losses and presented under Reserves from defined pension plan.
These items are subsequently never reclassified in income statement but transferred to retain earnings.
Where a new or amended plan comes into force, the past service cost is immediately recognized in profit
or loss.
An annual charge is recorded under Personnel expenses for defined benefit plans, consisting of:
-
the additional entitlements vested by each employee (current service cost);
-
past service cost resulting from a plan amendment or a curtailment;
-
the financial expense resulting from the discount rate (net interest on the net defined benefit
liability);
-
the settlement of plans.
Share–based payment transactions:
Employees (including senior executives) of the Group and Bank receive remuneration in the form of SG
share–based payment transactions, whereby employees render services as consideration for equity
instruments (‘equity–settled transactions’) and Group Société Générale attains certain ratios. The cost of
equity–settled transactions is recognized, together with a corresponding increase in equity, over the period
in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (‘the vesting date’).
Additionally, according to the Bank’s Remuneration Policy, the Executive Officers are entitled to a variable
remuneration, which is granted based on quantitative and qualitative criteria and represents a cash-settled
transaction, having two components cash and share equivalents settled in cash (BRDTP).
BRDTP or share equivalents is a component of the variable remuneration expressed in units, whose value
is determined for a relevant reference period preceding the vesting date, based on the price of the Bank
shares, listed on the Bucharest Stock Exchange.
In accordance with European and local legislation in force and the Bank’s risk appetite targets whilst
promoting alignment with shareholders’ interests, vesting of at least 60% of the variable remuneration is
deferred over five years, on a pro rata basis. This concerns both cash payments and share equivalents
(BRDTP) granted subject to the achievement of long-term performance conditions in terms of Bank
profitability. Another vesting condition refers to as presence of the Beneficiary (i.e. the mandate contract
is not terminated). At least 50% from any variable remuneration must be composed of share equivalents.
Other benefits
The Bank also grants to all employees having a seniority in the Bank higher than 3 years an annual
contribution to a private pension fund (Pillar III) in total amount of EUR 200 /year/employee.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
36
3. Summary of significant accounting policies (continued)
q) Taxation
The current tax is the amount of income taxes payable in respect of the taxable profit, computed in
accordance with Romanian tax rules and accrued for in the period to which it relates.
Deferred income tax liabilities are recognized for all taxable temporary differences between the tax bases
of assets and liabilities and their carrying amounts at the statement of financial position date for financial
reporting purposes, which will result in taxable amounts in future periods.
Deferred income tax assets are recognized for all deductible temporary differences and carry-forward of
unutilized tax losses to the extent that it is probable that taxable profit will be available, against which the
deductible temporary differences and carry forward of unused tax losses can be utilized.
Deferred income tax assets and liabilities are measured at the amount that is expected to be paid to or
recovered from the tax authorities after considering the tax rates and legislation that have been enacted or
substantially enacted until the statement of financial position date. Current and deferred tax assets and
liabilities are offset when they arise from the same tax reporting entity and relate to the same tax authority
and when the legal right to offset exists. Income tax relating to items recognized directly in equity is
recognized in equity and not in the income statement.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
37
3. Summary of significant accounting policies (continued)
r) Provisions
Provisions are recognized when the Group and Bank has a present obligation (legal or constructive),
because of a past event, it is probable that an outflow of embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the
time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due
to the passage of time is recognized as borrowing cost.
s) Contingencies
Contingent liabilities are not recognized in the financial statements, but they are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not
recognized in the financial statements but disclosed when an inflow of economic benefits is probable.
t) Earnings per share
Basic earnings per share are calculated by dividing net profit/ (loss) for the reporting period attributable to
ordinary equity holders of the parent by the weighted average number of shares outstanding during the year.
As of December 31, 2023 and 2022 there were no dilutive equity instruments issued by the Group and
Bank.
u) Dividends on ordinary shares
Dividends on ordinary shares are recognized as a liability and deducted from equity when they are approved
by the Group and Bank’s shareholders.
v) Related parties
Parties are considered related with the Group and Bank when one party, either through ownership,
contractual rights, family relationship or otherwise, has the ability to directly or indirectly control or
significantly influence the other party in making financial and operating decisions. Related party transaction
represents a transfer of resources or obligations between related parties, regardless of whether a price is
charged.
w) Subsequent events
Post - balance sheet events that provide additional information about the Group and Bank’s position at the
statement of financial position (adjusting events), or those that indicate that the going concern assumption
is not appropriate are reflected in the financial statements. Post-balance sheet events that are not adjusting
events are disclosed in the notes when significant.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
38
4. Segment information
The segments used for management purposes are based on customer type and size, products and services
offered as follows:
In Retail (Individuals & Small Business) category the following customer’s segments are identified:
●
Individuals – the Bank provides individual customers with a range of banking products such as: saving
and deposits taking, consumer and housing loans, overdrafts, credit card facilities, funds transfer and
payment facilities, etc.
●
Small business – business entities with annual turnover lower than EUR 1 million and having an
aggregated exposure at group level less than EUR 0.3 million. Standardised range of banking products
is offered to small companies and professional: saving and deposits taking, loans and other credit
facilities, etc.
Retail customers include clients with similar characteristics in terms of financing needs, complexity of the
activity performed and size of business for which a range of banking products and services with medium
to low complexity is provided.
In Non –Retail category the following customer’s segments are identified:
●
Small and medium enterprises (companies with annual turnover between EUR 1 million and EUR 50
million and the aggregated exposure at group level higher than EUR 0.3 million);
●
Large corporate (corporate banking and companies with annual turnover higher than 50 million EUR,
municipalities, public sector and other financial institutions).
The Bank provides these customers with a range of banking products and services, including saving and
deposits taking, loans and other credit facilities, transfers and payment services, provides cash-
management, investment advices, securities business, project and structured finance transaction, syndicated
loans and asset backed transactions.
The Corporate Center includes: treasury activities, ALM and other categories unallocated to Retail and
Non-Retail business lines.
The Executive Committee monitors the activity of each segment separately for the purpose of making
decisions about resource allocation and performance assessment.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
39
4. Segment information (continued)
Group
December 31, 2023
December 31, 2022
Total
Retail
Non retail
Corporate
Center
Total
Retail
Non retail
Corporate
Center
Total assets
83,848,961
25,532,562
16,982,449
41,333,950
73,841,767
23,896,003
13,799,733
36,146,031
Loans and advances to customers, net &
Finance lease receivables
42,305,125
25,322,676
16,982,449
-
37,695,736
23,896,003
13,799,733
-
Other assets
41,543,836
209,886
-
41,333,950
36,146,031
-
-
36,146,031
Total liabilities
83,848,961
40,766,424
21,639,185
21,443,352
73,841,767
37,096,720
19,564,121
17,180,926
Due to customers
62,405,609
40,766,424
21,639,185
-
56,660,841
37,096,720
19,564,121
-
Other liabilities
21,443,352
-
-
21,443,352
17,180,926
-
-
17,180,926
The category “Other assets” includes the loan portfolio of BRD Finance IFN SA which is made of retail consumer unsecured loans and that meets the criteria
in IFRS 5 “Non-current assets held for sale and discontinued operations”, for classification as non-current asset held for sale.
Bank
December 31, 2023
December 31, 2022
Total
Retail
Non retail
Corporate
Center
Total
Retail
Non retail
Corporate
Center
Total assets
81,381,350
24,534,157
15,667,533
41,179,660
71,522,977
22,780,047
12,762,232
35,980,698
Loans and advances to customers, net
40,201,690
24,534,157
15,667,533
-
35,542,279
22,780,047
12,762,232
-
Other assets
41,179,660
-
-
41,179,660
35,980,698
-
-
35,980,698
Total liabilities
81,381,350
40,766,424
21,875,414
18,739,512
71,522,977
37,096,720
19,819,020
14,607,237
Due to customers
62,641,838
40,766,424
21,875,414
-
56,915,740
37,096,720
19,819,020
-
Other liabilities
18,739,512
-
-
18,739,512
14,607,237
-
-
14,607,237
The Bank performed reclassifications in order to enhance presentation and corresponding comparatives have been re-classified accordingly.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
40
4. Segment information (continued)
Group
2023
2022
Total
Retail
Non retail
Corporate
Center
Total
Retail
Non retail
Corporate
Center
Net interest income
2,725,154
1,634,690
792,852
297,612
2,370,434
1,578,154
654,382
137,898
Fees and commissions, net
750,243
485,241
276,704
(11,702)
754,329
517,472
249,406
(12,550)
Total non-interest income
358,826
115,397
103,775
139,655
334,460
122,488
98,202
113,769
Operating income
3,834,223
2,235,328
1,173,330
425,565
3,459,223
2,218,115
1,001,990
239,118
Total operating expenses
(1,895,145)
(1,356,568)
(499,994)
(38,583)
(1,744,602)
(1,301,791)
(443,145)
334
Cost of risk
57,378
(78,935)
142,474
(6,161)
(95,106)
(132,974)
38,471
(603)
Profit before income tax
1,996,456
799,825
815,810
380,821
1,619,515
783,350
597,317
238,848
Total income tax
(340,627)
(136,476)
(139,203)
(64,948)
(282,427)
(136,607)
(104,165)
(41,654)
Profit for the period
1,655,829
663,349
676,607
315,873
1,337,088
646,742
493,151
197,194
Cost Income Ratio
49.4%
60.7%
42.6%
50.4%
58.7%
44.2%
The Bank performed reclassifications in order to enhance presentation and corresponding comparatives have been re-classified accordingly.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
41
4. Segment information (continued)
Bank
2023
2022
Total
Retail
Non retail
Corporate
Center
Total
Retail
Non retail
Corporate
Center
Net interest income
2,591,857
1,571,996
711,773
308,088
2,239,198
1,504,920
588,884
145,394
Fees and commissions, net
718,863
464,115
271,274
(16,526)
719,194
490,418
244,023
(15,247)
Total non-interest income
411,789
112,048
100,109
199,632
330,471
122,163
92,835
115,473
Operating income
3,722,508
2,148,158
1,083,156
491,194
3,288,863
2,117,503
925,741
245,619
Total operating expenses
(1,814,798)
(1,316,759)
(459,244)
(38,795)
(1,640,885)
(1,229,137)
(411,979)
231
Cost of risk
47,924
(91,791)
145,875
(6,160)
(92,699)
(140,513)
48,403
(588)
Profit before income tax
1,955,635
739,608
769,787
446,239
1,555,279
747,853
562,165
245,262
Total income tax
(321,455)
(121,572)
(126,533)
(73,350)
(269,341)
(129,512)
(97,355)
(42,474)
Profit for the period
1,634,180
618,036
643,254
372,889
1,285,938
618,339
464,811
202,789
Cost Income Ratio
48.8%
61.3%
42.4%
49.9%
58.0%
44.5%
The Bank performed reclassifications in order to enhance presentation and corresponding comparatives have been re-classified accordingly.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
42
5. Cash and due from Central Bank
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Cash in vaults
1,983,870
1,898,120
1,983,798
1,898,051
Cash in ATM
538,308
633,229
538,308
633,229
Current accounts with Central Bank
9,256,037
5,093,654
9,256,037
5,093,654
Total
11,778,215
7,625,002
11,778,143
7,624,933
6. Due from banks
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Deposits at Romanian banks
4,122
22,001
4,122
22,001
Deposits at foreign banks
313,679
622,972
298,314
606,997
Current accounts at Romanian banks
119,779
26,622
119,779
26,621
Current accounts at foreign banks
560,110
625,417
560,110
625,417
Reverse repo
4,650,402
5,450,233
4,650,402
5,450,233
Bonds
481,248
473,718
481,248
473,718
Total
6,129,340
7,220,963
6,113,975
7,204,987
The Due from banks portfolio is classified as Stage 1. The Group and Bank did not register any impairment
allowance for Due from banks as at December 31, 2023 (December 31, 2022: 7).
The Bank performed reclassifications in order to enhance presentation and corresponding comparatives
have been re-classified accordingly.
7. Derivatives and other financial instruments held for trading
Group
December 31, 2023
Assets
Liabilities
Notional (total)
Interest rate swaps
27,661
253,207
4,912,352
Currency swaps
12,587
35,016
3,755,955
Forward foreign exchange contracts
3,177
3,537
1,030,494
Options
43,858
44,011
3,857,823
Total derivative financial instruments
87,283
335,771
13,556,624
December 31, 2023
Assets
Liabilities
Treasury notes
1,219,076
522,637
Trading loans/deposits
-
344,613
Reverse repo/Repo
829,350
69,429
Total financial assets and liabilities held for trading
2,048,426
936,679
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
43
7. Derivatives and other financial instruments held for trading (continued)
Group
December 31, 2022
Assets
Liabilities
Notional (total)
Interest rate swaps
33,419
341,983
3,535,543
Currency swaps
47,067
32,726
4,105,813
Forward foreign exchange contracts
34,004
62,621
2,303,653
Options
65,609
65,645
3,053,774
Total derivative financial instruments
180,099
502,975
12,998,783
December 31, 2022
Assets
Liabilities
Treasury notes
426,524
294,199
Trading loans/deposits
984,869
616,757
Reverse repo/Repo
751,885
29,615
Total financial assets and liabilities held for trading
2,163,278
940,571
Bank
December 31, 2023
Assets
Liabilities
Notional (total)
Interest rate swaps
27,661
253,207
4,912,352
Currency swaps
12,587
35,016
3,755,955
Forward foreign exchange contracts
3,177
3,537
1,030,494
Options
43,858
44,011
3,857,823
Total derivative financial instruments
87,283
335,771
13,556,624
December 31, 2023
Assets
Liabilities
Treasury notes
1,194,028
522,637
Trading loans/deposits
-
344,613
Reverse repo/Repo
829,350
69,429
Total financial assets and liabilities held for trading
2,023,378
936,679
Bank
December 31, 2022
Assets
Liabilities
Notional (total)
Interest rate swaps
33,419
341,983
3,535,543
Currency swaps
47,067
32,726
4,105,813
Forward foreign exchange contracts
34,004
62,621
2,303,653
Options
65,609
65,645
3,053,774
Total derivative financial instruments
180,099
502,975
12,998,783
December 31, 2022
Assets
Liabilities
Treasury notes
420,458
294,199
Trading loans/deposits
984,869
616,757
Reverse repo/Repo
751,885
29,615
Total financial assets and liabilities held for trading
2,157,212
940,571
The Bank performed reclassifications in order to enhance presentation and corresponding comparatives
have been re-classified accordingly.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
44
7. Derivatives and other financial instruments held for trading (continued)
The Group continue to apply hedge accounting (fair value hedge) as of December 31, 2023 and has five
hedging relationships (4 hedging relationships as at December 31, 2022).
●
On June 30, 2018, the Bank initiated two macro fair value hedges one in EUR and one in USD of
interest rate risk associated with the current accounts, using several interest rate swaps (pay variable,
receive fixed). The change in the fair value of the macro fair value hedge swaps offsets the change in
the fair value of the hedged portion of the current accounts. The hedged items are represented by the
portion of the current accounts portfolio equal to the swaps nominal values of:
-
90 million EUR yearly with a fixed interest rate of 0.42%, the remaining period of 4.5 years.
-
20 million EUR yearly with a fixed interest rate of 0.171%, the remaining period of 1.5 years.
-
20 million USD yearly with a fixed interest rate of 2.813%, the remaining period of 4.5 years.
●
In October 30, 2020 the Bank initiated a macro fair value hedge of interest rate risk associated with the
current accounts, using several interest rate swaps (pay variable, receive fixed). The change in the fair
value of the macro fair value hedge swaps offsets the change in the fair value of the hedged portion of
the current accounts. The hedged item is represented by the portion of the current accounts portfolio
equal to the swaps nominal of 245 million EUR. The swap has a fixed interest rate of -0.403% and a
remaining period of 6.84 years.
●
On September 30, 2021 the Bank initiated a macro fair value hedge of interest rate risk associated with
the current accounts, using several interest rate swaps (pay variable, receive fixed). The change in the
fair value of the macro fair value hedge swaps offsets the change in the fair value of the hedged portion
of the current accounts. The hedged item is represented by the portion of the current accounts portfolio
equal to the swaps nominal of 90 million EUR. The swap has a fixed interest rate of -0.337% and a
remaining period of 2.75 years.
●
On October 31, 2023 the Bank initiated two micro fair value hedges in EUR of interest rate risk
associated with the purchased fixed rate bonds issued by French Republic in EUR, using an interest
rate swap (pay fixed, receive variable). The purpose of the hedge is to protect the Bank against change
in benchmark interest rate. The benchmark interest rate considered for EUR by the Bank is EURIBOR
3M. The hedged items are represented by bonds issued by French Republic which equal to the swap
nominal values of:
-
188 million EUR yearly with a fixed interest rate of 3.4375% which due to inefficiency reasons
was closed in December 2023;
-
125.5 million EUR yearly with a fixed interest rate of 3.162%, the remaining period of 4.91 years.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
45
7. Derivatives and other financial instruments held for trading (continued)
All hedging relationships have quarterly settlement periods for both fixed and variable legs. The macro
hedging relationships were effective throughout the reporting period.
Main source of hedge ineffectiveness that might be expected to affect the hedging relationships is the
amortization model of current accounts. However, the amortization of the hedged item is based on a
behavioral ALM model that is reviewed/back-tested on a yearly basis. In order to avoid inefficiency
generated by the underestimated amortization of the current accounts, maximum 70% of the current
accounts portfolio per each time band is designated as hedged item.
The hedging relationship were designated on the date of the IRS origination. At that date, the theoretical
derivative was built as to match the interest rate behavior of the current accounts, the hedged item (i.e. a
spread was added to the variable leg so that the fair value of the theoretical swap on the designation date to
be zero). Consequently, no other major sources of ineffectiveness were identified.
As at December 31, 2023, the accumulated amount of fair value hedge adjustments on the current accounts
hedged item are included in the carrying amount and presented in due to customer line in the statement of
financial position and amounts to -183,496. The change in value of the hedged item during the period is
explained by the cumulated effect of a loss from revaluation in amount of 117,608 and of the exchange rate
evolution effect in amount of 1,099.
The fair value of hedging instrument for Group and Bank was the following:
December 31, 2023
Assets
Liabilities
Notional (total)
Interest rate swaps
-
213,462
2,927,925
December 31, 2022
Assets
Liabilities
Notional (total)
Interest rate swaps
-
305,027
2,949,161
Forwards
Forward contracts are contractual agreements to buy or sell a specified financial instrument at a specific
price and date in the future. Forwards are customised contracts transacted in the over-the-counter market.
Swaps
Swaps are contractual agreements between two parties to exchange streams of payments over time based
on specified notional amounts, in relation to movements in a specified underlying index such as an interest
rate, foreign currency rate or equity index.
Interest rate swaps relate to contracts concluded by the Bank with other financial institutions in which the
Bank either receives or pays a floating rate of interest in return for paying or receiving, respectively, a fixed
rate of interest. The payment flows are usually netted against each other, with the difference being paid by
one party to the other. In a currency swap, the Bank pays a specified amount in one currency and receives
a specified amount in another currency. Currency swaps are mostly gross–settled.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
46
7. Derivatives and other financial instruments held for trading (continued)
Options
Options are contractual agreements that convey the right, but not the obligation, for the purchaser either to
buy or sell a specific amount of a financial instrument at a fixed price, either at a fixed future date or at any
time within a specified period. The Bank purchases and sells options in the over-the-counter markets.
Options purchased by the Bank provide the Bank with the opportunity to purchase (call options) or sell (put
options) the underlying asset at an agreed-upon value either on or before the expiration of the option.
The Bank is exposed to credit risk on purchased options only to the extent of their carrying amount, which
is their fair value. Options written by the Bank provide the purchaser the opportunity to purchase from or
sell to the Bank the underlying asset at an agreed-upon value either on or before the expiration of the option.
The options are kept in order to neutralize the customer deals.
Trading treasury notes are treasury discount notes and coupon bonds held for trading purposes. All the
treasury notes in Bank’s portfolio are issued by the Romanian Government in RON, EUR and USD.
Trading loans/deposits (including reverse repo/repo)
interbank flow and the associated risk management, those resulting from Bank obligations as primary dealer
and from Bank position al liquidity provider.
8. Financial assets at fair value through profit or loss
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Equity investments
11,376
8,133
11,376
8,132
Other securities
-
6,130
-
-
Total
11,376
14,262
11,376
8,132
Equity investments
Other equity investments represent shares in Romanian Commodities Exchange (Bursa de Valori
Bucuresti), Romanian Credit Guarantee Fund for Private Investors (Fondul Roman de Garantare a
Creditelor pentru Intreprinzatorii Privati SA), National Society for Transfer of Funds and Settlements-
TransFonD (Societatea Nationala de Transfer de Fonduri si Decontari), SWIFT, Shareholders’ Register
for the National Securities Commission (Depozitarul Central S.A.), Bucharest Stock Exchange (Bursa
Romana de Marfuri SA).
Other securities
As at December 31, 2023 the Group and Bank do not own any fund units.
As at December 31, 2022 the Group participation in fund units was the following:
December 31, 2023
Unit value RON
No of units
Market value
BRD Oportunitati clasa A
102
18,000
1,841
BRD Oportunitati clasa E
126
2,000
253
BRD Orizont 2035 clasa A
99
18,000
1,779
BRD Orizont 2035 clasa E
122
2,000
244
BRD Orizont 2045 clasa A
98
18,000
1,770
BRD Orizont 2045 clasa E
121
2,000
243
Total
6,130
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
47
9. Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include treasury notes, respectively
treasury discount notes and coupon bonds issued by:
Group
Ministry of Public Finance
French State
Belgian State
Total market value
ECL impairment allowance
Total
These financial assets at fair value through other comprehensive income are rated as very good according
to internal rating. As at December 31, 2023, they are classified as Stage 1 and ECL impairment allowance
amounts to 2,459 (December 31, 2022: 2,558).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
48
10. Financial assets at amortised cost
10.1. Loans and advances to customers
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Loans, gross
42,307,745
38,053,311
41,881,907
37,242,399
Loans impairment
(1,694,354)
(1,764,969)
(1,680,217)
(1,700,120)
Total
40,613,391
36,288,342
40,201,690
35,542,279
The structure of loans is the following:
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Working capital loans
10,208,630
7,158,039
10,208,630
7,158,039
Loans for equipment
4,446,600
3,650,998
4,016,253
3,275,108
Trade activities financing
1,181,285
1,385,051
1,181,285
1,385,051
Acquisition of real estate, including
mortgage for individuals
15,063,829
14,476,288
15,063,829
14,476,288
Consumer loans
9,333,096
9,014,881
9,337,605
8,579,859
Other
2,074,307
2,368,053
2,074,307
2,368,053
Total
42,307,745
38,053,311
41,881,907
37,242,399
During 2023 the gross loan portfolio increased by 4,640 million RON as compared with 31 December 2022.
As at December 31, 2023 the Bank’s gross loan portfolio and movements were distributed as follows:
●
Stage 1: 33,491 million RON, with a 6,314 million RON increase compared to December 31, 2022
●
Stage 2: 7,371 million RON, with a 1,631 million RON decrease compared to December 31, 2022
●
Stage 3: 960 million RON, with a 50 million RON decrease compared to December 31, 2022
●
POCI: 60 million RON, with 7 million RON increase compared to December 31, 2022.
The main movements on gross exposure value are along the following dimensions:
●
Stage 1 increase driven by robust commercial performance on both Retail and Non Retail segment
●
The decrease in Stage 2 portfolio reflects the migrations to Stage 1 as a result of credit quality and
macroeconomic evolution
●
The Stage 3 and POCI evolution is characterized by a net inflow of 330 million RON from performing
portfolios, offset by good recovery performance on already defaulted portfolios of 220 million RON
and portfolio sale and write-off in amount of 153 million RON.
As of December 31, 2023 the amortized cost of loans granted to the 20 largest corporate clients (groups of
connected borrowers) amounts to 5,071,590 (December 31, 2022: 4,748,797), while the value of letters of
guarantee and letters of credit issued in favour of these clients amounts for the Group and Bank to 5,248,249
(December 31, 2022: 5,148,297).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
49
10. Financial assets at amortised cost (continued)
10.1. Loans and advances to customers (continued)
Impairment allowance movement
Group
Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2023
135,308
505,549
584,804
3,219
1,228,880
New assets originated or purchased
117,580
29,159
13,803
8
160,549
Assets derecognised or repaid (excluding write offs)
(18,907)
(41,392)
(130,281)
(587)
(191,168)
Net provision movement for assets that did not change classification
(73,246)
(32,671)
(13,026)
1,548
(117,394)
Movements due to change in classification
(13,760)
(15,400)
193,383
274
164,497
Amounts written off
-
-
(54,773)
(459)
(55,232)
Other adjustments
(4,071)
(2,187)
(15,092)
3
(21,347)
Impairment allowance as at 31 December 2023
142,904
443,058
578,818
4,006
1,168,786
Non-Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2023
232,210
86,326
195,865
21,687
536,088
New assets originated or purchased
160,868
33,670
4,904
-
199,442
Assets derecognised or repaid (excluding write offs)
(103,025)
(26,775)
(18,177)
(0)
(147,976)
Net provision movement for assets that did not change classification
(24,637)
(5,371)
(2,183)
1,824
(30,368)
Movements due to change in classification
15,407
(19,643)
(25,115)
(73)
(29,424)
Amounts written off
-
-
(3,043)
(1)
(3,044)
Other adjustments
810
295
(374)
120
850
Impairment allowance as at 31 December 2023
281,634
68,501
151,877
23,557
525,568
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2023
367,518
591,875
780,668
24,906
1,764,968
New assets originated or purchased
278,448
62,829
18,707
8
359,992
Assets derecognised or repaid (excluding write offs)
(121,932)
(68,167)
(148,458)
(587)
(339,144)
Net provision movement for assets that did not change classification
(97,883)
(38,042)
(15,209)
3,372
(147,762)
Movements due to change in classification
1,647
(35,043)
168,267
201
135,073
Amounts written off
-
-
(57,818)
(460)
(58,277)
Other adjustments
(3,260)
(1,893)
(15,466)
124
(20,494)
Impairment allowance as at 31 December 2023
424,539
511,559
730,692
27,564
1,694,354
Line Other adjustments refers mainly to the impairment allowance for the loan portfolio of BRD Finance
IFN SA that was reclassified into category Assets held for sale as at December 31, 2023.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
50
10. Financial assets at amortised cost (continued)
10.1. Loans and advances to customers (continued)
Impairment allowance movement (continued)
Bank
Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2023
123,834
495,526
546,491
3,219
1,169,070
New assets originated or purchased
117,252
26,831
6,796
8
150,887
Assets derecognised or repaid (excluding write offs)
(18,879)
(40,929)
(130,111)
(587)
(190,506)
Net provision movement for assets that did not change classification
(70,212)
(32,144)
(15,005)
1,548
(115,814)
Movements due to change in classification
(9,946)
(9,409)
218,265
274
199,184
Amounts written off
-
-
(54,738)
(459)
(55,197)
Other adjustments
158
694
591
2
1,445
Impairment allowance as at 31 December 2023
142,207
440,568
572,290
4,005
1,159,069
Non-Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2023
231,675
82,792
194,896
21,687
531,050
New assets originated or purchased
160,420
32,477
4,556
-
197,453
Assets derecognised or repaid (excluding write offs)
(102,991)
(26,492)
(18,108)
(0)
(147,592)
Net provision movement for assets that did not change classification
(22,712)
(4,770)
(2,858)
1,824
(28,517)
Movements due to change in classification
13,645
(18,181)
(24,815)
(73)
(29,424)
Amounts written off
-
-
(3,043)
(1)
(3,044)
Other adjustments
798
285
19
120
1,221
Impairment allowance as at 31 December 2023
280,834
66,110
150,647
23,557
521,147
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2023
355,510
578,318
741,386
24,906
1,700,120
New assets originated or purchased
277,673
59,307
11,352
8
348,340
Assets derecognised or repaid (excluding write offs)
(121,870)
(67,421)
(148,219)
(587)
(338,098)
Net provision movement for assets that did not change classification
(92,925)
(36,914)
(17,863)
3,372
(144,331)
Movements due to change in classification
3,699
(27,591)
193,450
201
169,760
Amounts written off
-
-
(57,781)
(460)
(58,241)
Other adjustments
955
978
610
122
2,666
Impairment allowance as at 31 December 2023
423,041
506,677
722,936
27,562
1,680,217
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
51
10. Financial assets at amortised cost (continued)
10.1. Loans and advances to customers (continued)
Impairment allowance movement (continued)
Group
Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
133,801
457,954
602,990
3,875
1,198,619
New assets originated or purchased
88,882
22,940
10,229
9
122,060
Assets derecognised or repaid (excluding write offs)
(15,373)
(30,293)
(105,813)
(467)
(151,945)
Net provision movement for assets that did not change classification
(49,371)
(17,293)
(357)
1,528
(65,494)
Movements due to change in classification
(22,631)
72,287
174,935
(20)
224,571
Amounts written off
-
-
(97,064)
(1,695)
(98,759)
Other adjustments
1
(46)
(116)
(10)
(171)
Impairment allowance as at 31 December 2022
135,308
505,549
584,804
3,219
1,228,880
Non-Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
175,458
100,573
255,406
24,742
556,180
New assets originated or purchased
151,155
46,900
22,406
-
220,461
Assets derecognised or repaid (excluding write offs)
(97,119)
(27,058)
(57,544)
(367)
(182,088)
Net provision movement for assets that did not change classification
6,025
(27,730)
(15,779)
(2,685)
(40,168)
Movements due to change in classification
(3,306)
(6,373)
11,077
-
1,398
Amounts written off
-
-
(19,601)
(0)
(19,601)
Other adjustments
(4)
14
(101)
(3)
(94)
Impairment allowance as at 31 December 2022
232,210
86,326
195,865
21,687
536,088
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
309,259
558,527
858,398
28,617
1,754,801
New assets originated or purchased
240,037
69,840
32,635
9
342,521
Assets derecognised or repaid (excluding write offs)
(112,492)
(57,351)
(163,357)
(834)
(334,033)
Net provision movement for assets that did not change classification
(43,346)
(45,023)
(16,136)
(1,157)
(105,662)
Movements due to change in classification
(25,937)
65,915
186,012
(20)
225,969
Amounts written off
-
-
(116,665)
(1,695)
(118,360)
Other adjustments
(3)
(31)
(219)
(14)
(267)
Impairment allowance as at 31 December 2022
367,518
591,876
780,668
24,905
1,764,968
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
52
10. Financial assets at amortised cost (continued)
10.1. Loans and advances to customers (continued)
Impairment allowance movement (continued)
Bank
Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
118,917
451,772
544,071
3,875
1,118,635
New assets originated or purchased
88,678
17,592
2,359
9
108,637
Assets derecognised or repaid (excluding write offs)
(15,357)
(30,269)
(105,481)
(467)
(151,573)
Net provision movement for assets that did not change classification
(49,332)
(18,027)
(1,055)
1,528
(66,886)
Movements due to change in classification
(19,059)
74,491
176,608
(20)
232,019
Amounts written off
-
-
(69,895)
(1,695)
(71,590)
Other adjustments
(12)
(33)
(116)
(10)
(171)
Impairment allowance as at 31 December 2022
123,834
495,526
546,491
3,219
1,169,070
Non-Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
175,057
97,758
252,985
24,742
550,542
New assets originated or purchased
150,889
44,715
22,406
-
218,011
Assets derecognised or repaid (excluding write offs)
(97,091)
(26,804)
(57,143)
(367)
(181,406)
Net provision movement for assets that did not change classification
7,184
(27,607)
(14,692)
(2,685)
(37,800)
Movements due to change in classification
(4,360)
(5,284)
11,042
-
1,398
Amounts written off
-
-
(19,601)
(0)
(19,601)
Other adjustments
(4)
14
(100)
(3)
(93)
Impairment allowance as at 31 December 2022
231,675
82,792
194,896
21,687
531,050
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
293,973
549,531
797,056
28,617
1,669,176
New assets originated or purchased
239,567
62,307
24,765
9
326,648
Assets derecognised or repaid (excluding write offs)
(112,448)
(57,073)
(162,624)
(834)
(332,979)
Net provision movement for assets that did not change classification
(42,148)
(45,634)
(15,747)
(1,157)
(104,687)
Movements due to change in classification
(23,419)
69,207
187,650
(20)
233,417
Amounts written off
-
-
(89,496)
(1,695)
(91,191)
Other adjustments
(16)
(19)
(216)
(12)
(263)
Impairment allowance as at 31 December 2022
355,510
578,318
741,386
24,907
1,700,121
The sensitivity assessment of ECL to key inputs shows that a +/- 1 p.p. change in LGD would result in an
increase/ decrease of ECL with 35.9 million RON.
The sensitivity assessment of ECL to the macroeconomic scenarios used is described below:
●
A change of +/- 1 p.p. of the optimistic scenario weight correlated with a -/+ 1 p.p. change in base
scenario weight, will generate an ECL increase/decrease of 0.3 million RON
●
A change of +/- 1 p.p. of the pessimistic scenario weight correlated with a -/+ 1 p.p. change in base
scenario weight, will generate an ECL increase/decrease of 1.9 million RON.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
53
10. Financial assets at amortised cost (continued)
10.2. Treasury bills at amortised cost
Treasury bills at amortised cost income include bonds classified as being Hold To Collect (HTC), measured
at amortised cost and rated as very good according to internal rating.
Group
Ministry of Public Finance
French State
United State Government
Total market value
ECL impairment allowance
Total
11. Finance lease receivables
The Group acts as a lessor through the subsidiary BRD Sogelease IFN SA, having in the portfolio vehicles,
equipment (industrial, agricultural) and real estate leases. The leases are denominated mainly in EUR and
RON, with transfer of ownership of the leased asset at the end of the lease term. The receivables are secured
by the underlying assets and by other collateral. The payment timing analysis of lease receivables is as
follows:
Group
December 31, 2023
December 31, 2022
Gross investment in finance lease:
Under 1 year
786,316
651,209
Between 1 and 5 years
1,165,089
963,284
Higher than 5 years
3,074
8,046
1,954,479
1,622,539
Unearned finance income
(168,973)
(121,160)
Net investment in finance lease
1,785,506
1,501,379
Net investment in finance lease:
Under 1 year
705,080
593,826
Between 1 and 5 years
1,077,436
899,704
Higher than 5 years
2,990
7,849
1,785,506
1,501,379
December 31, 2023
December 31, 2022
Net investment in the lease
1,785,506
1,501,379
Accumulated allowance for uncollectible
minimum lease payments receivable
(93,772)
(93,985)
Total
1,691,734
1,407,394
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
54
11. Finance lease receivables (continued)
Impairment allowance movement
Retail
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2023
1,873
7,010
22,726
31,609
New assets originated or purchased
1,310
3,601
1,118
6,029
Assets derecognised or fully repaid (excluding write offs)
(231)
(798)
(1,244)
(2,273)
Movements due to change in classification
1,382
(1,707)
325
-
Net movement for assets that did not change classification
(1,849)
(1,142)
3,916
925
Amounts written off
(1)
(43)
(1,681)
(1,725)
Other adjustments
16
24
106
146
Impairment allowance as at 31 December 2023
2,500
6,945
25,266
34,712
Non-retail
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2023
2,616
12,269
47,491
62,377
New assets originated or purchased
1,822
4,921
1,530
8,273
Assets derecognised or fully repaid (excluding write offs)
(189)
(1,030)
(1,746)
(2,965)
Movements due to change in classification
3,837
(3,061)
(776)
-
Net movement for assets that did not change classification
(4,628)
(1,931)
180
(6,379)
Amounts written off
-
(2)
(876)
(878)
Other adjustments
34
44
(1,446)
(1,368)
Impairment allowance as at 31 December 2023
3,492
11,211
44,358
59,060
Total
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2023
4,489
19,279
70,218
93,986
New assets originated or purchased
3,132
8,522
2,648
14,302
Assets derecognised or fully repaid (excluding write offs)
(420)
(1,828)
(2,990)
(5,238)
Movements due to change in classification
5,219
(4,768)
(451)
(0)
Net movement for assets that did not change classification
(6,477)
(3,073)
4,096
(5,453)
Amounts written off
(1)
(45)
(2,557)
(2,603)
Other adjustments
50
68
(1,340)
(1,222)
Impairment allowance as at 31 December 2023
5,992
18,156
69,624
93,772
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
55
11. Finance lease receivables (continued)
Impairment allowance movement (continued)
Retail
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2022
1,450
3,544
19,701
24,695
New assets originated or purchased
937
3,541
3,261
7,739
Assets derecognised or fully repaid (excluding write offs)
(142)
(375)
(1,549)
(2,066)
Movements due to change in classification
354
1,020
(1,374)
-
Net movement for assets that did not change classification
(725)
(680)
2,895
1,489
Amounts written off
(1)
(40)
(204)
(245)
Other adjustments
(0)
(1)
(2)
(3)
Impairment allowance as at 31 December 2022
1,873
7,010
22,726
31,609
Non-retail
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2022
1,866
16,210
46,436
64,512
New assets originated or purchased
1,479
4,948
1,027
7,453
Assets derecognised or fully repaid (excluding write offs)
(117)
(2,508)
(1,975)
(4,601)
Movements due to change in classification
4,804
(5,002)
198
0
Net movement for assets that did not change classification
(5,414)
(1,364)
3,927
(2,850)
Amounts written off
-
-
(770)
(770)
Other adjustments
(1)
(15)
(1,351)
(1,367)
Impairment allowance as at 31 December 2022
2,616
12,269
47,491
62,377
Total
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2022
3,316
19,754
66,137
89,207
New assets originated or purchased
2,415
8,489
4,287
15,192
Assets derecognised or fully repaid (excluding write offs)
(259)
(2,883)
(3,524)
(6,666)
Movements due to change in classification
5,158
(3,982)
(1,176)
0
Net movement for assets that did not change classification
(6,139)
(2,044)
6,822
(1,361)
Amounts written off
(1)
(40)
(975)
(1,015)
Other adjustments
(1)
(16)
(1,354)
(1,370)
Impairment allowance as at 31 December 2022
4,489
19,279
70,218
93,986
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
56
12. Investments in subsidiaries, associates and joint ventures
Group
Associates and joint ventures
%
December 31,
2022
Disposals/
Provisions
Increase /
(decrease) in
net assets
December 31,
2023
BRD Asigurari de Viata SA
49.00%
33,966
-
(867)
33,099
BRD Fond de Pensii S.A.
26.95%
6,589
-
(520)
6,069
Fondul de Garantare a Creditului Rural
33.33%
19,482
19,429
(53)
(0)
ALD Automotive
20.00%
34,328
33,721
(607)
0
Biroul de Credit S.A.
16.38%
3,673
-
452
4,125
BRD Sogelease Asset Rental SRL
20.00%
1,979
-
590
2,569
CIT One SA
33.33%
13,653
-
5,368
19,021
113,670
53,150
4,363
64,883
Associates and joint ventures
%
December 31,
2021
Additions/
Reclassifications
Increase /
(decrease) in net
assets
December 31,
2022
BRD Asigurari de Viata SA
49.00%
29,144
-
4,822
33,966
BRD Fond de Pensii S.A.
49.00%
10,646
9,800
(13,857)
6,589
Fondul de Garantare a Creditului Rural
33.33%
19,130
-
352
19,482
ALD Automotive
20.00%
30,336
-
3,992
34,328
Biroul de Credit S.A.
16.38%
3,291
-
382
3,673
BRD Sogelease Asset Rental SRL
20.00%
1,087
-
892
1,979
CIT One SA
33.33%
13,571
-
82
13,653
107,205
9,800
(3,335)
113,670
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
57
12. Investments in subsidiaries, associates and joint ventures (continued)
Bank
Associates and joint ventures
%
December 31,
2022
Disposals/
Provisions
December 31,
2023
BRD Asigurari de Viata SA
49.00%
17,697
-
17,697
BRD Fond de Pensii S.A.
26.95%
4,647
-
4,647
Fondul de Garantare a Creditului Rural
33.33%
14,220
14,220
-
ALD Automotive
20.00%
11,873
11,873
-
Biroul de Credit S.A.
16.38%
729
-
729
CIT One SA
33.33%
11,900
-
11,900
Total associates and joint ventures
61,066
26,093
34,973
BRD Sogelease IFN SA
99.98%
11,558
-
11,559
BRD Asset Management SAI SA
99.98%
4,321
-
4,321
BRD Finance IFN SA
49.00%
53,019
-
53,019
Subsidiaries
68,898
-
68,899
Total associates and subsidiaries
129,964
26,093
103,872
Bank
Associates and joint ventures
%
December 31, 2021
Additions/
Reclassifications
Disposals/
Provisions
December 31, 2022
BRD Asigurari de Viata SA
49.00%
17,697
-
-
17,697
BRD Fond de Pensii S.A.
49.00%
33,599
9,800
(38,752)
4,647
Fondul de Garantare a Creditului Rural
33.33%
14,220
-
-
14,220
ALD Automotive
20.00%
11,873
-
-
11,873
Biroul de Credit S.A.
16.38%
729
-
-
729
CIT One SA
33.33%
11,900
-
-
11,900
Total associates and joint ventures
90,018
9,800
(38,752)
61,066
BRD Sogelease IFN SA
99.98%
11,558
-
-
11,558
BRD Asset Management SAI SA
99.98%
4,321
-
-
4,321
BRD Finance IFN SA
49.00%
53,019
-
-
53,019
Subsidiaries
68,898
-
-
68,898
Total associates and subsidiaries
158,916
9,800
(38,752)
129,964
As at December 31 2023, BRD Finance IFN SA is in a run off process and entered into a process for selling
its entire loan portfolio. The management intends to cease the activity and from this perspective it has
assessed that the going concern basis for the preparation of its financial statements is not appropriate.
Therefore, as at December 31, 2023 the BRD Finance IFN SA financial statements have no longer been
prepared as a going concern basis.
In July 2023 the Bank and Group sold the investment in associate Fondul de Garantare a Creditului Rural
and as a condition precedent to the sale the dividends accumulated over the years and for the year 2022
were distributed to the shareholders. The sale of the participation was reflected also in the Statement of
cash flow and in Note 2 b.
In November 2023 the Bank and Group sold for a price of 33,721 the investment in associate ALD
Automotive SRL within the Groupe Société Générale as a result of the reorganization after the acquisition
of Lease Plan at Groupe Société Générale level.
Additionally, the Bank and Group did not participate to the increase of the share capital of BRD Societate
de Administrare a Fondurilor de Pensii Private in July 2023 and therefore the ownership percentage was
reduced from 49% to 26.95% following the approval from ONRC in October 2023.
In May 2022, BRD participation in the share capital of BRD Fond de Pensii SA was increased by an amount
of 9,800. During 2022 the Bank also booked an impairment for this participation of 38,752 as of December
31, 2022.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
58
12. Investments in subsidiaries, associates and joint ventures (continued)
The subsidiaries, associates and joint venture summary of financial position and income statement as at December 31, 2023 are as follows:
December 31, 2023
%
Current
assets
Non-current
assets
Net assets
% of net
assets
Total assets
Current
liabilities
Non-current
liabilities
Total
liabilities
Revenue
Net profit/(loss)
Subsidiaries
BRD Sogelease IFN SA
99.98%
1,156,014
1,253,515
280,046
n/a
2,409,529
754,203
1,375,280
2,129,483
158,454
50,010
BRD Finance IFN SA
49.00%
132,476
179,845
133,871
n/a
312,321
129,875
48,575
178,450
76,800
31,858
BRD Asset Management SAI
SA
99.98%
9,522
31,874
24,673
n/a
41,397
3,354
13,370
16,724
32,324
1,300
Associate and joint ventures
BRD Asigurari de Viata SA
49.00%
728,331
147,962
67,558
33,099
876,293
148,540
660,195
808,735
404,142
21,017
Biroul de Credit S.A.
16.38%
23,631
2,160
25,191
4,125
25,791
600
-
600
19,574
10,534
BRD Fond de Pensii S.A.
26.95%
107,119
1,405
22,519
6,069
108,523
906
85,098
86,004
19,258
(14,705)
BRD Sogelease Asset Rental
SRL
20.00%
10,002
6,203
12,841
2,569
16,205
810
2,554
3,364
7,598
(2,924)
CIT One SA
33.33%
63,782
83,087
57,066
19,021
146,869
40,178
49,625
89,803
278,443
14,836
Total
64,883
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
59
12. Investments in subsidiaries, associates and joint ventures (continued)
The subsidiaries, associates and joint venture summary of financial position and income statement as at December 31, 2022 are as follows:
December 31, 2022
%
Current
assets
Non-current
assets
Net assets
% of net
assets
Total assets
Current
liabilities
Non-
current
liabilities
Total
liabilities
Revenue
Net profit/(loss)
Subsidiaries
BRD Sogelease IFN SA
99.98%
1,028,812
1,075,966
257,648
n/a
2,104,778
676,720
1,170,410
1,847,131
91,494
32,626
BRD Finance IFN SA
49.00%
160,063
353,361
116,506
n/a
513,424
238,748
158,171
396,919
100,843
17,804
BRD Asset Management SAI
SA
99.98%
13,633
17,794
26,831
n/a
31,427
919
3,676
4,595
33,477
3,415
Associate and joint ventures
ALD Automotive
20.00%
77,530
727,693
171,643
34,329
805,223
70,617
562,963
633,580
234,834
40,691
BRD Asigurari de Viata SA
49.00%
618,168
140,032
69,327
33,970
758,200
139,915
548,958
688,873
302,173
23,298
Fondul de Garantare a
Creditului Rural
33.33%
1,003,886
4,930
58,438
19,478
1,008,816
64,584
885,794
950,378
17,499
3,106
Biroul de Credit S.A.
16.38%
22,030
914
22,448
3,676
22,944
496
-
496
15,676
7,791
BRD Fond de Pensii S.A.
49.00%
76,884
427
13,442
6,586
77,310
942
62,927
63,869
21,839
(6,543)
BRD Sogelease Asset Rental
SRL
20.00%
11,611
7,376
9,894
1,979
18,987
405
8,688
9,093
10,489
(2,996)
CIT One SA
33.33%
38,624
88,518
40,962
13,652
127,142
37,066
49,114
86,180
227,257
(351)
Total
113,670
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
60
13. Property, plant and equipment
Group
Land & Buildings
Investment
properties
Materials and
other assets
Construction in
progress
Right of use
Total
Cost:
as of December 31, 2021
1,264,443
38,243
279,636
485,547
55,171
521,396
2,644,436
Additions
-
-
66
7
128,781
42,012
170,866
Transfers
36,282
(293)
26,567
27,440
(89,995)
-
1
Disposals
(21,293)
(937)
(16,832)
(53,334)
5,530
(77,390)
(164,256)
as of December 31, 2022
1,279,432
37,013
289,437
459,660
99,487
486,018
2,651,047
Additions
-
-
222
4
148,812
28,383
177,421
Transfers
44,985
(439)
43,385
71,843
(157,498)
-
2,276
Disposals
(20,459)
(1,068)
(28,674)
(61,356)
(1,847)
(52,033)
(165,437)
as of December 31, 2023
1,303,958
35,506
304,370
470,151
88,954
462,368
2,665,307
Depreciation and impairment:
as of December 31, 2021
(784,378)
(21,931)
(214,717)
(392,369)
(1,954)
(140,676)
(1,556,025)
Depreciation
(33,956)
(483)
(29,780)
(26,668)
-
(86,283)
(177,170)
Impairment
1,617
-
-
(56)
-
-
1,561
Disposals
14,903
697
16,824
50,608
-
76,921
159,953
Transfers
127
207
-
(334)
-
-
-
as of December 31, 2022
(801,687)
(21,510)
(227,673)
(368,819)
(1,954)
(150,038)
(1,571,681)
Depreciation
(35,156)
(455)
(31,940)
(28,449)
-
(81,420)
(177,420)
Impairment
2,054
75
-
(551)
1,954
-
3,532
Disposals
15,063
658
28,597
57,984
-
66,392
168,694
Transfers
(244)
262
-
(18)
-
-
-
as of December 31, 2023
(819,970)
(20,970)
(231,016)
(339,853)
-
(165,066)
(1,576,875)
Net book value:
as of December 31, 2021
480,065
16,312
64,919
93,178
53,217
380,720
1,088,411
as of December 31, 2022
477,745
15,503
61,764
90,841
97,533
335,980
1,079,366
as of December 31, 2023
483,988
14,536
73,354
130,298
88,954
297,302
1,088,432
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
61
13. Property, plant and equipment (continued)
Bank
Land & Buildings
Investment
properties
Materials and
other assets
Construction in
progress
Right of use
Total
Cost:
as of December 31, 2021
1,254,332
38,243
270,494
485,258
55,169
495,250
2,598,745
Additions
-
-
-
7
128,781
41,563
170,351
Transfers
36,282
(293)
26,566
27,440
(89,995)
-
-
Disposals
(21,181)
(937)
(16,520)
(53,311)
5,530
(68,595)
(155,014)
as of December 31, 2022
1,269,433
37,013
280,540
459,394
99,485
468,218
2,614,082
Additions
-
-
-
-
148,812
19,168
167,980
Transfers
44,985
(439)
43,385
71,843
(157,498)
-
2,276
Disposals
(20,459)
(1,069)
(28,185)
(61,348)
(1,846)
(48,738)
(161,645)
as of December 31, 2023
1,293,959
35,505
295,740
469,889
88,953
438,648
2,622,693
Depreciation and impairment:
as of December 31, 2021
(778,905)
(21,930)
(207,464)
(392,182)
(1,954)
(128,744)
(1,531,179)
Depreciation
(33,703)
(484)
(28,937)
(26,640)
-
(82,779)
(172,543)
Impairment
1,617
-
-
(56)
-
-
1,561
Disposals
14,789
697
16,518
50,587
-
67,434
150,025
Transfers
127
207
-
(334)
-
-
-
as of December 31, 2022
(796,075)
(21,510)
(219,883)
(368,625)
(1,954)
(144,089)
(1,552,136)
Depreciation
(34,919)
(455)
(31,271)
(28,435)
-
(78,618)
(173,698)
Impairment
2,054
75
-
(551)
1,954
-
3,532
Disposals
15,061
659
28,177
57,976
-
63,509
165,382
Transfers
(244)
262
-
(18)
-
-
-
as of December 31, 2023
(814,123)
(20,969)
(222,977)
(339,653)
-
(159,198)
(1,556,920)
Net book value:
as of December 31, 2021
475,427
16,313
63,030
93,076
53,215
366,506
1,067,566
as of December 31, 2022
473,358
15,503
60,657
90,769
97,531
324,129
1,061,946
as of December 31, 2023
479,836
14,536
72,763
130,236
88,953
279,450
1,065,773
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
62
13. Property, plant and equipment (continued)
Group
Right-of-use assets
Land & Buildings
IT Office equipments
Cars and other assets
Total
as of January 1, 2023
316,560
11,031
8,389
335,980
Additions
15,838
3,394
9,151
28,383
Depreciation expense
(71,390)
(3,608)
(6,422)
(81,420)
Disposals and other decreases
(26,242)
-
(68)
(26,310)
Contractual changes
40,478
-
191
40,669
as of December 31, 2023
275,244
10,817
11,241
297,302
Lease liabilities
as of January 1, 2023
339,746
Additions
28,382
Disposals and other decreases
(24,059)
Other movements (FX, other contractual changes)
43,871
Interest expense
5,628
Payments
(84,816)
as of December 31, 2023
308,752
Bank
Right-of-use assets
Land & Buildings
IT Office equipments
Cars and other assets
Total
as of January 1, 2023
305,781
9,498
8,850
324,129
Additions
9,041
3,394
6,733
19,168
Depreciation expense
(69,603)
(3,608)
(5,407)
(78,618)
Disposals and other decreases
(26,242)
-
-
(26,242)
Contractual changes
41,013
-
-
41,013
as of December 31, 2023
259,990
9,284
10,176
279,450
Lease liabilities
as of January 1, 2023
327,522
Additions
19,168
Disposals and other decreases
(23,259)
Other movements (FX, other contractual changes)
43,763
Interest expense
5,448
Payments
(82,140)
as of December 31, 2023
290,502
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
63
13. Property, plant and equipment (continued)
Group
Right-of-use assets
Land & Buildings
IT Office equipments
Cars and other assets
Total
as of January 1, 2022
366,047
4,220
10,453
380,720
Additions
26,415
11,904
3,409
41,728
Depreciation expense
(77,269)
(3,531)
(5,483)
(86,283)
Disposals and other decreases
(18,761)
(1,815)
(19)
(20,595)
Contractual changes
20,128
253
29
20,410
as of December 31, 2022
316,560
11,031
8,389
335,980
Lease liabilities
as of January 1, 2022
392,275
Additions
41,725
Disposals and other decreases
(32,025)
Other movements (FX, other contractual changes)
22,435
Interest expense
5,042
Payments
(89,706)
as of December 31, 2022
339,746
Bank
Right-of-use assets
Land & Buildings
IT Office equipments
Cars and other assets
Total
as of January 1, 2022
353,107
3,187
10,212
366,506
Additions
26,418
11,904
3,241
41,563
Depreciation expense
(74,661)
(3,531)
(4,587)
(82,779)
Disposals and other decreases
(18,761)
(1,815)
-
(20,576)
Contractual changes
19,678
(247)
(16)
19,415
as of December 31, 2022
305,781
9,498
8,850
324,129
Lease liabilities
as of January 1, 2022
377,699
Additions
41,563
Disposals and other decreases
(29,506)
Other movements (FX, other contractual changes)
19,084
Interest expense
4,920
Payments
(86,238)
as of December 31, 2022
327,522
The Group and Bank holds investment property as a consequence of the ongoing rationalization of its retail branch network. Investment properties comprise a
number of commercial properties that are leased to third parties. The investment properties have a fair value of 12,738 as of December 31, 2023 (December 31,
2022: 12,529). The fair value has been determined based on a valuation by an independent valuer in 2023. Rental income from investment property is in amount
of 2,406 (December 31, 2022: 2,427).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
64
14. Goodwill
Goodwill represents the excess of the acquisition cost over the fair value of net identifiable assets
transferred from Société Générale Bucharest to the Group in 1999.
Following the acquisition, the branch become the present Sucursala Mari Clienti Corporativi (“SMCC”) –
the branch dedicated to large significant clients, most of them taken over from the former Société Générale
Bucharest.
As at December 31, 2023, the branch had a number of 4,193 active customers (2022: 3,737), with loans
representing approximately 16% from total loans managed by the network (2022: 17%) and with deposits
representing about 13% of networks’ deposits (2022: 15%). Most of the SMCC non-retail clients are large
multinational and national customers.
Taking into account the stable base of clients and the contribution to the bank’s net banking income, the
branch which generated the goodwill is considered profitable, without any need of impairment.
15. Intangible assets
The balance of the intangible assets as of December 31, 2023 and December 31, 2022 represents mainly
software.
Group
Bank
Cost:
as of December 31, 2021
848,457
821,933
Additions
140,411
139,072
Disposals
(529)
45
as of December 31, 2022
988,339
961,050
Additions
176,567
174,911
Disposals
(80,042)
(76,684)
Transfers
(2,275)
(2,275)
as of December 31, 2023
1,082,589
1,057,002
Amortization:
as of December 31, 2021
(527,394)
(502,278)
Amortization expense
(53,852)
(53,105)
Disposals
395
-
as of December 31, 2022
(580,852)
(555,383)
Amortization expense
(74,916)
(74,082)
Disposals
79,137
76,685
as of December 31, 2023
(576,631)
(552,781)
Net book value:
as of December 31, 2021
321,063
319,655
as of December 31, 2022
407,487
405,667
as of December 31, 2023
505,958
504,221
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
65
16. Other assets
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Advances to suppliers
83,406
77,413
-
-
Sundry receivable
481,901
422,867
464,559
414,235
Prepaid expenses
53,353
73,545
51,926
56,755
Repossessed assets
3,754
4,536
924
924
Other assets
19,198
12,602
1,742
2,044
Total
641,612
590,963
519,151
473,958
As of December 31, 2023 the carrying value of repossessed assets for Group is 3,754 (December 31, 2022:
4,536). As of December 31, 2023 the carrying value of repossessed assets for Bank is 924 (December 31,
2022: 924).
The sundry receivables balances include various commissions, sundry debtors and are net of impairment
allowance.
Group
Sundry receivables
Total (Stage3)
Impairment allowance as at January 1, 2023
200,209
Additional expenses
75,359
Reversals of provisions
(10,248)
Receivables written off
(173,246)
Foreign exchange adjustments
118
Impairment allowance as at December 31, 2023
92,192
Total (Stage3)
Impairment allowance as at 1 st January 2022
165,641
Additional expenses
67,810
Reversals of provisions
(23,868)
Receivables written off
(9,469)
Foreign exchange adjustments
95
Impairment allowance as at 31 December 2022
200,209
Bank
Sundry receivables
Total (Stage3)
Impairment allowance as at January 1, 2023
190,512
Additional expenses
70,073
Reversals of provisions
(9,465)
Receivables written off
(173,208)
Foreign exchange adjustments
118
Impairment allowance as at December 31, 2023
78,030
Total (Stage3)
Impairment allowance as at 1 st January 2022
156,860
Additional expenses
66,146
Reversals of provisions
(23,262)
Receivables written off
(9,328)
Foreign exchange adjustments
95
Impairment allowance as at 31 December 2022
190,512
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
66
Property, plant and equipment
7,106
10,912
7,106
10,912
Financial assets at amortised cost
209,886
-
-
-
Total
216,992
10,912
7,106
10,912
Group
Bank
17. Assets held for sale
The category Property, plant and equipment represents mainly buildings classified as held for sale with a
gross value of 8,758 and a provision of 1,652 as at December 31, 2023 (gross value of 10,912 and no
provision as at December 31, 2022).
As at December 31, 2023 the BRD Finance IFN SA has entered into a process for selling its entire loan
portfolio, which meets the criteria in IFRS 5 “Non-current assets held for sale and discontinued operations”,
for classification as non-current asset held for sale. The portfolio consists of retail consumer unsecured
loans (please refer to Note 4). The loans portfolio continues to be measured at amortised cost and the impact
resulting from the sale shall be recognised at the date of derecognition of the assets on the basis of the actual
selling proceeds.
On January 26, 2024 the BRD Finance IFN Board of Directors approved the sale of the entire loan portfolio
to a third party and the entity is in a process of analysing the technical details with regards to the transfer,
while the sale is expected to be finalized during 2024.
The loan portfolio of BRD Finance IFN SA is represented only by consumer loans that are not rated and
are not guaranteed. The split by stages is detailed below:
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Provision allowance
Net Carying amount
18. Due to banks
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Demand deposits
680,497
304,610
680,497
304,610
Repo
460,500
286,448
460,500
286,448
Term deposits
5,543
45,830
5,543
45,830
Due to banks
1,146,540
636,888
1,146,540
636,888
The Bank performed reclassifications in order to enhance presentation and corresponding comparatives
have been re-classified accordingly.
19. Due to customers
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Demand deposits and current accounts
40,585,990
40,921,389
40,655,969
41,037,420
Term deposits
21,819,619
15,739,452
21,985,869
15,878,320
Total due to customers
62,405,609
56,660,841
62,641,838
56,915,740
The category Demand deposits and current accounts includes as of December 31, 2023: current accounts
in amount of 32,829,677 (36,121,663 as of December 31, 2022), transitory accounts in amount of 484,071
(416,540 as of December 31, 2022), demand deposits in amount of 6,694,919 (4,420,106 as of December
31, 2022) and other amounts due of 647,303 (79,111 as of December 31, 2022).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
67
20. Borrowed funds
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Borrowings from related parties
6,648,564
5,295,703
4,833,476
3,565,843
Borrowings from international financial
institutions
355,798
329,785
749
1,419
Total
7,004,362
5,625,488
4,834,225
3,567,262
Borrowings from related parties includes five senior non-preferred loans from Société Générale in amount
of:
●
150 million EUR, with an interest rate of EURIBOR 3M+1.98% and an initial term of three years
(received in June 2022)
●
120 million EUR, with a fixed interest rate of 4.77% and an initial term of three years (received in
December 2022)
●
450 million EUR, with a fixed interest rate of 4.26% and an initial term of three years (received in
December 2023)
●
100 million EUR, with a fixed interest rate of 4.68% and an initial term of seven years (received in
December 2023)
●
150 million EUR, with a fixed interest rate of 4.78% and an initial term of eight years (received in
December 2023).
Other funds borrowed from related parties are senior unsecured and are used in the normal course of
business.
21. Subordinated debts
Two subordinated debts were received from Société Générale in amount of:
●
100 million EUR with an interest rate of EURIBOR 3M+1.98% and an initial term of ten years (in
December 2021)
●
150 million EUR with an interest rate of EURIBOR 3M+4.31% and an initial term of ten years (in
June 2022).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
68
22. Provisions
The line Provisions includes provisions for financial guarantee and loan commitments and other provisions.
Financial guarantees and loan commitments provisions movement
Group
Retail lending
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2023
4,594
4,059
3,281
11,934
New commitments originated or purchased
10,463
2,131
1,519
14,113
Commitments derecognised or transferred into assets
(1,059)
(1,189)
(1,998)
(4,246)
Net provision movement not resulting from changes in
classification
(8,048)
(775)
(818)
(9,641)
Movements due to change in classification
(370)
(1,081)
2,071
620
Provision as at 31 December 2023
5,581
3,145
4,055
12,781
Non-Retail
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2023
128,239
50,188
147,471
325,898
New commitments originated or purchased
137,999
28,326
2,090
168,415
Commitments derecognised or transferred into assets
(66,634)
(23,959)
(15,846)
(106,439)
Net provision movement not resulting from changes in
classification
(70,698)
(6,298)
(14,298)
(91,294)
Movements due to change in classification
19,764
(28,941)
(1,807)
(10,984)
Other adjustments
145
37
1,667
1,849
Provision as at 31 December 2023
148,815
19,353
119,277
287,445
Total
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2023
132,833
54,247
150,753
337,833
New commitments originated or purchased
148,462
30,457
3,609
182,528
Commitments derecognised or transferred into assets
(67,693)
(25,148)
(17,844)
(110,686)
Net provision movement not resulting from changes in
classification
(78,746)
(7,073)
(15,116)
(100,935)
Movements due to change in classification
19,394
(30,022)
264
(10,364)
Other adjustments
146
37
1,667
1,850
Provision as at 31 December 2023
154,396
22,498
123,333
300,226
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
69
22. Provisions (continued)
Financial guarantees and loan commitments provisions movement (continued)
Bank
Retail lending
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2023
4,562
3,925
3,282
11,769
New commitments originated or purchased
10,414
2,059
1,492
13,965
Commitments derecognised or transferred into assets
(1,032)
(1,054)
(1,998)
(4,084)
Net provision movement not resulting from changes in
classification
(8,048)
(775)
(818)
(9,641)
Movements due to change in classification
(369)
(1,081)
2,071
621
Provision as at 31 December 2023
5,527
3,074
4,029
12,630
Non-Retail
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2023
128,092
49,811
157,351
335,254
New commitments originated or purchased
137,834
28,167
2,090
168,091
Commitments derecognised or transferred into assets
(66,489)
(23,580)
(15,845)
(105,914)
Net provision movement not resulting from changes in
classification
(70,698)
(6,298)
(14,295)
(91,291)
Movements due to change in classification
19,764
(28,941)
(1,807)
(10,984)
Other adjustments
145
37
41
223
Provision as at 31 December 2023
148,648
19,196
127,535
295,379
Total
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2023
132,654
53,736
160,633
347,023
New commitments originated or purchased
148,248
30,226
3,582
182,056
Commitments derecognised or transferred into assets
(67,521)
(24,634)
(17,843)
(109,998)
Net provision movement not resulting from changes in
classification
(78,746)
(7,073)
(15,113)
(100,932)
Movements due to change in classification
19,395
(30,022)
264
(10,363)
Other adjustments
145
37
41
223
Provision as at 31 December 2023
154,175
22,270
131,564
308,009
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
70
22. Provisions (continued)
Financial guarantees and loan commitments provisions movement (continued)
Group
Retail lending
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
3,374
3,132
3,371
9,877
New commitments originated or purchased
10,460
1,929
902
13,291
Commitments derecognised or transferred into assets
(1,241)
(659)
(706)
(2,606)
Net provision movement not resulting from changes in
classification
(7,307)
(672)
(1,613)
(9,592)
Movements due to change in classification
(692)
329
1,327
964
Provision as at 31 December 2022
4,594
4,059
3,281
11,934
Non-Retail
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
72,616
25,268
200,787
298,671
New commitments originated or purchased
99,008
35,196
1,386
135,590
Commitments derecognised or transferred into assets
(47,357)
(5,188)
(69,194)
(121,739)
Net provision movement not resulting from changes in
classification
14,131
(10,007)
3,755
7,879
Movements due to change in classification
(10,064)
4,931
8,602
3,469
Other adjustments
(95)
(12)
2,135
2,028
Provision as at 31 December 2022
128,239
50,188
147,471
325,898
Total
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
75,990
28,400
204,159
308,549
New commitments originated or purchased
109,468
37,125
2,288
148,881
Commitments derecognised or transferred into assets
(48,598)
(5,847)
(69,900)
(124,345)
Net provision movement not resulting from changes in
classification
6,824
(10,679)
2,142
(1,713)
Movements due to change in classification
(10,756)
5,260
9,929
4,433
Other adjustments
(95)
(12)
2,135
2,028
Provision as at 31 December 2022
132,833
54,247
150,753
337,833
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
71
22. Provisions (continued)
Financial guarantees and loan commitments provisions movement (continued)
Bank
Retail lending
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
3,365
3,125
3,371
9,861
New commitments originated or purchased
10,430
1,793
902
13,125
Commitments derecognised or transferred into assets
(1,234)
(650)
(706)
(2,590)
Net provision movement not resulting from changes in
classification
(7,306)
(672)
(1,613)
(9,591)
Movements due to change in classification
(692)
329
1,328
965
Other adjustments
(1)
-
-
(1)
Provision as at 31 December 2022
4,562
3,925
3,282
11,769
Non-Retail
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
72,589
24,749
212,015
309,353
New commitments originated or purchased
98,864
34,849
1,386
135,099
Commitments derecognised or transferred into assets
(47,333)
(4,689)
(69,194)
(121,216)
Net provision movement not resulting from changes in
classification
14,131
(10,006)
3,755
7,880
Movements due to change in classification
(10,064)
4,934
8,602
3,472
Other adjustments
(95)
(26)
787
666
Provision as at 31 December 2022
128,092
49,811
157,351
335,254
Total
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
75,954
27,874
215,386
319,214
New commitments originated or purchased
109,294
36,642
2,288
148,224
Commitments derecognised or transferred into assets
(48,567)
(5,339)
(69,900)
(123,806)
Net provision movement not resulting from changes in
classification
6,825
(10,678)
2,142
(1,711)
Movements due to change in classification
(10,756)
5,263
9,930
4,437
Other adjustments
(96)
(26)
787
665
Provision as at 31 December 2022
132,654
53,736
160,633
347,023
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
72
22. Provisions (continued)
The Bank includes in the line Provisions: provisions for litigation in amount of 11,886 as of December 31,
2023 (19,836 as of December 31, 2022), provisions for risks related to banking activity in amount of 1,418
as of December 31, 2023 (2,486 as of December 31, 2022) and other provisions for risks and charges in
amount of 12,497 as of December 31, 2022 (10,826 as of December 31, 2022).
The Group includes in the line Provisions: provisions for litigation in amount of 17,004 as of December 31,
2023 (42,306 as of December 31, 2022), provisions for risks related to banking activity in amount of 1,418
as of December 31, 2023 (2,486 as of December 31, 2022) and other provisions for risks and charges in
amount of 29,418 as of December 31, 2023 (10,826 as of December 31, 2022).
The movement in Provisions is as follows:
Group
TOTAL
Carrying value as of December 31, 2021
74,637
Additional expenses
19,000
Reversals of provisions
(30,466)
Usage
(7,553)
Carrying value as of December 31, 2022
55,618
Additional expenses
33,621
Reversals of provisions
(28,662)
Usage
(12,737)
Carrying value as of December 31, 2023
47,840
Bank
TOTAL
Carrying value as of December 31, 2021
55,531
Additional expenses
15,354
Reversals of provisions
(30,184)
Usage
(7,552)
Carrying value as of December 31, 2022
33,149
Additional expenses
13,771
Reversals of provisions
(8,382)
Usage
(12,737)
Carrying value as of December 31, 2023
25,801
23. Other liabilities
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Sundry creditors
272,526
272,164
191,408
201,271
Other payables to State budget
85,030
59,038
84,273
56,716
Deferred income
51,165
40,772
51,165
40,772
Payables to employees
187,689
165,820
166,457
137,401
Dividends payable
623,185
-
623,185
-
Creditors - Lease liabilities
308,752
339,746
290,502
327,522
Total
1,528,347
877,540
1,406,990
763,682
Sundry creditors are expected to be settled in no more than twelve months after the reporting period.
Payables to employees include, among other, gross bonuses, amounting 109,120 as of December 31, 2023
(December 31, 2022: 93,153) and post-employment benefits amounting 29,389 as of December 31, 2023
(December 31, 2022: 19,576).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
73
23. Other liabilities (continued)
Post-employment benefit plan
This is a defined benefit plan under which the amount of benefit that an employee is entitled to receive on
retirement depends on years of service and salary. The plan covers substantially all the employees and the
benefits are unfunded. A full actuarial valuation by a qualified independent actuary is carried out annually.
During 2023, the movements in defined benefit obligation is generated by the service cost and benefits
paid, resulting in a change of obligation carrying value 29,389 as of December 31, 2023, from 19,576 as of
December 31, 2022.
Movement in defined benefits obligations
Movement in defined benefits obligations
December 31, 2023
December 31, 2022
Opening defined benefit obligation
19,576
31,678
Total service cost
2,470
4,887
Benefits paid
(1,007)
(633)
Interest cost on benefit obligation
1,776
207
Actuarial (gains) / losses arising from changes in financial assumptions
6,574
(16,563)
Closing defined benefit obligation
29,389
19,576
Main actuarial assumptions
December 31, 2023
December 31, 2022
Discount rate
6.96%
9.20%
Long term inflation rate
3.30%
3.00%
Average remaining working period (years)
12
12
Sensitivities on the defined benefit obligation
The results of any valuation depend upon the assumptions employed. Significant actuarial assumptions for
the determination of the defined obligation are discount rate and expected salary increase.
The sensitivity analyses below have been determined based on reasonably possible changes of the
respective assumptions occurring at the end of the reporting period, while holding all other assumptions
constant.
●
If the discount rate used were 0.5% higher, then the defined benefit obligation would be lower by
about 4.73% meaning 27,999.
●
If the discount rate used were 0.5% lower, then the defined benefit obligation would be higher by
about 5.04% meaning 30,870.
●
If the salary increase rate used were 0.5% higher, then the defined benefit obligation would be
higher by about 4.94% meaning 30,841.
The sensitivity analysis presented above may not be representative of the actual change in the defined
benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another
as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis,
the present value of the defined benefit obligation has been calculated using the projected unit credit method
at the end of the reporting period, which is the same as that applied in calculating the defined benefit
obligation liability recognized in the statement of financial position. The eventual cost of providing the
benefits depends on the current future experience. Other factors such as the number of new employees
could also change the cost.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
74
24. Share capital
The nominal share capital, as registered with the Registry of Commerce is 696,901 (2022: 696,901).
Included in the share capital there is an amount of 1,818,721 (2022: 1,818,721) representing hyperinflation
restatement surplus.
Share capital as of December 31, 2023 represents 696,901,518 (2022: 696,901,518) authorized common
shares, issued and fully paid. The nominal value of each share is RON 1 (2022: RON 1). During 2023 and
2022, the Bank did not buy back any of its own shares.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
75
25. Taxation
Current income tax is calculated based on the taxable income as per the tax statement derived from the
stand-alone accounts of each consolidated entity. As of December 31, 2023 the Group has a current tax
liability in total amount of 36,181 (December 31, 2022: 5,595) and 0 current tax asset (December 31, 2022:
23,563) and at Bank level a current tax liability in total amount of 35,074 (December 31, 2022: 0) and 0
current tax asset (December 31, 2022: 23,563).
The deferred tax liability/asset is reconciled as follows:
Group
December 31, 2023
Temporary
differences Asset /
(Liability)
Consolidated
Statement of
Financial Position
Asset / (Liability)
Consolidated
Income Statement
(Expense) /
Income
Consolidated OCI
(Expense) /
Income
Elements generating deferred tax
Defined benefit obligation
64,741
(10,359)
-
1,051
Financial assets at fair value through other
comprehensive income
(1,410,015)
225,602
-
(171,884)
Tangible and intangible assets
6,295
(1,007)
(2,571)
-
Provisions and other liabilities
(592,824)
94,852
(13,542)
-
Taxable items
(1,931,803)
Deferred tax
309,089
(16,113)
(170,832)
Bank
December 31, 2023
Temporary
differences Asset /
(Liability)
Individual
Statement of
Financial Position
Asset / (Liability)
Individual Income
Statement
(Expense) /
Income
Consolidated OCI
(Expense) /
Income
Elements generating deferred tax
Defined benefit obligation
64,741
(10,359)
-
1,051
Financial assets at fair value through other
comprehensive income
(1,410,015)
225,602
-
(171,883)
Tangible and intangible assets
6,383
(1,021)
(2,584)
-
Provisions and other liabilities
(555,809)
88,930
(2,325)
-
Taxable items
(1,894,700)
Deferred tax
303,152
(4,909)
(170,832)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
76
25. Taxation (continued)
Group
December 31, 2022
Temporary
differences Asset /
(Liability)
Consolidated
Statement of
Financial
Position Asset /
(Liability)
Consolidated
Income
Statement
(Expense) /
Income
Consolidated OCI
(Expense) /
Income
Elements generating deferred tax
Defined benefit obligation
71,315
(11,410)
-
(2,650)
Financial assets at fair value through other
comprehensive income
(2,484,289)
397,486
-
320,411
Tangible and intangible assets
(9,772)
1,564
(11,617)
-
Provisions and other liabilities
(677,465)
108,393
9,800
-
Taxable items
(3,100,211)
Deferred tax
496,034
(1,817)
317,761
Bank
December 31, 2022
Temporary
differences
Asset /
(Liability)
Individual
Statement of
Financial
Position Asset /
(Liability)
Individual Income
Statement
(Expense) /
Income
Consolidated OCI
(Expense) /
Income
Elements generating deferred tax
Defined benefit obligation
71,315
(11,410)
-
(2,650)
Financial assets at fair value through other
comprehensive income
(2,484,289)
397,486
-
320,410
Tangible and intangible assets
(9,772)
1,563
(11,648)
-
Provisions and other liabilities
(570,335)
91,254
6,607
-
Taxable items
(2,993,081)
Deferred tax
478,893
(5,041)
317,760
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
77
25. Taxation (continued)
Movement in deferred tax is as follows:
Group
Bank
Deferred tax asset, net as of December 31, 2021
180,089
166,173
Deferred tax recognized in other comprehensive income
317,761
317,761
Deferred tax recognized in profit and loss
(1,817)
(5,041)
Deferred tax asset, net as of December 31, 2022
496,033
478,893
Deferred tax recognized in other comprehensive income
(170,832)
(170,832)
Deferred tax recognized in profit and loss
(16,113)
(4,909)
Deferred tax asset, net as of December 31, 2023
309,089
303,152
Reconciliation of total tax charge
Group
Bank
2023
2022
2023
2022
Profit before income tax
1,996,456
1,619,515
1,955,635
1,555,279
Income tax (16%)
319,433
259,122
312,902
248,845
Fiscal credit and other adjustments
3,429
(6,987)
(4,480)
(5,214)
Income tax without basis
-
7,484
-
7,484
Non-deductible elements
46,783
39,941
31,762
31,641
Non-taxable elements
(29,018)
(17,133)
(18,729)
(13,415)
Expense from income tax at effective tax rate
340,627
282,427
321,455
269,341
Effective tax rate
17.1%
17.4%
16.4%
17.3%
Recognition of deferred tax asset is based on the management’s profit forecasts, which indicates that it is
probable that future taxable profits will be available against which the deferred tax assets can be utilized.
At the Bank level, as at December 31, 2023, permanent non-deductible elements include the impact of
provisions for overdue commissions 10,833 (December 31, 2022: 9,777), sponsorship expenses with an
impact of 596 (December 31, 2022: 1,276) and debt sales and other operations with limited deductibility in
amount of 10,846 (December 31, 2022: 8,225); permanent non-taxable elements are mainly a result of
releases for provisions for overdue commissions in amount of 1,108 (December 31, 2022: 1,722),
provisions for risks and charges/litigations 2,371 (December 31, 2022: 1,184) and dividends income with
an impact of 11,067 (December 31, 2022: 7,574).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
78
26. Interest and similar income
Group
Bank
2023
2022
2023
2022
Interest on loans
3,179,597
2,289,040
3,092,418
2,201,210
Interest on finance lease
107,741
62,781
-
-
Interest on deposit with banks
318,097
60,254
317,486
59,622
Interest on financial assets
613,001
520,034
613,001
520,034
Interest income from hedging instruments
1,388
9,177
1,388
9,177
Total
4,219,824
2,941,286
4,024,293
2,790,043
The interest income on loans includes the accrued interest on net (after impairment allowance) impaired
loans in amount of 62,888 for Group (2022: 51,540) and 60,011 for Bank (2022: 47,953).
27. Interest and similar expense
Group
Bank
2023
2022
2023
2022
Interest on term deposits
876,854
323,977
877,748
324,590
Interest on demand deposits
209,714
110,324
217,303
114,448
Interest on borrowings
311,959
119,242
241,423
94,620
Interest expense on lease liabilities
5,628
5,042
5,448
4,920
Interest expense from hedging instruments
90,515
12,267
90,514
12,267
Total
1,494,670
570,852
1,432,436
550,845
28. Fees and commissions, net
Group
Bank
2023
2022
2023
2022
Services
586,138
608,341
583,581
605,207
107,034
110,532
107,034
110,532
82,186
70,122
82,186
70,122
68,794
70,472
68,794
70,472
54,314
68,293
54,314
68,293
189,618
206,032
189,618
206,032
55,175
48,254
55,167
48,254
29,017
34,636
26,468
31,502
Loan activity
104,158
100,766
75,335
68,765
Off balance sheet
59,947
45,222
59,947
45,222
Total
750,243
754,329
718,863
719,194
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
79
29. Gain on derivative and other financial instruments held for trading and foreign exchange
Group
Bank
2023
2022
2023
2022
71,148
(12,498)
71,148
(12,498)
228,118
233,802
226,265
230,738
94,908
56,251
93,743
56,251
(53,382)
38,673
(53,382)
38,674
1,880
(5,268)
1,880
(5,268)
711
1,167
711
1,167
(55,539)
39,420
(55,539)
39,420
6,958
6,879
6,958
6,879
(855)
(2,680)
(855)
(2,680)
(6,178)
(0)
(6,178)
(0)
(359)
(844)
(359)
(843)
for trading and foreign exchange
340,792
316,229
337,774
313,165
The Bank performed reclassifications in order to enhance presentation and corresponding comparatives
have been re-classified accordingly.
30. Other income/expense from banking activities
Group
Bank
2023
2022
2023
2022
Dividend income from subsidiaries
-
-
38,234
37,217
Provision for litigations
7,951
(3,385)
7,951
(3,385)
Held for sale fixed assets expenses
(1,893)
(3,836)
-
-
Other income/(expenses)
(9,123)
15,152
(15,495)
8,580
Total income / (expense ) from banking activity
(3,065)
7,931
30,690
42,412
For the Bank, other income includes dividends from subsidiaries in amount of 38,234 as of December 31,
2023 (37,217 as of December 31, 2022), income from banking activities offered to the clients and income
from non-banking activities, such as income from rentals.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
80
31. Contribution to Guarantee Scheme and Resolution Fund
According to the Romanian legislation (Law no. 311/2015 on Deposit Guarantee Schemes and the Bank
Deposit Guarantee Fund), the deposits of individuals and certain entities, including small and medium
enterprises and large companies are covered up to EUR 100,000 by the Bank Deposit Guarantee Fund
(“Fund”).
Each credit institution participating to deposit guarantee scheme shall pay the annual contribution as
determined and notified by the Fund. The amount of the contribution refers to the total covered deposits at
the end of the previous year and also reflects the degree of risk associated to each credit institution in the
scheme.
The degree of risk is determined based on the financial and prudential indicators reported by the credit
institutions to the National Bank of Romania. For this purpose, the Bank Deposits Guarantee Fund uses a
methodology approved by the National Bank of Romania considering also the guidelines issued by the
European Banking Authority.
For the year 2023 the expense related to the Deposit Guarantee Fund amounts to 16,269 (2022: 33,575).
According to Law no. 312/2015 on recovery and resolution of credit institution and investment firms, each
credit institution shall pay an annual contribution to Bank Resolution Fund as determined and notified by
the National Bank of Romania.
The National Bank of Romania as the local resolution authority establish the credit institutions annual
contributions to Bank Resolution Fund, in compliance with Commission Delegated Regulation EU
2015/63, supplementing Directive 2014/59 of the European Parliament and of the Council with regard to
ex ante contributions to resolution financing arrangements.
For the year 2023 the expense related to the Bank Resolution Fund was 51,953 (2022: 35,690).
Both contributions to the Bank Deposit Guarantee Fund and Bank Resolution Fund meet the criteria for
recognition as taxes and accounted in accordance with IFRIC 21 “Levies” requirements. The liability is
recognized at the date when the obligating event occurs and the contribution is recognized as an expense in
full on 1
st
32. Personnel expenses
Group
Bank
2023
2022
2023
2022
Salaries
870,204
775,467
827,006
742,371
Social security
20,321
19,065
19,146
17,594
Bonuses
78,195
96,614
76,262
72,976
Post-employment benefits
4,246
5,094
4,246
5,094
Capitalisation of internal projects
(48,098)
(31,130)
(48,098)
(31,130)
Other
38,090
33,791
36,429
32,264
Total
962,958
898,901
914,991
839,169
In 2023, the expense related to the Bank defined benefit contribution plan was 3,993 (2022: 4,286).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
81
33. Depreciation, amortization and impairment on tangible and intangible assets
Group
Bank
2023
2022
2023
2022
Depreciation and impairment
173,507
175,115
169,786
170,494
Amortisation
74,916
53,775
74,082
53,105
Total
248,423
228,889
243,868
223,599
The difference as at December 31, 2023 between the amount presented in Note 13 and the amount presented
in Note 33 represents depreciation of investment property in total amount of 455 and impairment of
investment property in amount of -75 (December 31, 2022: 481).
34. Other operating expenses
Group
Bank
2023
2022
2023
2022
Administrative expenses
507,570
437,767
487,962
409,840
Publicity and sponsorships
38,566
36,627
38,261
36,349
Other expenses
69,534
73,247
61,622
62,757
Total
615,670
547,641
587,845
508,946
Administrative expenses include for the Bank maintenance expenses, various utilities such as energy and
telecommunication, expenses related to short-term leases of 3,697 (December 31, 2022: 5,824) and to leases
of low-value assets of 4,264 (December 31, 2022: 3,934). This line also includes audit fees amounting
3,428 for Group (out of which statutory audit and Group Year End audit missions in amount of 2,557, other
audit fees in amount of 153 and other non-audit services in amount of 718) and 2,654 for Bank (out of
which statutory audit and Group Year End audit missions in amount of 1,783, other audit fees in amount of
153 and other non-audit services in amount of 718).
35. Cost of risk
Group
Bank
2023
2022
2023
2022
Net impairment allowance for loans
95,593
186,295
99,096
179,897
Net impairment allowance for sundry debtors
64,921
44,165
59,843
43,137
Net impairment allowance for finance lease
1,437
10,311
-
-
Income from recoveries of derecognized receivables &
sales of bad debts
(201,623)
(225,825)
(179,446)
(207,149)
Write-offs
21,549
11,897
11,620
8,669
Financial guarantee and loan contracts provisions
(39,457)
68,709
(39,239)
68,591
Net impairment allowance for debt securities
202
(446)
202
(446)
Total
(57,378)
95,106
(47,924)
92,699
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
82
36. Earnings per share
Basic earnings per share are calculated by dividing net profit/(loss) for the reporting period attributable to
ordinary equity holders of the parent by the weighted average number of shares outstanding during the year.
As of December 31, 2023 and December 31, 2022 there were no dilutive equity instruments issued by the
Group and Bank.
Group
Bank
2023
2022
2023
2022
Ordinary shares on market
696,901,518
696,901,518
696,901,518
696,901,518
Profit attributable to shareholders
1,639,581
1,328,008
1,634,180
1,285,938
Earnings per share (in RON)
2.3527
1.9056
2.3449
1.8452
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
83
37. Cash and cash equivalents details
Cash and cash equivalents:
For the purpose of the cash flow statements, cash and cash equivalents comprise cash in hand, current
accounts and short-term placements at other banks. The amounts in transit in amount of 469,953 (December
31, 2022: 262,937), bonds and reverse repo in total amount of 1,028,085 (December 31, 2022: 473,718),
loans to banks, with more than 90 days maturity from the date of acquisition in amount of 15,365 (December
31, 2022: 15,975) for the Group are excluded. The Group and Bank did not include in cash and cash
equivalents the amounts representing minimum compulsory reserve held at National Bank of Romania.
Group
Bank
December 31,
2023
December 31,
2022
January 1,
2022
December 31,
2023
December 31,
2022
January 1,
2022
Cash in vaults and ATM
2,522,178
2,531,348
1,894,448
2,522,106
2,531,279
1,894,415
Current accounts and placements with
banks
4,615,937
6,468,333
4,255,984
4,615,937
6,468,332
4,255,984
Total
7,138,115
8,999,681
6,150,432
7,138,043
8,999,611
6,150,399
Impairment and provisions adjustment for non-cash items:
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Net impairment allowance for loans
95,593
186,295
99,096
179,897
Net impairment allowance for sundry debtors
64,921
44,165
59,843
43,137
Net impairment allowance for financial leases
1,437
10,311
-
-
Write-offs
21,549
11,897
11,620
8,669
Financial guarantee and loan contracts provisions
(39,457)
68,709
(39,239)
68,591
Net movement in other provisions
(7,778)
(19,019)
(7,348)
(22,383)
Net impairment allowance for debt securities
202
(446)
202
(446)
Total
136,467
301,912
124,174
277,465
38. Other commitments
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Tangible non-current assets
28,269
13,470
28,269
13,470
Intangible non-current assets
79,793
81,086
79,793
81,086
Commitments relating to short-term and low value leases
24,952
24,547
24,952
24,547
Total
133,014
119,103
133,014
119,103
The other commitments presented above include short term and low value leases, software maintenance
contracts and other IT services.
As at December 31, 2023 and December 31, 2022 the future minimum lease payments regarding operating
leases (rents) concluded by the Group and Bank as a lessee are:
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Less than one year
12,545
11,654
12,545
11,654
Between one and five years
9,769
9,855
9,769
9,855
More than five years
69
104
69
104
Total
22,383
21,613
22,383
21,613
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
84
As at December 31, 2023 and December 31, 2022, the future minimum lease receipts regarding operating
leases (rents) concluded by the Group and Bank as a lessor are:
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Less than one year
1,641
499
1,641
499
Between one and five years
324
559
324
559
More than five years
41
113
41
113
Total
2,006
1,171
2,006
1,171
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
85
39. Related parties
The Group entered into related party transactions with its parent, other SG entities, subsidiaries, associates and joint venture and key management personnel.
All related party transactions were made on substantially the same terms, including interest rates and collateral requirements, as those prevailing for similar
transactions with unrelated parties. The transactions/balances with subsidiaries were eliminated for consolidation purposes. The transactions/balances with
related parties can be summarized as follows:
Grup
2023
2022
Parent
Other related
parties
Associates & Joint
ventures
Key management
of the institution
Parent
Other related
parties
Associates & Joint
ventures
Key management
of the institution
Assets
3,295,712
34,603
25,891
2,879
3,621,318
25,677
28,467
2,922
Nostro accounts
113,766
407
-
-
143,996
578
-
-
Deposits
2,919,555
-
-
-
3,169,456
-
-
-
Loans
-
34,058
23,655
2,879
-
25,045
25,866
2,922
Derivative financial instruments
57,482
(0)
-
-
100,173
-
-
0
Other assets
204,909
138
2,236
-
207,693
55
2,602
0
Liabilities
8,651,529
218,233
37,312
6,993
7,179,683
197,710
99,423
7,820
Loro accounts
28,833
13,530
-
-
737
294
-
-
Deposits and amounts in transit
55,072
178,941
28,062
6,991
74,935
176,462
71,348
7,820
Borrowings
6,648,564
-
-
-
5,295,707
-
-
-
Subordinated borrowings
1,245,400
-
-
-
1,238,651
-
-
-
Lease payable
-
11,221
-
-
-
-
9,508
-
Derivative financial instruments
244,002
10,601
-
-
530,400
20,299
-
-
Other liabilities
429,658
3,939
9,250
1
39,253
655
18,567
-
Commitments
7,511,480
252,581
45,000
273
5,877,472
153,755
48,243
318
Total commitments granted
250,611
144,673
-
273
249,274
85,573
1,364
318
Total commitments received
243,732
53,388
35,000
-
206,767
61,169
25,000
-
Uncommitted facilities granted
37,985
54,520
10,000
-
12,968
7,012
21,879
-
Notional amount of foreign exchange transactions
2,568,922
-
-
-
2,095,028
-
-
-
Notional amount of interest rate derivatives
4,410,230
-
-
-
3,313,435
-
-
-
Income statement
(325,651)
1,756
(7,520)
(74)
(297,798)
(3,860)
2,643
263
Interest and commision revenues
61,216
15,057
52,687
169
13,440
10,713
56,869
373
Interest and commission expenses
(403,101)
(4,814)
(28,982)
(74)
(90,705)
(5,264)
(17,497)
(46)
Net gain/(loss) on interest rate derivatives
57,783
-
-
-
(223,663)
-
-
(5)
Net gain/(loss) on foreign exchange derivatives
(1,601)
(104)
-
-
39,601
-
-
-
Dividend incomes
-
-
17,040
-
-
-
8,677
-
Other income
(118)
(2,046)
21,927
-
733
2
76
-
Other expenses
(39,830)
(6,335)
(70,191)
(169)
(37,203)
(9,311)
(45,483)
(58)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
86
39. Related parties (continued)
Bank
2023
2022
Parent
Other related
parties
Subsidiaries
Associates &
Joint ventures
Key
management
of the
institution
Parent
Other related
parties
Subsidiaries
Associates &
Joint ventures
Key
management
of the
institution
Assets
3,280,317
34,603
6,842
23,982
2,879
3,605,123
25,677
46,553
26,194
2,922
Nostro accounts
113,766
407
-
-
-
143,996
578
-
-
-
Deposits
2,904,190
-
-
-
-
3,153,481
-
-
-
-
Loans
-
34,058
4,943
23,655
2,879
-
25,045
44,934
25,866
2,922
Derivative financial instruments
57,482
(0)
(0)
-
-
100,173
-
-
-
0
Other assets
204,880
138
1,900
327
-
207,473
55
1,619
329
0
Liabilities
6,831,077
217,895
239,964
37,312
6,993
5,444,569
197,684
256,683
98,841
7,820
Loro accounts
28,833
13,530
-
-
-
737
294
-
-
-
Deposits and amounts in transit
55,072
178,941
237,216
28,062
6,991
74,935
176,462
255,807
71,348
7,820
Borrowings
4,830,840
-
2,636
-
-
3,564,997
-
847
-
-
Subordinated borrowings
1,245,400
-
-
-
-
1,238,651
-
-
-
-
Lease payable
-
10,964
-
-
-
-
-
-
9,508
-
Derivative financial instruments
244,002
10,601
-
-
-
530,400
20,299
-
-
-
Other liabilities
426,930
3,859
113
9,250
1
34,849
629
29
17,985
-
Commitments
7,511,480
252,581
51,630
45,000
273
5,877,472
153,755
76,081
48,243
318
Total commitments granted
250,611
144,673
11,206
-
273
249,274
85,573
21,580
1,364
318
Total commitments received
243,732
53,388
-
35,000
-
206,767
61,169
-
25,000
-
Uncommitted facilities granted
37,985
54,520
40,424
10,000
-
12,968
7,012
54,501
21,879
-
Notional amount of foreign exchange
transactions
2,568,922
-
-
-
-
2,095,028
-
-
-
-
Notional amount of interest rate
derivatives
4,410,230
-
-
-
-
3,313,435
-
-
-
-
Income statement
(260,790)
2,765
49,463
(14,551)
(74)
(272,495)
(3,762)
56,996
(5,744)
263
Interest and commision revenues
60,604
14,881
16,284
45,648
169
12,808
9,961
19,251
47,331
373
Interest and commission expenses
(339,425)
(4,814)
(8,503)
(28,982)
(74)
(65,901)
(5,264)
(4,743)
(17,494)
(46)
Net gain/(loss) on interest rate derivatives
57,783
-
-
-
-
(223,663)
-
-
-
(5)
Net gain/(loss) on foreign exchange
derivatives
(1,601)
(104)
(164)
-
-
39,601
-
(621)
-
-
Dividend incomes
-
-
38,234
17,040
-
-
-
37,217
8,677
-
Other income
(118)
(2,046)
(104)
21,850
-
733
2
266
-
-
Other expenses
(38,033)
(5,150)
3,717
(70,105)
(169)
(36,073)
(8,461)
5,626
(44,257)
(58)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
87
39. Related parties (continued)
Other liabilities and other expenses include corporate and technical assistance with Société Générale Paris.
Other liabilities include also an amount of 386,860 representing dividends to be paid to Société Générale
Paris.
The Bank has granted to SG Paris collaterals regarding derivative instruments in total amount of 201,869
at December 31, 2023 (December 31, 2022: 204,723).
As of December 31, 2023 the Board of Directors and Managing Committee members own 21,030 shares
(December 31, 2022: 48,858).
Key management personnel benefits for 2023 and 2022 are:
Group
Bank
2023
2022
2023
2022
Short-term benefits
17,258
17,992
13,156
13,954
Long-term benefits
5,211
5,129
4,476
4,442
Termination benefits
273
-
273
-
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
88
40. Interest in unconsolidated structured entities
According to IFRS 12 applied starting with January 1, 2014 the Group and Bank has to present the interests it has in entities that have been designated so that
voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and
the relevant activities are directed by means of contractual arrangements.
The Group and Bank has identified the investment funds in which it invested during the years and which manages, through the Bank’s subsidiary, BRD Asset
Management, as being unconsolidated structured entities. The structured entities are financed through the resources (unit funds) received from individuals and
corporates that are afterwards placed on monetary and capital markets.
As of December 31, 2023 the Group and Bank do not have any interests in unconsolidated structured entities.
Interests in unconsolidated structured entities and size of structured entities in 2022:
Name of
structured entity
Carrying amount
of financial assets
recognised in the
reporting
institution's
balance sheet
Of which:
liquidity
support
drawn
Fair value
of
liquidity
support
drawn
Carrying amount
of financial
liabilities
recognised in the
reporting
institution's sheet
Nominal amount
of off-balance
sheet items given
by the reporting
institution
Of which:
Nominal
amount of loan
commitments
given
Losses incurred
by the reporting
institution in the
current period
Maximum
exposure to
loss
Total balance
sheet of the
structured
entity (size)
BRD Oportunitati
2,751
657
646
1,213
-
-
-
2,751
9,254
BRD Orizont 2035
2,023
-
-
367
-
-
-
2,023
2,780
BRD Orizont 2045
2,013
-
-
100
-
-
-
2,013
2,380
Breakdown of interests in unconsolidated structured entities in 2022:
Name of
structured entity
Selected financial assets recognised in the reporting institution's
balance sheet
Selected equity and financial liabilites recognised in the
reporting institution's balance sheet
Off-balance sheet
items given by the
reporting
institution
of which:
defaulted
Derivatives
Equity
instruments
Debt
securities
Loans
and
advances
Total
Equity
instruments
issued
Derivatives
Deposits
Debt
securities
issued
Total
of which:
defaulted
Total
BRD Oportunitati
-
-
2,094
-
657
2,751
-
-
1,213
-
1,213
-
-
BRD Orizont 2035
-
-
2,023
-
-
2,023
-
-
367
-
367
-
-
BRD Orizont 2045
-
-
2,013
-
-
2,013
-
-
100
-
100
-
-
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
89
41. Contingencies
As of December 31, 2023 the Bank is the defendant in a number of lawsuits arising in the course of business,
amounting to approximately 80,404 (December 31, 2022: 670,213). The amounts disclosed represent the
additional potential loss in the event of a negative court decision, the amounts not being provisioned. The
management believes that the ultimate resolution of these matters will not have a material adverse effect
on the Group’s overall financial position and performance. The Bank already booked a provision of 11,886
(December 31, 2022: 19,836) and the Group 17,004 (December 31, 2022: 42,306) in relation with the
litigations.
Competition Council
During the year ended December 31, 2023, the Bank (together with other banks) was subject of two
investigations by the Competition Council:
-
First investigation was launched ad-hoc in October 2022 and concerns a potential infringement of
the completion regulations regarding the fixing of reference ROBOR rates. The investigation is
still in the preliminary phase at the date of issue of these financial statements and no report has
been delivered.
-
Second investigation was launched in July 2023 and concerns the activity of the Credit Bureau and,
more specifically, how usage of the FICO scoring is influenced by the number of banks’
interrogations with the Credit Bureau. The investigation is also in its early phases and the Bank has
not received yet a request of information from the Competition Council.
If applicable, in case of a negative outcome of the above investigations, the Competition Law 21/1996
provisions become applicable (i.e. subject to individualization, depending on gravity, length and potential
mitigating and aggravating circumstances, the related fine might range between 0.5% and 10% from the
turnover in the year prior to the sanction).
However, considering that:
-
based on current info as of today, no specific element of non-compliance with competition law has
been identified by the Bank,
-
the investigation is in an incipient stage and no report has been issued by the Competition Council,
the Bank concludes that the risk is low and remote and therefore no provision should be recognized.
National Agency for Consumer Protection (“ANPC”)
During 2023, ANPC launched an investigation on a large number of banks concerning the observed most
employed method of reimbursement schedule computation (i.e. equal instalments). The Bank was fined
with 50 000 RON for deceiving marketing practice and received an ANPC order to stop these practices.
The Bank launched a series of Court actions concerning both the fine and the order. At this point in time
the ANPC Order is suspended and the actions follow their legal course.
Considering the status of the all above actions, the Bank assesses that as at December 31, 2023, the criteria
for booking a provision or a contingent liability are not met.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
90
42. Fair value
Determination of fair value and fair value hierarchy
To determine and disclose the fair value hierarchy of the financial instruments, the Group follows the three-
level classification of the inputs to valuation techniques used to measure fair value:
●
Level 1: quoted (unadjusted) prices
Level 1 instruments contain the government bonds, priced directly by external counterparties on various
dealing platforms (Bloomberg, Reuters etc.);
●
Level 2: other inputs
that are observable
that particular asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices);
Level 2 instruments include in particular securities that cannot directly be quoted on the market (e.g.
corporate bonds) and firm derivatives, with standard features and common maturities, whose value can be
retrieved or derived from market data;
●
Level 3:
unobservable inputs
).
Level 3 instruments include options traded over-the-counter and other derivatives with specifically-tailored
return profiles and/or maturities extended over the normal spectrum;
The following table shows an analysis of financial instruments recorded at fair value by level of the fair
value hierarchy:
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
91
42. Fair value (continued)
Group
Bank
December 31, 2023
December 31, 2023
Assets measured at fair value
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Derivative financial instruments
Interest rate swaps
-
27,661
-
27,661
-
27,661
-
27,661
Currency swaps
-
12,587
-
12,587
-
12,587
-
12,587
Forward foreign exchange contracts
-
3,177
-
3,177
-
3,177
-
3,177
Options
-
-
43,858
43,858
-
-
43,858
43,858
-
43,425
43,858
87,283
-
43,425
43,858
87,283
Financial assets at fair value through other comprehensive
income
13,429,670
-
-
13,429,670
13,429,670
-
-
13,429,670
Equity investments (listed)
7,456
-
-
7,456
7,456
-
-
7,456
Equity investments (not listed)
-
-
3,919
3,919
-
-
3,919
3,919
Total
13,437,126
-
3,919
13,441,046
13,437,126
-
3,919
13,441,046
Other financial instruments held for trading
1,219,076
829,350
-
2,048,426
1,194,028
829,350
-
2,023,378
Total
14,656,202
872,775
47,777
15,576,755
14,631,154
872,775
47,777
15,551,707
Assets for which fair value is disclosed
Cash and due from Central Bank
11,778,215
-
-
11,778,215
11,778,143
-
-
11,778,143
Due from banks
-
6,129,340
-
6,129,340
-
6,113,975
-
6,113,975
Loans and advances to customers
-
-
40,980,878
40,980,878
-
-
40,574,832
40,574,832
Treasury bills at amortised cost
5,275,613
-
-
5,275,613
5,275,613
-
-
5,275,613
Financial lease receivables
-
-
1,673,622
1,673,622
-
-
-
-
Assets held for sale
-
-
199,535
199,535
-
-
-
-
Total
17,053,828
6,129,340
42,854,034
66,037,202
17,053,756
6,113,975
40,574,832
63,742,563
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
92
42. Fair value (continued)
Group
Bank
December 31, 2023
December 31, 2023
Liabilities measured at fair value
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities
Derivative financial instruments
Interest rate swaps
-
253,207
-
253,207
-
253,207
-
253,207
Currency swaps
-
35,016
-
35,016
-
35,016
-
35,016
Forward foreign exchange contracts
-
3,537
-
3,537
-
3,537
-
3,537
Options
-
-
44,011
44,011
-
-
44,011
44,011
Total
-
291,760
44,011
335,771
-
291,760
44,011
335,771
Other financial instruments held for trading
522,637
414,042
-
936,679
522,637
414,042
-
936,679
Total
522,637
705,802
44,011
1,272,450
522,637
705,802
44,011
1,272,450
Liabilities for which fair value is disclosed
Due to banks
-
1,146,540
-
1,146,540
-
1,146,540
-
1,146,540
Due to customers
-
62,424,534
-
62,424,534
-
62,660,775
-
62,660,775
Borrowed funds
-
7,004,362
-
7,004,362
-
4,834,225
-
4,834,225
Subordinated debts
-
1,245,400
-
1,245,400
-
1,245,400
-
1,245,400
Total
-
71,820,836
-
71,820,836
-
69,886,940
-
69,886,940
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
93
42. Fair value (continued)
Group
Bank
December 31, 2022
December 31, 2022
Assets measured at fair value
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Derivative financial instruments
Interest rate swaps
-
33,419
-
33,419
-
33,419
-
33,419
Currency swaps
-
47,067
-
47,067
-
47,067
-
47,067
Forward foreign exchange contracts
-
34,004
-
34,004
-
34,004
-
34,004
Options
-
-
65,609
65,609
-
-
65,609
65,609
-
114,490
65,609
180,099
-
114,490
65,609
180,099
Financial assets at fair value through other
comprehensive income
13,439,596
-
-
13,439,596
13,439,596
-
-
13,439,596
Equity investments (listed)
4,012
-
-
4,012
4,012
-
-
4,012
Equity investments (not listed)
-
-
4,120
4,120
-
-
4,120
4,120
Other securities quoted
-
6,130
-
6,130
-
-
-
-
Total
13,443,608
6,130
4,120
13,453,857
13,443,608
-
4,120
13,447,728
Other financial instruments held for trading
426,524
1,736,754
-
2,163,278
420,458
1,736,754
-
2,157,212
Total
13,870,132
1,857,374
69,729
15,797,234
13,864,066
1,851,244
69,729
15,785,039
Assets for which fair value is disclosed
Cash and due from Central Bank
7,625,002
-
-
7,625,002
7,624,933
-
-
7,624,933
Due from banks
-
7,220,963
-
7,220,963
-
7,204,987
-
7,204,987
Loans and advances to customers
-
-
36,259,563
36,259,563
-
-
35,554,410
35,554,410
Treasury bills at amortised cost
2,675,354
-
-
2,675,354
2,675,354
-
-
2,675,354
Financial lease receivables
-
-
1,390,610
1,390,610
-
-
-
-
Total
10,300,356
7,220,963
37,650,172
55,171,491
10,300,287
7,204,987
35,554,410
53,059,684
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
94
42. Fair value (continued)
Group
Bank
December 31, 2022
December 31, 2022
Liabilities measured at fair value
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities
Derivative financial instruments
Interest rate swaps
-
341,983
-
341,983
-
341,983
-
341,983
Currency swaps
-
32,726
-
32,726
-
32,726
-
32,726
Forward foreign exchange contracts
-
62,621
-
62,621
-
62,621
-
62,621
Options
-
-
65,645
65,645
-
-
65,645
65,645
Total
-
437,330
65,645
502,975
-
437,330
65,645
502,975
Other financial instruments held for trading
294,199
646,372
-
940,571
294,199
646,372
-
940,571
Total
294,199
1,083,702
65,645
1,443,546
294,199
1,083,702
65,645
1,443,546
Liabilities for which fair value is disclosed
Due to banks
-
636,888
-
636,888
-
636,888
-
636,888
Due to customers
-
56,645,790
-
56,645,790
-
56,900,621
-
56,900,621
Borrowed funds
-
5,625,488
-
5,625,488
-
3,567,262
-
3,567,262
Subordinated debts
-
1,238,651
-
1,238,651
-
1,238,651
-
1,238,651
Total
-
64,146,817
-
64,146,817
-
62,343,422
-
62,343,422
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
95
42. Fair value (continued)
Financial instruments measured at fair value
The following is a description of the determination of fair value for financial instruments which are recorded
at fair value using valuation techniques. These incorporate the Group’s estimate of assumptions that a
market participant would make when valuing the instruments.
Treasury notes
through other comprehensive income or financial instruments held for trading measured at fair value
through profit and loss, being measured using a valuation technique based on market quotes published by
Bloomberg or by Reuters (market approach).
Derivatives
The fair value of the derivatives is determined using valuation techniques commonly known on the market,
such as discounted cash flows for swaps or Black-Sholes formula for options.
Firm derivatives
main derivative products measured using as valuation technique the income approach (discounting cash
flows) and incorporating observable inputs from market (foreign exchange spot rate, forward rates, interest
rate rates, futures), both directly observable ones (explicit parameters) and indirectly observable ones.
The directly observable parameters are variables that come directly from the market and are presumed to
be easily available, accessible to each market participant. The main explicit parameters used in valuation
of firm financial instruments are interbank fixing FX rates published by NBR, interbank swap points,
interbank bid/ask interest rates, futures quotes on EUR and USD. Implicit parameters are variables obtained
through standard intermediary calculation, using market prices for relevant financial instruments. The yield
curves designated at the level of each product and currency are fed with explicit parameters according to
the pre-set configuration, facilitating the computation of implicit parameters used in computing the fair
value such as Zero-coupons, Discount Factors and Forward Interest Rates.
Conditional derivatives
mark-to-model approach. The model is calibrated to derive the value of the option based on the current
market conditions (spot rates) and the future values presumed to be attained by the underlying (forward
exchange rates, FRAs etc.), integrating in the calculation the standard option-sensitivities (delta, gamma,
vega, theta), along with information regarding the size of the positions and the liquidity of the instrument.
The fair value is determined through SG’s computation module, the values of the specific parameters being
daily retrieved from the market and stored in the database, serving as direct input in the daily final formula
or further used for the statistical calculation implied by the valuation process.
BRD manages the group of these financial assets and liabilities (options) on the basis of the entity’s net
exposure to a particular market risk (foreign exchange, interest rate, price risk) and, according to the trading
book policy in place, BRD assumes no residual market risk induced by option-trading. Any bought option
is perfectly matched on the same day with a sold option, identical in terms of option type, underlying,
exercise prices, maturity. The perfect back-to-back system is subject to daily controls performed at back-
office level, to ensure that no mismatch occurred and there is no residual open position on options.
Therefore, the impact of a specific change on the estimated value on one non-observable parameter used
on the valuation of an option classified/ accounted as financial asset is offset by same specific change on
estimated value of the same non-observable parameter on the valuation of the mirror-replicated option
classified/ accounted as financial liability.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
96
42. Fair value (continued)
Equities
These assets are valued using models which sometimes only incorporate data observable in the market and
at other times use both observable and non-observable data. The non-observable inputs to the models
include assumptions regarding the financial performance of the investee.
The fair value of equity instruments not listed classified as at fair value through profit and loss and
consisting of ordinary shares of other entities is determined by using the net assets of the entities as at the
end of the last closed reporting period. The entities net assets represent the best estimation of the current
replacement cost that would be paid in order to replace the holding as it consists of the initial capital
investment adjusted by the financial performance of the entity.
Fair value of financial assets and liabilities not carried at fair value
Financial assets
Deposits with banks, loans originated by the Group and leases are measured at amortized cost using the
effective interest rate method less any impairment allowance.
For deposits with banks, amortized cost is estimated to approximate fair value due to their short–term
nature, interest rates reflecting current market conditions and no significant transaction costs.
For loans and lease receivables the fair value is determined by using discounted cash-flows based on interest
rate offered to similar products and similar time horizons.
Financial liabilities
The amortized cost of deposits from banks is considered to approximate their respective fair values, since
these items have predominantly short maturities, carry interest rates reflecting current market conditions
and are settled without significant transaction costs.
For due to customers and borrowings amounts the fair value is determined by using discounted cash-flows
based on interest rate offered to similar products and customers and with similar time horizons.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
97
42. Fair value (continued)
The following table presents the fair value and the carrying amount per type of financial instrument.
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Carrying value
Fair value
Carrying value
Fair value
Carrying value
Fair value
Carrying value
Fair value
Financial assets
Cash and due from Central Bank
11,778,215
11,778,215
7,625,002
7,625,002
11,778,143
11,778,143
7,624,933
7,624,933
Due from banks
6,129,340
6,129,340
7,220,963
7,220,963
6,113,975
6,113,975
7,204,987
7,204,987
Loans and advances to customers
40,613,391
40,980,878
36,288,342
36,259,563
40,201,690
40,574,832
35,542,279
35,554,410
Treasury bills at amortised cost
5,182,430
5,275,613
2,730,706
2,675,354
5,182,430
5,275,613
2,730,706
2,675,354
Financial lease receivables
1,691,734
1,673,622
1,407,394
1,390,610
-
-
-
-
Assets held for sale
209,886
199,535
-
-
-
-
-
-
Total
65,604,996
66,037,202
55,272,407
55,171,491
63,276,238
63,742,563
53,102,905
53,059,684
Financial liabilities
Due to banks
1,146,540
1,146,540
636,888
636,888
1,146,540
1,146,540
636,888
636,888
Due to customers
62,405,609
62,424,534
56,660,841
56,645,790
62,641,838
62,660,775
56,915,740
56,900,621
Borrowed funds
7,004,362
7,004,362
5,625,488
5,625,488
4,834,225
4,834,225
3,567,262
3,567,262
Subordinated debts
1,245,400
1,245,400
1,238,651
1,238,651
1,245,400
1,245,400
1,238,651
1,238,651
Total
71,801,911
71,820,836
64,161,868
64,146,817
69,868,003
69,886,940
62,358,541
62,343,422
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
98
42. Fair value (continued)
The methods and significant assumptions applied in determining the fair value of the elements in the table
above are listed below.
The fair value of fixed rate instruments is estimated by discounting the maturing cash flows with discount
factors derived from the rates offered to similar clients, for similar products on similar maturities. The fair
value of floating instruments is estimated by discounting from the next re-pricing date using as discount
factors rates offered to similar clients, for similar products on similar time horizons.
Changes in the credit quality of loans within the portfolio are not taken into account in determining gross
fair values, as the impact of impairment is recognized separately by deducting the amount of the allowance
for credit losses from both carrying and fair values.
For the purposes of the fair value disclosure, the interest accrued to date is included in the carrying value
of the financial instruments.
The transfers between levels of fair value hierarchy are deemed to have occurred the date of the event or
change in circumstances that caused the transfer, but not later that the end of the reporting period.
Movement in level 3:
Fair value of equity investments not listed is estimated based on net assets of the investments.
Equity investments
(not listed)
Options (A)
Options (L)
Closing balance as at December 31, 2021
4,049
35,214
35,258
Acquisitions
-
7,777
7,777
Sales
-
(1,579)
(1,579)
Reimbursements
-
(23,968)
(23,968)
Gain losses from change in fair value
71
48,165
48,157
Closing balance as at December 31, 2022
4,120
65,609
65,645
Acquisitions
-
8,001
8,001
Sales
-
(296)
(296)
Reimbursements
-
(6,144)
(6,144)
Gain losses from change in fair value
(201)
(23,312)
(23,195)
Closing balance as at December 31, 2023
3,919
43,858
44,011
43. Subsequent events
According to Law 296 /2023, the Romanian Fiscal Code was amended in order to introduce, starting
January 1st, 2024, a supplementary tax for credit institutions, i.e. the tax on turnover which is computed as
follows: for 2024 and 2025 the tax is 2% from the turnover, while starting 2026 the rate is 1%. The tax is
additional to the corporate income tax, it is computed and payable on a quarterly basis and is a non-
deductible expense.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
99
44. Risk management
Risk management within the Group and Bank is based on an integrated concept that takes into account the
statutory and regulatory norms as defined and required by the National Bank of Romania, Société Générale
risk management standards as well as best practices accepted by the banking industry. The level of risk
appetite fully reflects the Group’s and Bank’s risk management strategy, aiming to support a sustainable
growth of its lending activity while reinforcing the Bank’s and Group’s market position.
Risk governance relies on the three lines of defense model, which reinforces segregation of duties between
various control functions.
The
first line
management of the risks arisen in conducting their daily activities, taking into account the Bank’s risk
appetite and its existing policies, procedures and controls.
The
second line
responsible for further identifying, measuring, monitoring and reporting risks, while ensuring the
compliance with internal and external requirements and providing support to the business/operational
functions in executing their duties.
The
third line
and objective assurance on the quality and effectiveness of the Bank’s internal control system, the first and
second lines of defense and the risk governance framework.
The Group and Bank’s risk management governance is centered along the following axes:
●
continuous process of identification, assessment, monitoring, reporting and control, considering risk
limits, approval competences, segregation of duties and other mitigation techniques;
●
risks are taken within the defined risk appetite approved by the Board of Directors;
●
strong involvement of the Bank’s management body in the risk management system and promotion of
risk culture, throughout the entire organizational structure, from the Board of Directors down to
operational teams;
●
clearly defined internal rules and procedures;
●
communication of information regarding risk management across the organization in a timely, accurate,
comprehensible and meaningful manner;
●
continuous supervision by an independent risk function to monitor risks and to enforce rules and
procedures.
The Group and Bank’s risk management is organized around two key principles:
●
risk assessment departments must be independent from the business divisions;
●
the risk management approach and risk monitoring must be consistent throughout the Group and Bank.
The Group and the Bank is exposed to the risks inherent to its core businesses. The main financial assets
and liabilities are the loans and advances, lease receivables, amounts placed with NBR, demand and term
deposits and borrowings. These instruments are exposed to a series of risks such as credit risk, foreign
exchange risk, interest rate risk, liquidity risk and market risk which are discussed below.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
100
44. Risk management (continued)
44.1 Credit risk
Credit risk represents current or future risk of negative impact on profits and capital arising from a debtor’s
failure to fulfil the contractual obligations or failure to perform as agreed. The credit risk is inherent to
traditional banking products - loans, commitments to lend and other contingent liabilities such as letters of
credit - and to fair value derivative contracts (refer to the Notes 7, 9, 10, 11 and 41).
The Group and Bank’s credit policy is based on the principle that approval of any credit risk undertaking
must rely on a sound knowledge of a given client and its business, an understanding of the purpose and
structure of the transaction and the sources of debt repayment. As part of Group Société Générale, the Bank
has a cash flow based lending approach, meaning the bank expects debt to be serviced primarily through
the future cash flow (legal entities)/income (individuals) generated by the client.
The Group and Bank assesses the quality of its Non Retail portfolio by use of Société Générale’s rating
system, with a scale from 1 to 10 (1 to 7- in bonis exposures, 8 to 10 – defaulted exposures). Within the in
bonis portfolio, the most vulnerable counterparties are grouped into a distinct category (referred to as
sensitive, rating class 7) which is subject to increased monitoring requirements, in order to improve
reactivity through timely implementation of corrective measures.
The internal rating system is based on models that include both quantitative and qualitative assessment
criteria, differentiated by counterparty type and size, in which the expert judgment is a key element. Internal
models are developed based on the Group and Bank’s available data history and the use of rating model is
regulated by internal norms and procedures. Rating review is performed at least once per year, or as soon
as new and significant aspects impacting the credit quality of the counterparty occur. This process results
in the classification of exposures between sound, sensitive and non performing client status.
Throughout the post approval period, the monitoring of counterparties is conducted on a continuous basis,
so that potential vulnerabilities can be identified early and reacted upon. The outcome of monitoring activity
is analyzed as an inherent responsibility of commercial and risk structures. Risky counterparties defined
according to internally prescribed criteria are closely monitored through dedicated committees, with the
aim of defining a strategy towards them and ensuring consistent rating and loss recognition.
Retail counterparties are assessed at origination, based on application scorecards and/or behavioral rating
models, and monitored throughout the lifespan of the loans using behavioral rating models.
Security, in the form of collateral (funded protection) or guarantee (unfunded protection), is accepted by
the Bank in order to mitigate credit risk and do not serve as a substitute for the borrower’s ability to meet
obligations. The securities accepted by the Bank in support of granted commitments primarily include real
estate, both residential and commercial, guarantees issued by other banks and guarantee funds, equipment
and inventories.
Concentration risk related to credit risk is managed primarily through a set of limits established based on
the Bank’s risk appetite and the expectations on the evolution of the economic environment. The limits are
monitored periodically and revised whenever necessary, but at least annually. The set of limits is related to
the following dimensions: individual concentration (single name or group of connected clients), economic
sector concentration, geographical concentration, concentration by product type/transaction type and credit
risk mitigations techniques types.
The Bank has in place a process of continuous monitoring of exposure by concentration dimensions, set
out in the local normative guidelines, meant to prevent any excessive concentration.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
101
44. Risk management (continued)
44.1 Credit risk (continued)
Maximum exposure to credit risk before considering any collaterals or guarantees
Group
December 31, 2023
December 31, 2022
ASSETS
Due from Central Bank
9,256,037
5,093,654
Due from banks
6,129,340
7,220,963
Derivatives and other financial instruments held for trading
2,135,709
2,343,377
Financial assets at fair value through profit and loss
11,376
14,262
Financial assets at fair value through other comprehensive income
13,429,670
13,439,596
Financial assets at amortised cost
45,795,821
39,019,048
Loans, gross
42,307,745
38,053,311
Impairment allowance for loans
(1,694,354)
(1,764,969)
40,613,391
36,288,342
5,182,430
2,730,706
Finance lease receivables
1,691,734
1,407,394
Other assets
472,078
392,517
Assets held for sale
209,886
-
Total assets
79,131,651
68,930,811
Letters of guarantee granted
6,929,469
6,449,588
Financing commitments granted
6,923,587
6,183,371
Total commitments granted
13,853,056
12,632,959
Total credit risk exposure
92,984,707
81,563,770
Bank
December 31, 2023
December 31, 2022
ASSETS
Due from Central Bank
9,256,037
5,093,654
Due from banks
6,113,975
7,204,987
Derivatives and other financial instruments held for trading
2,110,661
2,337,311
Financial assets at fair value through profit and loss
11,376
8,132
Financial assets at fair value through other comprehensive income
13,429,670
13,439,596
Financial assets at amortised cost
45,384,120
38,272,985
Loans, gross
41,881,907
37,242,399
Impairment allowance for loans
(1,680,217)
(1,700,120)
40,201,690
35,542,279
5,182,430
2,730,706
Other assets
454,736
383,885
Total assets
76,760,575
66,740,550
Letters of guarantee granted
6,939,810
6,451,531
Financing commitments granted
6,868,776
5,740,595
Total commitments granted
13,808,586
12,192,126
Total credit risk exposure
90,569,161
78,932,676
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
102
44. Risk management (continued)
44.1 Credit risk (continued)
Analyses of the inputs to the ECL model is made under multiple economic scenarios
An overview of the approach to estimate ECLs is set out in Note 2 e) Significant accounting judgments and
estimates and Note 3 Summary of significant accounting policies. Economic input data is obtained from a
team of economists in the Bank and Group Société Générale. To ensure accuracy and completeness, inputs
are corroborated with third party sources – economic forecasts issued by specialized institutions.
Expected losses are computed based on three macroeconomic scenarios, each with a corresponding weight:
optimistic (10%), baseline (62%) and stress scenario (28%). The table below shows the values of the key
forward looking economic variables/ assumptions used in the base, optimistic and stress economic scenario
for the ECL calculation.
The Bank presents the estimation of key drivers for 2023 because these scenarios have produced effects
during the year and have been used in the computation of ECL as at December 31, 2023.
December, 31 2023
Key drivers
ECL Scenario
2024
2025
2026
Baseline/ Central
3.0
2.7
3.0
GDP growth [%]
Stress
-2.0
-0.3
1.5
Optimistic
4.0
4.7
4.0
Baseline/ Central
5.6
5.4
5.2
Unemployment rate [%]
Stress
6.6
6.9
7.4
Optimistic
5.0
4.5
4.2
Baseline/ Central
5
5
5
Exchange rate RON/EUR [RON]
Stress
6.2
6.5
6.2
Optimistic
5
5
5
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
103
44. Risk management (continued)
44.1 Credit risk (continued)
Considering the internal rating quality, the exposures of the counterparties not impaired are split in 4
categories which are defined below:
Very good
strong.
Good
counterparty is somewhat more sensitive to adverse changes in circumstances and economic conditions.
Standard grade
but more likely to be undermined by unfavourable economic conditions and changes in circumstances.
Sub-standard grade
increased credit risk. Timely debt service repayment is uncertain and depends on favourable economic and
financial conditions. Close and more frequent monitoring of the client’s capacity to service the bank debt
is needed, in order to be able to react to a potential deterioration via implementation of corrective measures.
Analysis of due from banks by credit rating
Group
Bank
2023
2022
2023
2022
Internal rating grade
Very good grade
5,998,449
6,926,230
5,983,084
6,910,254
Good grade
-
246,081
-
246,081
Standard grade
627
22,007
627
22,007
Not rated internally
130,264
26,652
130,264
26,652
Total
6,129,340
7,220,970
6,113,975
7,204,994
Provision allowance
Very good grade
-
(7)
-
(7)
Net Carying amount
6,129,340
7,220,963
6,113,975
7,204,987
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
104
44. Risk management (continued)
44.1 Credit risk (continued)
Sector analysis of loans granted and impairment allowance
Group
December 31, 2023
%
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Individuals
51.1%
31.4%
85.0%
83.8%
75.7%
75.5%
40.6%
14.5%
57.6%
66.0%
Agriculture, forestry and fishing
4.3%
7.4%
2.8%
3.9%
1.8%
1.4%
0.0%
0.0%
4.0%
3.6%
Mining and quarrying
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.0%
Manufacturing
8.2%
11.9%
2.0%
2.2%
2.4%
2.6%
3.9%
0.6%
6.9%
4.8%
Electricity, gas, steam and air conditioning supply
3.7%
4.4%
5.1%
3.9%
0.3%
0.1%
0.0%
0.0%
3.9%
2.3%
Water supply
0.5%
0.7%
0.1%
0.2%
0.0%
0.0%
0.0%
0.0%
0.4%
0.2%
Construction
3.5%
5.7%
0.7%
0.8%
5.1%
5.2%
0.0%
0.0%
3.0%
3.9%
Wholesale and retail trade
13.5%
18.3%
2.5%
3.2%
0.8%
0.8%
16.2%
2.7%
11.2%
5.9%
Transport and storage
2.5%
3.6%
0.5%
0.6%
5.3%
5.4%
0.1%
0.2%
2.2%
3.4%
Accommodation and food service activities
1.0%
1.6%
0.2%
0.3%
3.8%
3.6%
0.0%
0.0%
0.9%
2.0%
Information and communication
1.3%
1.6%
0.0%
0.0%
0.4%
0.3%
0.0%
0.0%
1.1%
0.6%
Financial institutions
2.5%
3.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2.0%
0.8%
Real estate activities
1.6%
2.8%
0.2%
0.2%
3.6%
4.1%
36.6%
80.3%
1.5%
3.8%
Professional, scientific and technical activities
0.4%
0.3%
0.2%
0.2%
0.4%
0.4%
0.0%
0.0%
0.3%
0.3%
Administrative and support service activities
0.5%
0.8%
0.1%
0.1%
0.0%
0.0%
2.6%
1.7%
0.5%
0.3%
Public administration and defence, compulsory social security
3.5%
2.8%
0.0%
0.0%
0.3%
0.4%
0.0%
0.0%
2.8%
0.9%
Education
0.1%
0.1%
0.3%
0.4%
0.0%
0.0%
0.0%
0.0%
0.1%
0.1%
Human health services and social work activities
1.4%
2.8%
0.2%
0.2%
0.1%
0.1%
0.0%
0.0%
1.2%
0.8%
Arts, entertainment and recreation
0.2%
0.3%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
0.1%
Other services
0.2%
0.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
0.1%
Total
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Loans to individuals include mortgage loans, consumer loans and overdrafts.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
105
44. Risk management (continued)
44.1 Credit risk (continued)
Sector analysis of loans granted and impairment allowance (continued)
Bank
December 31, 2023
%
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Individuals
51.6%
31.5%
86.0%
84.6%
76.8%
76.3%
40.6%
14.5%
58.2%
66.5%
Agriculture, forestry and fishing
3.9%
7.2%
1.9%
3.2%
0.9%
0.7%
0.0%
0.0%
3.5%
3.1%
Mining and quarrying
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.0%
Manufacturing
8.2%
11.9%
2.1%
2.2%
2.4%
2.7%
3.9%
0.6%
7.0%
4.8%
Electricity, gas, steam and air conditioning supply
3.8%
4.5%
5.1%
4.0%
0.3%
0.1%
0.0%
0.0%
3.9%
2.4%
Water supply
0.5%
0.7%
0.1%
0.2%
0.0%
0.0%
0.0%
0.0%
0.4%
0.2%
Construction
3.5%
5.8%
0.6%
0.8%
5.1%
5.3%
0.0%
0.0%
3.0%
4.0%
Wholesale and retail trade
13.5%
18.3%
2.4%
3.1%
0.8%
0.8%
16.2%
2.7%
11.3%
5.9%
Transport and storage
2.1%
3.5%
0.4%
0.5%
4.9%
5.1%
0.1%
0.2%
1.9%
3.2%
Accommodation and food service activities
1.0%
1.6%
0.2%
0.3%
3.8%
3.6%
0.0%
0.0%
0.9%
2.0%
Information and communication
1.4%
1.6%
0.0%
0.0%
0.4%
0.3%
0.0%
0.0%
1.1%
0.6%
Financial institutions
2.6%
3.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2.0%
0.8%
Real estate activities
1.6%
2.8%
0.2%
0.2%
3.6%
4.1%
36.6%
80.3%
1.5%
3.8%
Professional, scientific and technical activities
0.4%
0.3%
0.2%
0.2%
0.4%
0.4%
0.0%
0.0%
0.3%
0.3%
Administrative and support service activities
0.5%
0.8%
0.1%
0.1%
0.1%
0.0%
2.6%
1.7%
0.4%
0.3%
Public administration and defence, compulsory social security
3.6%
2.8%
0.0%
0.0%
0.3%
0.4%
0.0%
0.0%
2.9%
0.9%
Education
0.1%
0.1%
0.3%
0.4%
0.0%
0.0%
0.0%
0.0%
0.1%
0.1%
Human health services and social work activities
1.4%
2.9%
0.2%
0.2%
0.1%
0.1%
0.0%
0.0%
1.2%
0.8%
Arts, entertainment and recreation
0.2%
0.3%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
0.1%
Other services
0.2%
0.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
0.1%
Total
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Loans to individuals include mortgage loans, consumer loans and overdrafts.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
106
44. Risk management (continued)
44.1 Credit risk (continued)
Sector analysis of loans granted and impairment allowance (continued)
Group
December 31, 2022
%
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying
amount
Impairmen
t allowance
Gross
carrying
amount
Impairmen
t allowance
Gross
carrying
amount
Impairmen
t allowance
Gross
carrying
amount
Impairmen
t allowance
Gross
carrying
amount
Impairmen
t allowance
Individuals
54.7%
35.1%
82.3%
83.1%
70.7%
72.3%
52.8%
12.9%
61.8%
67.3%
Agriculture, forestry and fishing
3.8%
6.3%
2.8%
3.6%
4.2%
4.6%
0.0%
0.0%
3.5%
4.6%
Mining and quarrying
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.0%
Manufacturing
7.5%
11.1%
2.7%
2.5%
3.0%
3.2%
1.6%
0.7%
6.2%
4.6%
Electricity, gas, steam and air conditioning supply
5.3%
5.2%
1.8%
0.3%
2.6%
0.9%
0.0%
0.0%
4.3%
1.6%
Water supply
0.3%
0.5%
0.2%
0.1%
0.0%
0.0%
0.0%
0.0%
0.3%
0.1%
Construction
2.3%
4.4%
0.3%
0.3%
7.0%
7.5%
0.0%
0.0%
1.9%
4.3%
Wholesale and retail trade
11.8%
18.2%
1.9%
1.6%
1.9%
1.3%
2.6%
2.3%
9.1%
4.9%
Transport and storage
2.1%
3.8%
0.9%
2.0%
0.5%
0.5%
0.0%
0.0%
1.8%
1.7%
Accommodation and food service activities
0.9%
1.6%
0.1%
0.2%
3.9%
3.6%
0.0%
0.0%
0.8%
2.0%
Information and communication
1.7%
1.7%
0.0%
0.1%
0.0%
0.0%
0.0%
0.0%
1.2%
0.4%
Financial institutions
2.3%
3.2%
2.9%
2.1%
0.0%
0.0%
0.0%
0.0%
2.4%
1.4%
Real estate activities
1.2%
2.4%
2.7%
2.0%
1.1%
1.5%
42.4%
82.9%
1.6%
3.0%
Professional, scientific and technical activities
0.4%
0.3%
0.1%
0.2%
2.8%
3.5%
0.0%
0.0%
0.4%
1.7%
Administrative and support service activities
0.4%
0.7%
0.1%
0.2%
0.1%
0.1%
0.6%
1.3%
0.3%
0.3%
Public administration and defence, compulsory social security
3.7%
2.7%
0.3%
0.3%
2.0%
0.9%
0.0%
0.0%
2.9%
1.0%
Education
0.0%
0.1%
0.3%
0.5%
0.0%
0.0%
0.0%
0.0%
0.1%
0.2%
Human health services and social work activities
1.2%
2.0%
0.5%
0.8%
0.2%
0.2%
0.0%
0.0%
1.0%
0.8%
Arts, entertainment and recreation
0.2%
0.4%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
0.1%
Other services
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.0%
Total
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Loans to individuals include mortgage loans, consumer loans and overdrafts.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
107
44. Risk management (continued)
44.1 Credit risk (continued)
Sector analysis of loans granted and impairment allowance (continued)
Bank
December 31, 2022
%
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying
amount
Impairment
allowance
Gross carrying
amount
Impairment
allowance
Gross carrying
amount
Impairment
allowance
Gross carrying
amount
Impairment
allowance
Gross carrying
amount
Impairment
allowance
Individuals
54.3%
33.2%
83.8%
84.3%
70.2%
71.5%
52.8%
12.9%
61.8%
67.0%
Agriculture, forestry and fishing
3.6%
6.5%
1.4%
2.5%
3.8%
4.5%
0.0%
0.0%
3.1%
4.1%
Mining and quarrying
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.0%
Manufacturing
7.6%
11.5%
2.8%
2.6%
3.2%
3.3%
1.6%
0.7%
6.3%
4.7%
Electricity, gas, steam and air conditioning supply
5.4%
5.3%
1.8%
0.3%
2.7%
0.9%
0.0%
0.0%
4.4%
1.6%
Water supply
0.3%
0.5%
0.2%
0.1%
0.0%
0.0%
0.0%
0.0%
0.3%
0.2%
Construction
2.3%
4.5%
0.3%
0.3%
7.3%
7.9%
0.0%
0.0%
2.0%
4.5%
Wholesale and retail trade
12.0%
18.8%
1.7%
1.5%
1.9%
1.3%
2.6%
2.3%
9.2%
5.0%
Transport and storage
1.8%
3.8%
0.6%
1.8%
0.2%
0.3%
0.0%
0.0%
1.4%
1.5%
Accommodation and food service activities
0.9%
1.7%
0.1%
0.1%
4.1%
3.8%
0.0%
0.0%
0.8%
2.0%
Information and communication
1.7%
1.8%
0.0%
0.1%
0.0%
0.0%
0.0%
0.0%
1.3%
0.4%
Financial institutions
2.5%
3.3%
3.0%
2.1%
0.0%
0.0%
0.0%
0.0%
2.6%
1.4%
Real estate activities
1.3%
2.5%
2.8%
2.1%
1.1%
1.5%
42.4%
82.9%
1.7%
3.1%
Professional, scientific and technical activities
0.4%
0.3%
0.1%
0.2%
3.0%
3.7%
0.0%
0.0%
0.4%
1.8%
Administrative and support service activities
0.4%
0.7%
0.2%
0.2%
0.1%
0.1%
0.6%
1.3%
0.3%
0.3%
Public administration and defence, compulsory social security
3.8%
2.8%
0.3%
0.3%
2.1%
0.9%
0.0%
0.0%
2.9%
1.1%
Education
0.0%
0.1%
0.3%
0.5%
0.0%
0.0%
0.0%
0.0%
0.1%
0.2%
Human health services and social work activities
1.2%
2.0%
0.5%
0.8%
0.2%
0.3%
0.0%
0.0%
1.0%
0.8%
Arts, entertainment and recreation
0.2%
0.5%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
0.1%
Other services
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.1%
Total
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Loans to individuals include mortgage loans, consumer loans and overdrafts.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
108
44. Risk management (continued)
44.1 Credit risk (continued)
Analysis of collateral coverage – Loans and advances
Group
December 31, 2023
collateralized
exposure
Collaterals &
Guarantees
Under-
collateralized
exposure
Collaterals &
Guarantees
Non-retail lending
1,978,983
4,551,097
14,448,582
2,453,984
Retail lending
15,545,644
29,060,658
10,334,537
516,934
379,595
836,057
1,127,996
303,850
10,485
34,126
8,939,305
1,480
15,155,564
28,190,476
267,236
211,604
Total
17,524,627
33,611,755
24,783,119
2,970,918
out of which non-performing
Non-retail lending
127,244
292,803
99,192
57,139
Retail lending
300,725
750,178
473,688
23,769
5,209
21,414
22,714
8,793
1,131
1,786
430,290
79
294,385
726,977
20,684
14,896
Total
427,969
1,042,981
572,881
80,907
December 31, 2022
collateralized
exposure
Collaterals &
Guarantees
Under-
collateralized
exposure
Collaterals &
Guarantees
Non-retail lending
2,189,968
4,961,785
11,261,966
1,679,572
Retail lending
15,185,445
26,902,441
9,415,931
574,100
376,637
830,323
710,299
314,552
11,631
34,776
8,390,992
1,231
14,797,177
26,037,342
314,640
258,317
Total
17,375,413
31,864,226
20,677,898
2,253,672
out of which non-performing
Non-retail lending
131,395
272,730
174,531
90,108
Retail lending
272,185
638,242
466,304
29,239
5,703
27,797
15,425
4,784
627
371
415,970
43
265,856
610,074
34,909
24,411
Total
403,580
910,973
640,835
119,347
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
109
44. Risk management (continued)
44.1 Credit risk (continued)
Analysis of collateral coverage – Loans and advances (continued)
Bank
December 31, 2023
collateralized
exposure
Collaterals &
Guarantees
Under-
collateralized
exposure
Collaterals &
Guarantees
Non-retail lending
1,761,139
4,185,246
14,427,542
2,430,292
Retail lending
15,377,769
28,768,006
10,315,457
501,057
213,023
543,404
1,108,916
287,973
10,485
34,126
8,939,305
1,480
15,154,261
28,190,476
267,236
211,604
Total
17,138,908
32,953,251
24,742,999
2,931,349
out of which non-performing
Non-retail lending
124,652
287,135
98,937
57,139
Retail lending
300,725
750,178
473,688
23,769
5,209
21,414
22,714
8,793
1,131
1,786
430,290
79
294,385
726,977
20,684
14,896
Total
425,377
1,037,313
572,626
80,907
December 31, 2022
collateralized
exposure
Collaterals &
Guarantees
Under-
collateralized
exposure
Collaterals &
Guarantees
Non-retail lending
2,014,971
4,704,502
11,278,311
1,657,127
Retail lending
15,035,398
26,677,474
8,913,718
553,755
226,591
605,356
688,396
294,206
11,631
34,776
7,910,682
1,231
14,797,177
26,037,342
314,640
258,317
Total
17,050,369
31,381,976
20,192,029
2,210,882
out of which non-performing
Non-retail lending
129,759
268,796
174,296
90,108
Retail lending
272,185
638,242
466,304
29,239
5,703
27,797
15,425
4,784
627
371
415,970
43
265,856
610,074
34,909
24,411
Total
401,944
907,038
640,600
119,347
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
110
44. Risk management (continued)
44.1 Credit risk (continued)
Analysis of collateral coverage for finance lease receivables
December 31, 2023
exposure
Collaterals &
Guarantees
Under-collateralized
exposure
Collaterals &
Guarantees
1,057,804
1,563,964
81,709
52,595
629,044
1,008,969
16,949
6,258
residential
629,044
1,008,969
16,899
6,258
-
-
50
-
Total
1,686,848
2,572,933
98,658
58,853
December 31, 2022
exposure
Collaterals &
Guarantees
Under-collateralized
exposure
Collaterals &
Guarantees
877,900
1,333,317
68,262
43,749
533,868
856,018
21,349
7,083
residential
533,815
855,958
21,277
7,083
53
59
73
-
Total
1,411,768
2,189,335
89,611
50,832
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
111
44. Risk management (continued)
44.1 Credit risk (continued)
Rating analysis of loans
Group
Retail lending
December 31, 2023
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Very good grade
10,396,982
7,948
-
-
10,404,931
Good grade
6,530,116
4,239,029
-
-
10,769,145
Standard grade
1,473,739
1,533,399
-
-
3,007,138
Sub-standard grade
-
721,628
-
15,437
737,065
Non- performing
-
-
765,104
9,309
774,413
-
-
13,013
224
13,237
Not rated internally
134,787
41,567
11,134
-
187,489
Total
18,535,625
6,543,571
776,238
24,746
25,880,181
Provision allowance
Internal rating grade
Very good grade
(53,161)
(104)
-
-
(53,265)
Good grade
(50,174)
(96,320)
-
-
(146,494)
Standard grade
(38,873)
(164,082)
-
-
(202,955)
Sub-standard grade
-
(180,061)
-
(96)
(180,158)
Non- performing
-
-
(572,290)
(3,909)
(576,198)
-
-
(11,836)
(224)
(12,060)
Not rated internally
(698)
(2,491)
(6,528)
-
(9,716)
Total
(142,904)
(443,059)
(578,818)
(4,005)
(1,168,786)
Net Carying amount
18,392,720
6,100,513
197,421
20,741
24,711,395
Non-Retail lending
December 31, 2023
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Good grade
10,277,680
464,256
-
-
10,741,936
Standard grade
4,999,167
99,956
-
-
5,099,122
Sub-standard grade
-
353,428
-
6,643
360,070
Non- performing
-
-
197,271
29,166
226,437
-
-
174,952
29,091
204,044
Total
15,276,846
917,640
197,271
35,808
16,427,565
Provision allowance
Internal rating grade
Good grade
(162,701)
(23,983)
-
-
(186,684)
Standard grade
(118,933)
(7,484)
-
-
(126,417)
Sub-standard grade
-
(37,034)
-
(3)
(37,037)
Non- performing
-
-
(151,877)
(23,554)
(175,430)
-
-
(136,955)
(23,487)
(160,442)
Total
(281,634)
(68,501)
(151,877)
(23,557)
(525,569)
Net Carying amount
14,995,212
849,139
45,394
12,252
15,901,996
Total
December 31, 2023
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Very good grade
10,396,982
7,948
-
-
10,404,931
Good grade
16,807,796
4,703,285
-
-
21,511,081
Standard grade
6,472,905
1,633,354
-
-
8,106,260
Sub-standard grade
-
1,075,056
-
22,080
1,097,136
Non- performing
-
-
962,375
38,475
1,000,850
-
-
187,966
29,315
217,281
Not rated internally
134,787
41,567
11,134
-
187,489
Total
33,812,471
7,461,211
973,509
60,555
42,307,746
Provision allowance
Internal rating grade
Very good grade
(53,161)
(104)
-
-
(53,265)
Good grade
(212,875)
(120,303)
-
-
(333,178)
Standard grade
(157,806)
(171,566)
-
-
(329,372)
Sub-standard grade
-
(217,095)
-
(99)
(217,195)
Non- performing
-
-
(724,166)
(27,462)
(751,629)
-
-
(148,791)
(23,711)
(172,502)
Not rated internally
(698)
(2,491)
(6,528)
-
(9,716)
Total
(424,539)
(511,560)
(730,694)
(27,562)
(1,694,354)
Net Carying amount
33,387,932
6,949,651
242,815
32,993
40,613,392
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
112
44. Risk management (continued)
44.1 Credit risk (continued)
Rating analysis of loans (continued)
Bank
Retail lending
December 31, 2023
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Very good grade
10,396,982
7,948
-
-
10,404,931
Good grade
6,530,116
4,239,029
-
-
10,769,145
Standard grade
1,473,739
1,533,399
-
-
3,007,138
Sub-standard grade
-
721,628
-
15,437
737,065
Non- performing
-
-
765,104
9,309
774,413
-
-
13,013
224
13,237
Not rated internally
535
-
-
-
535
Total
18,401,372
6,502,004
765,104
24,746
25,693,227
Provision allowance
Internal rating grade
Very good grade
(53,161)
(104)
-
-
(53,265)
Good grade
(50,174)
(96,320)
-
-
(146,494)
Standard grade
(38,873)
(164,082)
-
-
(202,955)
Sub-standard grade
-
(180,061)
-
(96)
(180,158)
Non- performing
-
-
(572,290)
(3,909)
(576,198)
-
-
(11,836)
(224)
(12,060)
Total
(142,207)
(440,568)
(572,290)
(4,005)
(1,159,069)
Net Carying amount
18,259,166
6,061,436
192,815
20,741
24,534,157
Non-Retail lending
December 31, 2023
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Good grade
10,218,633
457,398
-
-
10,676,031
Standard grade
4,871,046
70,541
-
-
4,941,586
Sub-standard grade
-
340,831
-
6,643
347,474
Non- performing
-
-
194,424
29,166
223,589
-
-
174,952
29,091
204,044
Total
15,089,679
868,770
194,424
35,808
16,188,681
Provision allowance
Internal rating grade
Good grade
(162,434)
(23,648)
-
-
(186,082)
Standard grade
(118,401)
(6,045)
-
-
(124,445)
Sub-standard grade
-
(36,417)
-
(3)
(36,421)
Non- performing
-
-
(150,647)
(23,554)
(174,200)
-
-
(136,955)
(23,487)
(160,442)
Total
(280,835)
(66,110)
(150,647)
(23,557)
(521,148)
Net Carying amount
14,808,844
802,660
43,777
12,252
15,667,533
Total
December 31, 2023
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Very good grade
10,396,982
7,948
-
-
10,404,931
Good grade
16,748,749
4,696,426
-
-
21,445,176
Standard grade
6,344,784
1,603,940
-
-
7,948,724
Sub-standard grade
-
1,062,459
-
22,080
1,084,539
Non- performing
-
-
959,528
38,475
998,003
-
-
187,966
29,315
217,281
Not rated internally
535
-
-
-
535
Total
33,491,051
7,370,773
959,528
60,555
41,881,907
Provision allowance
Internal rating grade
Very good grade
(53,161)
(104)
-
-
(53,265)
Good grade
(212,608)
(119,968)
-
-
(332,575)
Standard grade
(157,273)
(170,127)
-
-
(327,400)
Sub-standard grade
-
(216,479)
-
(99)
(216,578)
Non- performing
-
-
(722,936)
(27,462)
(750,398)
-
-
(148,791)
(23,711)
(172,502)
Total
(423,041)
(506,678)
(722,936)
(27,562)
(1,680,217)
Net Carying amount
33,068,010
6,864,096
236,592
32,993
40,201,690
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
113
44. Risk management (continued)
44.1 Credit risk (continued)
Rating analysis of loans (continued)
Group
Retail lending
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Very good grade
8,682,463
6,044
-
-
8,688,507
Good grade
5,771,318
5,205,882
-
-
10,977,199
Standard grade
1,086,252
1,647,851
-
-
2,734,102
Sub-standard grade
-
791,378
-
18,885
810,262
Non- performing
-
-
729,609
8,880
738,489
-
-
19,698
113
19,811
Not rated internally
496,465
107,354
48,997
-
652,817
Total
16,036,497
7,758,509
778,606
27,765
24,601,377
Provision allowance
Very good grade
(46,987)
(90)
-
-
(47,077)
Good grade
(47,240)
(117,360)
-
-
(164,600)
Standard grade
(29,607)
(174,635)
-
-
(204,243)
Sub-standard grade
-
(203,440)
-
(92)
(203,533)
Non- performing
-
-
(546,491)
(3,127)
(549,617)
-
-
(18,993)
(87)
(19,080)
Not rated internally
(11,475)
(10,023)
(38,313)
-
(59,811)
Total
(135,309)
(505,549)
(584,804)
(3,219)
(1,228,881)
Net Carying amount
15,901,189
7,252,959
193,802
24,546
23,372,496
Non-Retail lending
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Good grade
8,095,047
865,172
-
-
8,960,218
Standard grade
3,628,529
231,841
-
-
3,860,370
Sub-standard grade
-
324,606
-
814
325,420
Non- performing
-
-
281,901
24,025
305,926
-
-
254,369
24,025
278,394
Total
11,723,576
1,421,619
281,901
24,838
13,451,935
Provision allowance
Good grade
(136,420)
(34,204)
-
-
(170,624)
Standard grade
(95,791)
(15,845)
-
-
(111,636)
Sub-standard grade
-
(36,277)
-
(64)
(36,341)
Non- performing
-
-
(195,865)
(21,623)
(217,488)
-
-
(178,010)
(21,625)
(199,634)
Total
(232,210)
(86,326)
(195,865)
(21,687)
(536,088)
Net Carying amount
11,491,365
1,335,293
86,037
3,151
12,915,846
Total
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Very good grade
8,682,463
6,044
-
-
8,688,507
Good grade
13,866,364
6,071,054
-
-
19,937,418
Standard grade
4,714,780
1,879,692
-
-
6,594,472
Sub-standard grade
-
1,115,984
-
19,698
1,135,683
Non- performing
-
-
1,011,510
32,905
1,044,415
-
-
274,067
24,137
298,205
Not rated internally
496,465
107,354
48,997
-
652,817
Total
27,760,073
9,180,128
1,060,507
52,603
38,053,312
Provision allowance
Very good grade
(46,987)
(90)
-
-
(47,077)
Good grade
(183,659)
(151,564)
-
-
(335,224)
Standard grade
(125,398)
(190,481)
-
-
(315,879)
Sub-standard grade
-
(239,717)
-
(156)
(239,873)
Non- performing
-
-
(742,355)
(24,750)
(767,105)
-
-
(197,003)
(21,711)
(218,714)
Not rated internally
(11,475)
(10,023)
(38,313)
-
(59,811)
Total
(367,519)
(591,876)
(780,668)
(24,906)
(1,764,969)
Net Carying amount
27,392,554
8,588,252
279,839
27,697
36,288,342
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
114
44. Risk management (continued)
44.1 Credit risk (continued)
Rating analysis of loans (continued)
Bank
Retail lending
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Very good grade
8,682,463
6,044
-
-
8,688,507
Good grade
5,771,318
5,205,882
-
-
10,977,199
Standard grade
1,086,252
1,647,851
-
-
2,734,102
Sub-standard grade
-
791,378
-
18,885
810,262
Non- performing
-
-
729,609
8,880
738,489
-
-
19,698
113
19,811
Not rated internally
556
-
-
-
556
Total
15,540,588
7,651,154
729,609
27,765
23,949,116
Provision allowance
Very good grade
(46,987)
(90)
-
-
(47,077)
Good grade
(47,240)
(117,360)
-
-
(164,600)
Standard grade
(29,607)
(174,635)
-
-
(204,243)
Sub-standard grade
-
(203,440)
-
(92)
(203,533)
Non- performing
-
-
(546,491)
(3,127)
(549,617)
-
-
(18,993)
(87)
(19,080)
Total
(123,834)
(495,526)
(546,491)
(3,219)
(1,169,070)
Net Carying amount
15,416,754
7,155,628
183,118
24,546
22,780,047
Non-Retail lending
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Good grade
8,095,605
864,840
-
-
8,960,445
Standard grade
3,541,813
202,648
-
-
3,744,461
Sub-standard grade
-
283,507
-
814
284,320
Non- performing
-
-
280,031
24,025
304,056
-
-
254,369
24,025
278,394
Total
11,637,418
1,350,995
280,031
24,838
13,293,282
Provision allowance
Good grade
(136,238)
(34,187)
-
-
(170,425)
Standard grade
(95,438)
(14,384)
-
-
(109,822)
Sub-standard grade
-
(34,220)
-
(64)
(34,284)
Non- performing
-
-
(194,896)
(21,623)
(216,519)
-
-
(178,010)
(21,625)
(199,634)
Total
(231,676)
(82,792)
(194,896)
(21,687)
(531,051)
Net Carying amount
11,405,742
1,268,203
85,135
3,151
12,762,232
Total
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Very good grade
8,682,463
6,044
-
-
8,688,507
Good grade
13,866,922
6,070,722
-
-
19,937,644
Standard grade
4,628,065
1,850,499
-
-
6,478,563
Sub-standard grade
-
1,074,884
-
19,698
1,094,583
Non- performing
-
-
1,009,640
32,905
1,042,545
-
-
274,067
24,137
298,205
Not rated internally
556
-
-
-
556
Total
27,178,006
9,002,150
1,009,640
52,603
37,242,399
Provision allowance
Very good grade
(46,987)
(90)
-
-
(47,077)
Good grade
(183,477)
(151,548)
-
-
(335,025)
Standard grade
(125,045)
(189,020)
-
-
(314,065)
Sub-standard grade
-
(237,660)
-
(156)
(237,817)
Non- performing
-
-
(741,386)
(24,750)
(766,136)
-
-
(197,003)
(21,711)
(218,714)
Total
(355,510)
(578,318)
(741,386)
(24,906)
(1,700,120)
Net Carying amount
26,822,496
8,423,832
268,253
27,697
35,542,279
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
115
44. Risk management (continued)
44.1 Credit risk (continued)
Rating analysis of Finance Lease receivables
Retail
December 31, 2023
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Not rated internally
472,694
115,322
57,978
645,993
Total
472,694
115,322
57,978
645,993
Provision allowance
(2,505)
(6,940)
(25,267)
(34,712)
Net Carying amount
470,188
108,382
32,711
611,281
Non-Retail
December 31, 2023
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Internal rating grade
Good grade
379,509
56,363
-
435,872
Standard grade
465,656
132,466
-
598,121
Sub-standard grade
-
34,400
-
34,400
Non- performing
-
-
62,956
62,956
Not rated internally
-
7,584
580
8,164
Total
845,165
230,813
63,536
1,139,513
Provision allowance
(3,486)
(11,214)
(44,360)
(59,060)
Net Carying amount
841,678
219,598
19,176
1,080,453
Total
December 31, 2023
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Internal rating grade
Good grade
379,509
56,363
-
435,872
Standard grade
465,656
132,466
-
598,121
Sub-standard grade
-
34,400
-
34,400
Non- performing
-
-
62,956
62,956
Not rated internally
472,694
122,905
58,558
654,157
Total
1,317,859
346,134
121,514
1,785,506
Provision allowance
(5,992)
(18,154)
(69,626)
(93,772)
Net Carying amount
1,311,867
327,980
51,887
1,691,734
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
116
44. Risk management (continued)
44.1 Credit risk (continued)
Rating analysis of Finance Lease receivables:
Retail
December 31, 2022
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Not rated internally
383,487
120,540
51,190
555,217
Total
383,487
120,540
51,190
555,217
Provision allowance
(1,867)
(7,119)
(22,724)
(31,710)
Net Carying amount
381,620
113,421
28,466
523,507
Non-Retail
December 31, 2022
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Internal rating grade
Good grade
191,115
38,103
-
229,218
Standard grade
446,936
149,435
-
596,370
Sub-standard grade
-
48,243
-
48,243
Non- performing
-
-
68,782
68,782
Not rated internally
(663)
4,094
118
3,549
Total
637,387
239,875
68,901
946,162
Provision allowance
(2,623)
(12,158)
(47,495)
(62,275)
Net Carying amount
634,764
227,716
21,406
883,887
Total
December 31, 2022
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Internal rating grade
Good grade
191,115
38,103
-
229,218
Standard grade
446,936
149,435
-
596,370
Sub-standard grade
-
48,243
-
48,243
Non- performing
-
-
68,782
68,782
Not rated internally
382,824
124,634
51,308
558,766
Total
1,020,874
360,415
120,091
1,501,380
Provision allowance
(4,490)
(19,277)
(70,219)
(93,986)
Net Carying amount
1,016,384
341,137
49,872
1,407,394
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
117
44. Risk management (continued)
44.1 Credit risk (continued)
Guarantees and other credit commitments
Guarantees and letters of credit
The Group and Bank issues guarantees and letters of credit for its customers. The primary purpose of letters
of credit is to ensure that funds are available to a customer as required. Guarantees and standby letters of
credit, which represent irrevocable assurances that the Group and Bank will make payments in the event
that a customer cannot meet its obligations (delivery of goods, documents submitting, etc.) to third parties
with which it entered previously into a contractual relationship, carry a similar credit risk as loans once they
are executed.
The market and credit risks on these financial instruments, as well as the operational risk are similar to
those arising from granting of loans. In the event of a claim on the Group and Bank as a result of a
customer’s default on a guarantee these instruments also present a degree of liquidity risk to the Group and
Bank.
Credit related commitments
Financing commitments represent unused amounts of approved credit facilities.
The Group and Bank monitors the term to maturity of credit commitments because longer-term
commitments generally have a greater degree of credit risk than shorter-term commitments. The total
outstanding contractual amount of commitments does not necessarily represent future cash requirements
since many of these commitments will expire or be terminated without being funded.
Group
Bank
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Letters of guarantee granted
6,929,469
6,449,588
6,939,810
6,451,531
Financing commitments granted
6,923,587
6,183,371
6,868,776
5,740,595
Total commitments granted
13,853,056
12,632,959
13,808,586
12,192,126
Uncommitted facilities granted
11,600,816
9,454,516
11,641,240
9,509,016
Letters of guarantee received
28,441,140
23,730,601
28,441,140
23,730,601
Total commitments received
28,441,140
23,730,601
28,441,140
23,730,601
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
118
44. Risk management (continued)
44.2 Market risk
Market risk is defined as the risk of registering losses related to the on and off-balance sheet positions
arising from unfavorable movements of market parameters (FX rates, interest rates, share prices, etc.) and
that might be incurred both by the trading book portfolio and by certain banking book positions (structural
portfolio).
The management of market risks is a continuous process, whose primary aim is to identify and measure the
market risks induced by the business activities undergone by the entity.
Trading Book related market risks
The trading activity’s business model is mainly driven by the clients’ requests, the trading portfolio
comprising mostly foreign exchange spot transactions, transactions with bonds issued by the Romanian
Government (outright or reversible transactions), forward and swap deals on foreign exchange or interest
rate, as well as options on different underlying (foreign exchange, interest rates and equities).
Although the trading book portfolio generates a small portion of the Bank’s entire exposure to market risks
(mainly interest rate risk and foreign exchange risk), it is monitored separately from the banking book
portfolio. The identified risks are further reported to the bank’s management and to the Group, ensuring
timely distribution of accurate information for the decision-making processes.
The risk awareness related to the trading book activity is embraced by all actors pertaining to the Financial
Markets perimeter, several sets of controls, some of them with daily frequency,
being
each involved department. The functional independence conferred to the risk line from the business line,
translated in an independent follow-up of risks conducted at the Market Risk Department level, guarantees
a fair, unbiased picture of BRD’s exposure to assumed market risks.
The foundation of an efficient management framework addressing market risks relies on the main principles
listed below:
●
frequent update of the risk management policy and framework, to comply with regulatory requisites,
permanently adapted to market evolutions and internal changes;
●
ongoing improvement of the market risk practice, aligned with the best market practices;
●
validation of valuation techniques used to calculate risks metrics and results;
●
defining risk measurement models and provisions for the market risks assumed (reserves);
●
authorization of various market risk limits, consistent with the stated market risk appetite;
●
approval of the instruments allowed for trading (new products or significant changes of existing
products);
●
involvement in designing the functionalities of the IT systems, data flows and operational procedures;
●
monitoring and analyzing exposures and compliance with the limits, periodical dissemination of
essential data mirroring the bank’s exposure to market risks to the management bodies.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
119
44. Risk management (continued)
44.2 Market risk (continued)
On an annual basis, the market risk appetite is approved by the Board of Directors, being aligned with the
Bank’s business strategy. The top-down approach transposes this high level indicator into limits, notified
to middle management and executive functions, calibrated on different measurement types (nominal,
sensitivity, stress test results, VaR and SVaR levels).
To properly support the trading activities, a daily report, presenting all the market risk indicators, is
delivered to the personnel acting within the Financial Markets perimeter, to the management of Risk
Department and to the Group.
The process of monitoring the compliance with the limits includes the daily metrics report, the monthly
analysis of the trading book activity, and the quarterly summaries submitted to the General Management.
The assesment process of trading book related market risks is designed according with the Group’s
methodology, combining three main risk approaches:
●
Trading VaR, accompanied by SVaR;
●
Stress test scenarios, based on shocks derived from historical and hypothetical scenarios;
●
Complementary indicators (sensitivities, nominal, etc.) which decompose the global indicators into
specific ones, enabling the identification of risk areas, concentration on products and/or maturities that
might generate important risks unrevealed by the global risk metrics.
Valu e at Risk (VaR)
The purpose of VaR
is to determine a maximum potential loss the bank might incur from the trading
activity, over a given period of time, with a certain level of confidence. BRD computes daily the VaR level
for 1-day holding period, based on historical approach, with a confidence level of 99%.
The relevance of the VaR model is assessed through back testing, by comparing the daily trading result
with the loss estimated by the model, and is performed with daily frequency, in order to forewarn of the
need to recalibrate the computational model or to reconsider the observation period of the market
parameters. The model’s accuracy is tested by comparing the number of days with negative P&L exceeding
the VaR figure with the number of expected overshoots (induced by the model’s assumptions).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
120
44. Risk management (continued)
44.2 Market risk (continued)
Should a breach occur, an investigation is conducted to identify its root cause and the event is escaladed to
the management of the Financial Markets’ perimeter.
The VaR model developed in BRD is used for trading position management purposes only and it is not
transposed into capital requirements.
99% VAR (1 Day) - Key figures (in MEUR)
Begin of year
End of year
Minimum
Average
Maximum
2021
0.59
0.18
0.18
0.47
0.71
2022
0.18
0.42
0.12
0.35
0.97
2023
0.40
0.16
0.12
0.31
0.83
Stressed VAR (SVaR)
SVaR estimates a maximum
potential
loss from trading activity, for 1-day horizon and with 99% confidence
level, as a consequence of adverse market movements associated with a financial crisis. SVaR is computed
using the same approach as VaR, the only difference being that, in the case of SVaR, the observation period
for the risk factors is fixed to a window of 12 consecutive months marked by extreme market events.
The appropriateness of the one-year chosen window is assessed by comparing the SVaR level with the VaR
level. If the VaR/SVaR ratio exceeds the 90% threshold at least three times during a quarter, the
suitability of the window must be reassessed. The range of daily VaR/SVaR values is analyzed periodically
for signals on the need to review the SVaR period.
99%
SVAR
(1
D
AY
)
-
K
EY FIGURES
(
IN
MEUR)
Begin of year
End of year
Minimum
Average
Maximum
2021
1.77
0.97
0.92
2.25
3.82
2022
0.98
0.73
0.26
0.86
2.30
2023
0.50
1.04
0.44
1.05
2.85
Stress test assessment
Methodology
The stress test assessment is one of the main pillars of the market risk management framework, being
complementary to VaR and compensating the limitation of the historical VaR methodology. While the VaR
model considers historical movements of the risk factors occurred in the past, the stress testing environment
embeds theoretical hypothesis or market event-specific scenarios describing large, abrupt changes of the
underlying risk factors. On a daily basis, a range of hypothetical models picturing extreme shocks are mixed
with various historical scenarios and are applied for the entire trading book portfolio of the bank.
A global stress test metric is computed and compared against the approved limit, derived from the market
risk appetite stated in Bank’s strategy.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
121
44. Risk management (continued)
44.2 Market risk (continued)
The various stress test scenarios are subject to review and improvement, the accuracy of the assumptions
used under the active patterns being regularly monitored. The hypothesis validation aims to certify that the
shocks applied are still severe enough and that they model an unlikely event, otherwise timely detecting the
necessity to recalibrate them.
The table below presents the result of applying the stress test methodology on the trading book portfolio.
Stress Test Assessment - Key Negative figures (in MEUR)
Begin of year
End of year
Minimum
Average
Maximum
2021
10.85
2.43
0.01
8.68
14.32
2022
2.91
2.78
0.00
2.36
5.70
2023
1.25
4.84
0.01
4.57
10.30
Foreign exchange risk
The foreign exchange risk is the risk of loss resulting from changes in exchange rates, monitored for all
books. The Group and Bank manages the foreign currency risk by using limits for the open foreign currency
positions both by currency and at the level of global foreign currency position.
The table below indicates the currencies to which the Group and Bank had an exposure as at December 31
st
on its assets and liabilities. The analysis calculates the effect of a reasonably possible movement of the
currency rate against RON, with all other variables held constant, on the income statement and equity. A
negative amount in the table reflects a potential net reduction in income statement or equity, while a positive
amount reflects a net potential increase. An equivalent decrease in each of the below currencies against
RON would have resulted in an equivalent but opposite impact.
The estimated impact below does not include the impact recorded in income statement of the period:
Group
Bank
2023
Currency
Change in
currency rate %
Effect on profit
before tax
Effect on equity
Change in
currency rate %
Effect on profit
before tax
Effect on equity
EUR
+5
(229,897)
(28,036)
+5
(229,147)
(28,036)
Other
+5
(9,273)
(966)
+5
(9,254)
(966)
Group
Bank
2022
Currency
Change in
currency rate %
Effect on profit
before tax
Effect on equity
Change in
currency rate %
Effect on profit
before tax
Effect on equity
EUR
+5
(225,724)
(41,868)
+5
(225,580)
(41,868)
Other
+5
(9,021)
(1,705)
+5
(9,018)
(1,705)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
122
44. Risk management (continued)
44.2 Market risk (continued)
The Group and the Bank statement of financial position structure by currency is presented below:
Group
Bank
December 31, 2023
December 31, 2023
ASSETS
Total
RON
EUR
Other
Total
RON
EUR
Other
Cash and due from Central Bank
11,778,215
10,128,243
1,592,936
57,036
11,778,143
10,128,171
1,592,936
57,036
Due from banks
6,129,340
967,835
4,989,232
172,273
6,113,975
952,470
4,989,232
172,273
Derivatives and other financial instruments held for trading
2,135,709
1,821,239
216,313
98,157
2,110,661
1,796,191
216,313
98,157
Financial assets at fair value through profit and loss
11,376
10,488
888
-
11,376
10,488
888
-
Financial assets at fair value through other comprehensive income
13,429,670
8,654,503
4,583,537
191,630
13,429,670
8,654,503
4,583,537
191,630
Financial assets at amortised cost
45,795,821
32,687,110
12,299,923
808,787
45,384,120
32,688,815
11,886,517
808,787
40,613,391
30,160,488
10,269,693
183,210
40,201,690
30,162,193
9,856,287
183,210
5,182,430
2,526,622
2,030,230
625,577
5,182,430
2,526,622
2,030,230
625,577
Financial lease receivables
1,691,734
72,571
1,619,163
-
-
-
-
-
Investments in associates and subsidiares
64,883
64,883
-
-
103,872
103,872
-
-
Goodwill
50,130
50,130
-
-
50,130
50,130
-
-
Deferred tax asset
309,089
309,089
-
-
303,152
303,152
-
-
Other assets
2,236,002
1,986,368
249,396
238
2,089,145
1,846,000
242,907
238
Assets held for sale
216,992
216,992
-
-
7,106
7,106
-
-
Total assets
83,848,961
56,969,451
25,551,388
1,328,122
81,381,350
56,540,898
23,512,330
1,328,122
LIABILITIES
Due to banks
1,146,540
1,024,778
96,793
24,969
1,146,540
1,024,778
96,793
24,969
Derivatives and other financial instruments held for trading
1,272,450
697,040
572,494
2,915
1,272,450
697,040
572,494
2,915
Due to customers
62,405,609
43,411,950
15,750,165
3,243,494
62,641,838
43,625,665
15,772,676
3,243,496
Debt issued and borrowed funds
7,004,362
121,417
6,882,945
-
4,834,225
3,385
4,830,840
-
Subordinated debts
1,245,400
-
1,245,400
-
1,245,400
-
1,245,400
-
Current tax liability
36,181
36,181
-
-
35,074
35,074
-
-
Other liabilities
1,876,413
1,470,073
381,779
24,560
1,740,800
1,359,285
357,325
24,189
Shareholders' equity
8,862,006
8,862,006
-
-
8,465,023
8,465,023
-
-
Total liabilities and shareholders' equity
83,848,961
55,623,445
24,929,577
3,295,939
81,381,350
55,210,251
22,875,529
3,295,570
Position
1,346,006
621,811
(1,967,818)
1,330,647
636,801
(1,967,448)
Position off BS
(1,337,787)
(636,209)
1,973,995
(1,337,787)
(636,209)
1,973,995
Position total
8,220
(14,397)
6,178
(7,140)
593
6,547
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
123
44. Risk management (continued)
44.2 Market risk (continued)
Group
Bank
December 31, 2022
December 31, 2022
ASSETS
Total
RON
EUR
Other
Total
RON
EUR
Other
Cash and due from Central Bank
7,625,002
5,941,426
1,579,300
104,276
7,624,933
5,941,359
1,579,300
104,275
Due from banks
7,220,963
893,305
5,527,611
800,047
7,204,987
877,328
5,527,611
800,047
Derivatives and other financial instruments held for trading
2,343,377
1,968,547
325,071
49,759
2,337,311
1,962,481
325,071
49,759
Financial assets at fair value through profit and loss
14,262
13,435
828
-
8,132
7,304
828
-
Financial assets at fair value through other comprehensive income
13,439,596
8,739,723
4,517,714
182,159
13,439,596
8,739,723
4,517,714
182,159
Financial assets at amortised cost
39,019,048
26,649,538
11,793,899
575,612
38,272,985
26,260,352
11,437,021
575,612
36,288,342
26,349,858
9,794,586
143,897
35,542,279
25,960,672
9,437,708
143,898
2,730,706
299,679
1,999,312
431,715
2,730,706
299,679
1,999,312
431,715
Financial lease receivables
1,407,394
61,915
1,345,479
-
-
-
-
-
Investments in associates and subsidiares
113,670
113,670
-
-
129,964
129,964
-
-
Goodwill
50,130
50,130
-
-
50,130
50,130
-
-
Current tax assets
23,563
23,563
-
-
23,563
23,563
-
-
Deferred tax asset
496,034
496,034
-
-
478,893
478,893
-
-
Other assets
2,077,816
1,833,301
243,690
826
1,941,571
1,702,201
238,869
501
Assets held for sale
10,912
10,912
-
-
10,912
10,912
-
-
Total assets
73,841,767
46,795,498
25,333,592
1,712,679
71,522,977
46,184,209
23,626,412
1,712,353
LIABILITIES
Due to banks
636,888
494,592
104,226
38,070
636,888
494,592
104,226
38,070
Derivatives and other financial instruments held for trading
1,443,546
1,050,292
385,831
7,423
1,443,546
1,050,292
385,831
7,423
Due to customers
56,660,841
36,523,728
16,335,841
3,801,272
56,915,740
36,719,140
16,395,326
3,801,274
Debt issued and borrowed funds
5,625,488
279,661
5,345,827
-
3,567,262
2,266
3,564,997
-
Subordinated debts
1,238,651
-
1,238,651
-
1,238,651
-
1,238,651
-
Current tax liability
5,595
5,595
-
-
-
-
-
-
Other liabilities
1,270,992
808,115
434,113
28,764
1,143,854
670,069
445,413
28,372
Shareholders' equity
6,959,766
6,959,766
-
-
6,577,036
6,577,036
-
-
Total liabilities and shareholders' equity
73,841,767
46,121,750
23,844,489
3,875,528
71,522,977
45,513,395
22,134,444
3,875,139
Position
673,748
1,489,102
(2,162,851)
670,816
1,491,969
(2,162,785)
Position off BS
(678,725)
(1,485,863)
2,164,588
(678,725)
(1,485,863)
2,164,588
Position total
(4,977)
3,239
1,737
(7,909)
6,106
1,803
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
124
44. Risk management (continued)
44.2 Market risk (continued)
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the
fair values of financial instruments. BRD-Groupe Société Générale manages interest rate risk mainly
through the sensitivity of the net present value (NPV), measured as the sensitivity to a set of interest rate
shocks of the present value of the future principal and interest cash flows of all items in the banking book,
balance sheet and off-balance sheet. This measure is calculated for all currencies to which the Bank is
exposed.
Assets and liabilities are analyzed without a prior allocation of resources to uses. Maturities of outstanding
amounts are determined by taking into account the contractual characteristics of the transactions, adjusted
for the results of customer behavior modelling (in particular for demand deposits, savings and early loan
repayments).
In accordance with the Group’s policy, positions are monitored on a regular basis and appropriate strategies
are used to ensure that they are maintained within the established limits.
The following table demonstrates the sensitivity to a reasonable possible change in interest rates, with all
other variables held constant, of the Group’s and Bank’s banking book.
Group
Bank
December 31, 2023
December 31, 2023
Change in interest
rate (b.p)
Sensitivity (MRON)
Change in interest
rate (b.p)
Sensitivity (MRON)
10
8
10
6
(10)
(8)
(10)
(8)
December 31, 2022
December 31, 2022
Change in interest
rate (b.p)
Sensitivity (MRON)
Change in interest
rate (b.p)
Sensitivity (MRON)
10
19
10
18
(10)
(19)
(10)
(19)
The tables below analyse the Group’s and the Bank’s banking book interest rate risk exposure. The Group’s
assets and liabilities are included at carrying amount and gaps between outstanding assets and liabilities are
determined on the basis of the contractual terms of transactions, models based on clients’ historic behaviour
patterns, as well as conventional assumptions relating to certain balance sheet items.
The Bank’s assets and liabilities are included at carrying amount and categorised by the earlier of
contractual repricing or maturity dates.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
125
44. Risk management (continued)
44.2 Market risk (continued)
Interest rate risk (continued)
Group
December 31, 2023
0-1 months
1-3 months
3-12 months
1-5 years
Over 5 years
Total
ASSETS
Cash and due from Central Bank
6,441,856
1,147,499
1,332,981
2,408,632
447,247
11,778,215
Due from banks
2,736,882
3,377,505
12,553
2,400
-
6,129,340
Derivatives and other financial instruments held for trading
1,045,882
54,392
410,943
347,602
276,890
2,135,709
Financial assets at fair value through profit and loss
95
190
853
4,550
5,688
11,376
Financial assets at fair value through other comprehensive income
(1,500,842)
-
1,363,302
5,655,238
7,911,972
13,429,670
Financial assets at amortised cost
14,300,845
13,054,914
4,415,676
10,345,150
3,679,236
45,795,821
14,217,834
13,054,914
3,813,234
8,725,776
801,633
40,613,391
83,011
-
602,442
1,619,374
2,877,603
5,182,430
Financial lease receivables
234,925
726,011
314,957
415,840
-
1,691,734
Investments in associates and subsidiares
543
1,087
4,890
26,078
32,286
64,883
Goodwill
418
836
3,760
20,052
25,065
50,130
Deferred tax asset
2,663
5,324
23,959
127,779
149,365
309,089
Other assets
29,061
57,833
260,072
1,355,888
533,148
2,236,002
Assets held for sale
5,509
58,214
15,527
137,742
-
216,992
Total assets
23,297,839
18,483,803
8,159,473
20,846,951
13,060,896
83,848,961
Liabilities
Due to banks
1,146,540
-
-
-
-
1,146,540
Derivatives and other financial instruments held for trading
1,247,450
20,000
5,000
-
-
1,272,450
Due to customers
18,931,866
8,705,798
14,262,656
12,258,028
8,247,261
62,405,609
Debt issued and borrowed funds
94,406
2,015,670
907,252
2,743,384
1,243,650
7,004,362
Subordinated debts
1,750
1,243,650
-
-
-
1,245,400
Current tax liability
-
36,181
-
-
-
36,181
Other liabilities
994,770
15,278
101,542
497,494
267,330
1,876,413
Total liabilities
22,416,782
12,036,578
15,276,450
15,498,905
9,758,241
74,986,955
Total shareholders' equity
(1,131,944)
-
999,395
3,997,580
4,996,975
8,862,006
Net position
2,013,001
6,447,225
(8,116,372)
1,350,467
(1,694,320)
-
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
126
44. Risk management (continued)
44.2 Market risk (continued)
Interest rate risk (continued)
Group
December 31, 2022
0-1 months
1-3 months
3-12 months
1-5 years
Over 5 years
Total
ASSETS
Cash and due from Central Bank
2,241,508
1,062,798
1,255,614
2,569,376
495,706
7,625,002
Due from banks
2,166,395
4,552,744
473,718
28,106
-
7,220,963
Derivatives and other financial instruments held for trading
1,903,485
69,600
189,148
35,052
146,092
2,343,377
Financial assets at fair value through profit and loss
119
238
1,070
5,706
7,131
14,262
Financial assets at fair value through other comprehensive income
(2,516,879)
-
1,048,581
6,203,637
8,704,257
13,439,596
Financial assets at amortised cost
12,553,669
12,427,983
2,785,355
8,400,234
2,851,807
39,019,048
12,530,503
12,427,983
2,785,355
7,051,904
1,492,597
36,288,342
23,166
-
-
1,348,331
1,359,210
2,730,706
Financial lease receivables
211,326
543,478
255,890
395,722
979
1,407,394
Investments in associates and subsidiares
698
2,166
8,593
45,829
56,385
113,670
Goodwill
418
836
3,760
20,052
25,065
50,130
Current tax assets
-
23,563
-
-
-
23,563
Deferred tax asset
4,230
8,457
38,058
202,977
242,312
496,034
Other assets
49,180
5,234
235,617
1,229,228
558,556
2,077,816
Assets held for sale
-
545
1,637
8,730
-
10,912
Total assets
16,614,149
18,697,640
6,297,041
19,144,647
13,088,290
73,841,767
Liabilities
Due to banks
636,888
-
-
-
-
636,888
Derivatives and other financial instruments held for trading
1,433,546
10,000
-
-
-
1,443,546
Due to customers
11,384,251
4,003,597
9,875,954
20,200,227
11,196,812
56,660,841
Debt issued and borrowed funds
78,743
4,006,937
346,837
1,192,971
-
5,625,488
Subordinated debts
1,800
1,236,851
-
-
-
1,238,651
Current tax liability
-
5,595
-
-
-
5,595
Other liabilities
698,849
37,980
64,875
332,412
136,877
1,270,992
Total liabilities
14,234,078
9,300,960
10,287,665
21,725,609
11,333,690
66,882,001
Total shareholders' equity
(2,051,615)
-
901,138
3,604,554
4,505,692
6,959,766
Net position
4,431,686
9,396,680
(4,891,761)
(6,185,515)
(2,751,090)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
127
44. Risk management (continued)
44.2 Market risk (continued)
Interest rate risk (continued)
Bank
December 31, 2023
0-1 months
1-3 months
3-12 months
1-5 years
Over 5 years
Total
ASSETS
Cash and due from Central Bank
6,441,784
1,147,499
1,332,981
2,408,632
447,247
11,778,143
Due from banks
2,736,470
3,377,505
-
-
-
6,113,975
Derivatives and other financial instruments held for trading
1,045,882
54,392
410,943
322,554
276,890
2,110,661
Financial assets at fair value through profit and loss
95
190
853
4,550
5,688
11,376
Financial assets at fair value through other comprehensive income
(1,500,841)
-
1,363,302
5,655,238
7,911,972
13,429,670
Financial assets at amortised cost
14,243,049
12,880,804
4,338,188
10,242,843
3,679,236
45,384,120
14,160,038
12,880,804
3,735,746
8,623,469
801,633
40,201,690
83,011
-
602,442
1,619,374
2,877,603
5,182,430
Investments in associates and subsidiares
866
1,731
7,790
41,549
51,936
103,872
Goodwill
418
836
3,760
20,052
25,065
50,130
Deferred tax asset
3,354
6,707
30,183
160,976
101,932
303,152
Other assets
26,613
52,938
238,044
1,238,403
533,148
2,089,145
Assets held for sale
119
237
1,066
5,685
-
7,106
Total assets
22,997,808
17,522,837
7,727,110
20,100,482
13,033,113
81,381,350
Liabilities
Due to banks
1,146,540
-
-
-
-
1,146,540
Derivatives and other financial instruments held for trading
1,247,450
20,000
5,000
-
-
1,272,450
Due to customers
19,137,962
8,720,798
14,277,656
12,257,990
8,247,432
62,641,838
Debt issued and borrowed funds
5,551
746,492
597,973
2,240,559
1,243,650
4,834,225
Subordinated debts
1,750
1,243,650
-
-
-
1,245,400
Current tax liability
-
35,074
-
-
-
35,074
Other liabilities
977,553
12,334
83,313
400,271
267,330
1,740,800
Total liabilities
22,516,806
10,778,348
14,963,942
14,898,819
9,758,412
72,916,326
Total shareholders' equity
(1,181,954)
-
2,225,700
3,298,345
4,122,931
8,465,023
Net position
1,662,956
6,744,489
(9,462,531)
1,903,317
(848,230)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
128
44. Risk management (continued)
44.2 Market risk (continued)
Interest rate risk (continued)
Bank
December 31, 2022
0-1 months
1-3 months
3-12 months
1-5 years
Over 5 years
Total
ASSETS
Cash and due from Central Bank
2,241,440
1,062,798
1,255,614
2,569,376
495,706
7,624,933
Due from banks
2,165,972
4,552,744
473,718
12,553
-
7,204,987
Derivatives and other financial instruments held for trading
1,903,485
69,600
189,148
28,986
146,092
2,337,311
Financial assets at fair value through profit and loss
68
136
610
3,253
4,066
8,132
Financial assets at fair value through other comprehensive income
(2,516,879)
-
1,048,581
6,203,637
8,704,257
13,439,596
Financial assets at amortised cost
12,520,589
12,190,060
2,673,232
8,042,591
2,846,513
38,272,984
12,497,424
12,190,060
2,673,232
6,694,260
1,487,303
35,542,279
23,165
-
-
1,348,331
1,359,210
2,730,706
Investments in associates and subsidiares
1,083
2,166
9,747
51,986
64,982
129,964
Goodwill
418
836
3,760
20,052
25,065
50,130
Current tax assets
-
23,563
-
-
-
23,563
Deferred tax asset
4,846
9,693
43,617
232,624
188,115
478,893
Other assets
23,937
24,236
215,090
1,119,751
558,556
1,941,571
Assets held for sale
-
545
1,637
8,730
-
10,912
Total assets
16,344,960
17,936,374
5,914,755
18,293,538
13,033,352
71,522,977
Liabilities
Due to banks
636,888
-
-
-
-
636,888
Derivatives and other financial instruments held for trading
1,433,546
10,000
-
-
-
1,443,546
Due to customers
11,546,420
4,027,817
9,925,936
20,218,584
11,196,983
56,915,740
Debt issued and borrowed funds
4,337
2,968,440
-
594,485
-
3,567,262
Subordinated debts
1,801
1,236,850
-
-
-
1,238,651
Other liabilities
691,676
33,913
46,575
234,813
136,877
1,143,854
Total liabilities
14,314,668
8,277,020
9,972,511
21,047,882
11,333,860
64,945,941
Total shareholders' equity
(2,084,244)
-
1,676,269
3,104,449
3,880,562
6,577,036
Net position
4,114,536
9,659,354
(5,734,025)
(5,858,793)
(2,181,072)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
129
44. Risk management (continued)
44.3 Liquidity risk
The liquidity risk is associated either with the difficulty of an enterprise to raise necessary funds in order to
meet commitments or with its inability to monetize a financial asset quickly and for an amount close to its
fair value.
The Group manages the exposure to the liquidity risk using a specific framework designed to manage it
both under normal day-to-day conditions and in the event of a potential liquidity crisis. The liquidity risk
management approach starts at the intraday level managing the daily payments flows, forecasting and
managing cash flows, and factoring in the access to central bank monetary policy operations and standing
facilities. It then covers a longer term perspective, comprising the maturity profile of all assets and liabilities
and the funding strategy.
The liquidity risk position, under normal conditions, is measured at consolidated level using the static
liquidity gaps indicator and the two liquidity ratios defined by CRD IV: Liquidity Coverage Ratio (LCR)
and Net Stable Funding Ratio (NSFR). Static liquidity gap is defined as the difference between the expected
future inflows and outflows related to the current transactions (no new business included), determined for
each time bucket and currency based on the contractual maturity of the transactions, considering also
embedded options (e.g. prepayment for loans, term deposits) or, for non-maturing products (the main ones
being: current accounts, fixed assets, other assets, equity, other liabilities), based on a maturity modelled
using historical client behaviour or a conventional maturity. For each budgeting and planning exercise, the
future funding needs are assessed starting from the actual liquidity position and budgeted evolution of assets
and liabilities. When a deficit is expected, funding solutions are assessed and appropriate actions are
planned.
As regards LCR and NSFR, the limits imposed by the regulation in force was respected throughout the
entire year.
The Group performs liquidity risk stress tests on a quarterly basis in order to identify and quantify its
exposures to possible liquidity stresses, analysing potential impacts on the cash flows and liquidity position.
The Group is considering 3 liquidity crisis scenarios: specific to the Group (idiosyncratic), systemic and a
combination of both. The Group maintains a liquidity buffer of unencumbered, high quality liquid assets
as an insurance against a range of liquidity stress scenarios. A contingency funding plan is designed to
protect the stakeholders’ interests and to ensure positive outcome in the event of a liquidity crisis.
The maturity structure of the Group’s and the Bank’s assets and liabilities as of December 31, 2023 and
2022 is as follows:
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
130
44. Risk management (continued)
44.3 Liquidity risk (continued)
Group
December 31, 2023
ASSETS
Cash and due from Central Bank
11,778,215
5,921,582
1,111,408
4,745,225
-
-
Due from banks
6,129,340
2,736,882
3,377,505
12,553
2,400
-
Derivatives and other financial instruments held for trading
2,135,709
1,045,882
54,392
410,943
347,602
276,890
Financial assets at fair value through profit and loss
11,376
95
190
853
4,550
5,688
Financial assets at fair value through other comprehensive income
13,429,670
(1,500,842)
-
1,363,302
5,655,238
7,911,972
Financial assets at amortised cost
45,795,821
1,282,849
2,252,454
9,516,660
18,923,517
13,820,341
40,613,391
1,199,838
2,252,454
8,914,218
17,304,143
10,942,738
5,182,430
83,011
-
602,442
1,619,374
2,877,603
Financial lease receivables
1,691,734
77,576
214,766
465,015
934,377
-
Investments in associates and subsidiares
64,883
543
1,087
4,890
26,078
32,286
Goodwill
50,130
418
836
3,760
20,052
25,064
Deferred tax asset
309,089
2,663
5,324
23,959
127,779
149,365
Other assets
2,236,002
29,061
57,833
260,072
1,355,888
533,149
Assets held for sale
216,992
5,509
58,214
15,527
137,742
-
Total assets
83,848,961
9,602,218
7,134,007
16,822,759
27,535,224
22,754,753
LIABILITIES
Due to banks
1,146,540
1,146,540
-
-
-
-
Derivatives and other financial instruments held for trading
1,272,450
1,247,450
20,000
5,000
-
-
Due to customers
62,405,609
18,931,866
8,705,798
14,262,656
12,258,028
8,247,261
Debt issued and borrowed funds
7,004,362
93,557
379,005
3,049,375
2,238,776
1,243,650
Subordinated debts
1,245,400
1,750
-
-
1,243,650
-
Current tax liability
36,181
-
36,181
-
-
-
Other liabilities
1,876,413
988,145
25,545
118,118
625,400
119,205
Total liabilities
74,986,955
22,409,308
9,166,529
17,435,149
16,365,855
9,610,116
Total shareholders equity
8,862,006
(1,131,944)
-
999,395
3,997,580
4,996,975
Gap
(11,675,147)
(2,032,521)
(1,611,784)
7,171,789
8,147,663
Cumulative gap
(11,675,147)
(13,707,668)
(15,319,452)
(8,147,663)
0
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
131
44. Risk management (continued)
44.3 Liquidity risk (continued)
Group
December 31, 2022
ASSETS
Cash and due from Central Bank
7,625,002
1,707,235
327,939
1,604,875
3,196,633
788,320
Due from banks
7,220,963
2,166,395
4,552,744
473,718
28,106
-
Derivatives and other financial instruments held for trading
2,343,377
1,903,485
69,600
189,148
35,052
146,092
Financial assets at fair value through profit and loss
14,262
119
238
1,070
5,705
7,131
Financial assets at fair value through other comprehensive income
13,439,596
(2,516,879)
-
1,048,581
6,203,637
8,704,257
Financial assets at amortised cost
39,019,048
1,963,208
1,958,576
6,865,686
15,646,570
12,585,008
36,288,342
1,940,042
1,958,576
6,865,686
14,298,239
11,225,798
2,730,706
23,166
-
-
1,348,331
1,359,209
Financial lease receivables
1,407,394
42,098
175,139
415,567
772,676
1,914
Investments in associates and subsidiares
113,670
698
2,166
8,593
45,829
56,385
Goodwill
50,130
418
836
3,760
20,052
25,064
Current tax assets
23,563
-
23,563
-
-
-
Deferred tax asset
496,034
4,230
8,457
38,058
202,978
242,311
Other assets
2,077,816
49,180
5,234
235,617
1,229,228
558,556
Assets held for sale
10,912
-
545
1,637
8,730
-
Total assets
73,841,767
5,320,187
7,125,036
10,886,310
27,395,195
23,115,038
LIABILITIES
Due to banks
636,888
636,888
-
-
-
-
Derivatives and other financial instruments held for trading
1,443,546
1,433,546
10,000
-
-
-
Due to customers
56,660,841
11,384,251
4,003,597
9,875,954
20,200,227
11,196,812
Debt issued and borrowed funds
5,625,488
78,340
154,681
2,825,797
2,566,670
-
Subordinated debts
1,238,651
1,801
-
-
1,236,850
-
Current tax liability
5,595
-
5,595
-
-
-
Other liabilities
1,270,992
357,614
49,547
116,928
610,027
136,877
Total liabilities
66,882,001
13,892,440
4,223,420
12,818,678
24,613,773
11,333,690
Total shareholders equity
6,959,766
(2,051,618)
-
901,138
3,604,554
4,505,692
Gap
(6,520,637)
2,901,617
(2,833,507)
(823,130)
7,275,657
Cumulative gap
(6,520,637)
(3,619,020)
(6,452,527)
(7,275,657)
0
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
132
44. Risk management (continued)
44.3 Liquidity risk (continued)
Bank
December 31, 2023
ASSETS
Cash and due from Central Bank
11,778,143
5,921,510
1,111,408
4,745,226
-
-
Due from banks
6,113,975
2,736,470
3,377,505
-
-
-
Derivatives and other financial instruments held for trading
2,110,661
1,045,882
54,392
410,943
322,554
276,890
Financial assets at fair value through profit and loss
11,376
95
190
853
4,550
5,688
Financial assets at fair value through other comprehensive income
13,429,670
(1,500,841)
-
1,363,302
5,655,238
7,911,972
Financial assets at amortised cost
45,384,120
1,263,765
2,204,123
9,402,254
18,693,637
13,820,341
40,201,690
1,180,754
2,204,123
8,799,813
17,074,263
10,942,738
5,182,430
83,011
-
602,442
1,619,374
2,877,603
Investments in associates and subsidiares
103,872
866
1,731
7,790
41,549
51,936
Goodwill
50,130
418
836
3,760
20,052
25,065
Deferred tax asset
303,152
3,354
6,707
30,183
160,976
101,932
Other assets
2,089,145
26,613
52,938
238,044
1,238,403
533,148
Assets held for sale
7,106
119
237
1,066
5,685
-
Total assets
81,381,350
9,498,249
6,810,065
16,203,421
26,142,644
22,726,971
LIABILITIES
Due to banks
1,146,540
1,146,540
-
-
-
-
Derivatives and other financial instruments held for trading
1,272,450
1,247,450
20,000
5,000
-
-
Due to customers
62,641,838
14,739,670
4,894,431
12,995,650
20,004,669
10,007,417
Debt issued and borrowed funds
4,834,225
5,551
302
1,344,163
2,240,559
1,243,650
Subordinated debts
1,245,400
1,750
-
-
1,243,650
-
Current tax liability
35,074
-
35,074
-
-
-
Other liabilities
1,740,800
970,928
22,601
99,889
528,177
119,205
Total liabilities
72,916,327
18,111,890
4,972,408
14,444,703
24,017,055
11,370,272
Total shareholders equity
8,465,023
(1,181,954)
-
2,225,700
3,298,345
4,122,931
Gap
(7,431,688)
1,837,658
(466,981)
(1,172,757)
7,233,768
Cumulative gap
(7,431,688)
(5,594,030)
(6,061,012)
(7,233,768)
(0)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
133
44. Risk management (continued)
44.3 Liquidity risk (continued)
Bank
December 31, 2022
ASSETS
Cash and due from Central Bank
7,624,933
1,707,166
327,939
1,604,875
3,196,633
788,320
Due from banks
7,204,987
2,165,972
4,552,744
473,718
12,553
-
Derivatives and other financial instruments held for trading
2,337,311
1,903,485
69,600
189,148
28,986
146,092
Financial assets at fair value through profit and loss
8,132
68
136
610
3,253
4,066
Financial assets at fair value through other comprehensive income
13,439,596
(2,516,879)
-
1,048,581
6,203,637
8,704,257
Financial assets at amortised cost
38,272,984
1,940,992
1,901,072
6,711,969
15,140,332
12,578,619
35,542,279
1,917,827
1,901,072
6,711,969
13,792,001
11,219,409
2,730,706
23,165
-
-
1,348,331
1,359,210
Investments in associates and subsidiares
129,964
1,083
2,166
9,747
51,986
64,982
Goodwill
50,130
418
836
3,760
20,052
25,065
Current tax assets
23,563
-
23,563
-
-
-
Deferred tax asset
478,893
4,846
9,693
43,617
232,624
188,114
Other assets
1,941,571
23,937
24,236
215,090
1,119,751
558,556
Assets held for sale
10,912
-
545
1,637
8,730
-
Total assets
71,522,977
5,231,089
6,912,527
10,302,752
26,018,538
23,058,072
LIABILITIES
Due to banks
636,888
636,888
-
-
-
-
Derivatives and other financial instruments held for trading
1,443,546
1,433,546
10,000
-
-
-
Due to customers
56,915,740
7,532,931
3,624,484
10,551,292
22,797,035
12,409,998
Debt issued and borrowed funds
3,567,262
4,337
-
2,226,330
1,336,595
-
Subordinated debts
1,238,651
1,801
-
-
1,236,850
-
Other liabilities
1,143,854
350,441
45,481
98,628
512,428
136,877
Total liabilities
64,945,941
9,959,943
3,679,965
12,876,250
25,882,908
12,546,875
Total shareholders equity
6,577,035
(2,084,244)
-
1,676,269
3,104,449
3,880,562
Gap
(2,644,612)
3,232,562
(4,249,767)
(2,968,821)
6,630,637
Cumulative gap
(2,644,612)
587,951
(3,661,816)
(6,630,637)
(0)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
134
44. Risk management (continued)
44.3 Liquidity risk (continued)
Future undiscounted cash flows
The tables below summarize the maturity profile of the financial liabilities based on contractual
undiscounted repayment obligations.
Group
December 31, 2023
LIABILITIES
Due to banks
1,150,401
1,149,229
468
704
-
-
Derivatives and other financial instruments held for trading
982,536
1,225,808
9,835
(70,594)
(160,945)
(21,568)
Due to customers
64,299,418
19,332,204
8,832,183
14,830,111
12,907,422
8,397,497
Debt issued and borrowed funds
7,866,184
115,792
466,086
3,276,404
2,668,421
1,339,482
Subordinated debt
1,259,638
3,500
12,326
163
1,243,650
-
Current tax liability
36,181
-
36,181
-
-
-
Other liabilities except for fair values of derivatives
1,876,413
988,145
25,545
118,118
625,400
119,205
Letters of guarantee granted
6,929,469
6,929,469
-
-
-
-
Financing commitments granted
6,923,587
6,923,587
-
-
-
-
Total liabilities
91,323,827
36,667,734
9,382,623
18,154,906
17,283,948
9,834,616
Group
December 31, 2022
LIABILITIES
Due to banks
636,524
636,524
-
-
-
-
Derivatives and other financial instruments held for trading
668,890
911,677
(15,860)
(37,841)
(158,519)
(30,567)
Due to customers
57,036,178
11,508,294
4,037,384
9,992,135
20,230,198
11,268,167
Debt issued and borrowed funds
5,862,760
84,900
165,839
2,874,005
2,687,634
50,382
Subordinated debt
1,240,452
3,602
-
-
1,236,850
-
Current tax liability
5,595
-
5,595
-
-
-
Other liabilities except for fair values of derivatives
1,209,895
165,220
35,184
124,648
722,890
161,953
Letters of guarantee granted
6,449,588
6,449,588
-
-
-
-
Financing commitments granted
6,183,371
6,183,371
-
-
-
-
Total liabilities
79,293,253
25,943,176
4,228,142
12,952,948
24,719,052
11,449,936
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
135
44. Risk management (continued)
44.3 Liquidity risk (continued)
Future undiscounted cash flows (continued)
Bank
December 31, 2023
LIABILITIES
Due to banks
1,150,401
1,149,229
468
704
-
-
Derivatives and other financial instruments held for trading
988,733
1,225,808
9,930
(65,334)
(160,103)
(21,568)
Due to customers
64,538,537
15,081,528
5,038,402
13,596,881
20,664,069
10,157,657
Debt issued and borrowed funds
5,535,298
11,029
73,380
1,520,642
2,590,765
1,339,482
Subordinated debt
1,259,638
3,500
12,326
163
1,243,650
-
Current tax liability
35,074
-
35,074
-
-
-
Other liabilities except for fair values of derivatives
1,740,800
970,928
22,601
99,889
528,177
119,205
Letters of guarantee granted
6,939,810
6,939,810
-
-
-
-
Financing commitments granted
6,868,776
6,868,776
-
-
-
-
Total liabilities
89,057,067
32,250,608
5,192,180
15,152,944
24,866,559
11,594,776
Bank
December 31, 2022
LIABILITIES
Due to banks
643,830
637,386
-
6,444
-
-
Derivatives and other financial instruments held for trading
669,702
911,676
(15,785)
(37,674)
(157,990)
(30,525)
Due to customers
58,154,885
7,695,107
3,650,485
11,029,214
23,211,063
12,569,016
Debt issued and borrowed funds
3,644,028
8,053
-
2,263,431
1,372,545
-
Subordinated debt
1,246,896
3,602
-
6,444
1,236,850
-
Other liabilities except for fair values of derivatives
1,143,854
350,441
45,481
98,628
512,428
136,877
Letters of guarantee granted
6,451,531
6,451,531
-
-
-
-
Financing commitments granted
5,740,595
5,740,595
-
-
-
-
Total liabilities
77,695,321
21,798,390
3,680,181
13,366,487
26,174,895
12,675,368
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
136
44. Risk management (continued)
44.4 Operational risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes,
personnel and systems, or from external events. It includes the legal risk, the risk related to information
technology and communication and security risk, conduct risk and model risk, but excludes the strategic
risk.
The Group’s operational risk management system was developed and strengthened over the years and
allows:
Ø
identification, analysis and evaluation of operational risks, their control and follow up
Ø
applying measures meant to improve and strengthen the control framework, in order to
prevent/reduce operational risk losses
Ø
ensuring adequate capital requirements for covering exposure to operational risks.
The day to day management of operational risk is the responsibility of employees from each business unit.
The personnel have to be always aware of their responsibilities in connection with identification and
reporting of operational risks and other duties which may arise in relation with the management of
operational risks.
Operational risk management tools put in place at BRD are:
Ø
Historical operational risk losses database
Ø
Key risk indicators (KRI)
Ø
Risk and control self-assessment process (RCSA)
Ø
Scenario analysis
Ø
Managerial Supervision of processes (MS)
Ø
Fraud prevention and detection system
Ø
Committee for New Products, which ensures the assessment of operational risks associated
with new products for Banks’ clients, outsourcing of activities and significant modifications of
the existing products offered to the Bank’s clients
Ø
Crisis management and business continuity plan
Ø
Management of Information Security and IT Risk
In 2023, the operational risk strategy focused on the following axes:
Ø
continue the enhancement of operational risk culture through new sessions of operational risk
awareness and staff training, including specific session on fraud risk, information security and
business continuity risk;
Ø
continue the improvement of the operational risk management process and tools by adapting
to the internal and external environment.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2023
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
137
45. Capital management
BRD Group calculates the capital requirements in accordance with Basel III principles, implemented in the
European Union law by the capital Directive (CRD IV - 36/2013), Regulation (CRR – 575/2013), technical
regulatory standards and technical implementation standards issued by the European Banking Authority,
with all subsequent amendments as of date. Locally, the European requirements are also adopted through
National Bank of Romania (NBR) prudential regulations for credit institutions and investment firms: OUG
99/2006 on credit institutions and capital adequacy and NBR Regulation no. 5/2013 regarding prudential
requirements.
All CRR 2 requirements (represented by new provisions of Regulations EU 876/2019) have been
implemented starting 30.06.2021.
Group’s and Bank’s own funds comprises Tier 1 and Tier 2 capital. Two subordinated loans in total amount
of 250 million EUR (received in December 2021 and June 2022) are included as Tier 2 capital.
Tier 1 capital includes CET 1 capital, namely eligible capital, eligible reserves and other comprehensive
income less regulatory deductions.
A summary of the capital requirements indicators is presented below, in million RON:
Group
Bank
2023
2022
2023
2022
Total Tier 1 capital
6,664
7,037
6,343
6,714
Total Tier 2 capital
1,244
1,237
1,244
1,237
TOTAL OWN FUNDS
7,908
8,273
7,587
7,951
Total capital requirement
2,976
2,711
2,823
2,551
Credit risk (including counterparty risk)
34,598
31,067
32,769
29,150
Market risk
146
77
139
76
Operational risk
2,308
2,526
2,238
2,448
CVA risk
145
218
145
218
Total risk exposure amount
37,198
33,888
35,291
31,892
Regulatory CAR
21.26%
24.41%
21.50%
24.93%
Tier 1 ratio
17.92%
20.76%
17.97%
21.05%
BRD Group regulatory own funds as of December 31, 2023 amounted to 7,908 million RON (after
dividends distribution and 40% profit integration), compared to 8,273 million RON as of December 31,
2022 (including current year net result and the impact of OCI quick fix adjustment).
Note: The Regulatory CAR indicator without the impact of OCI quick fix adjustment as of December 31,
2022 is 21.50% (Group) and 21.83% (Bank).
The Group and Bank was compliant with the capital adequacy ratios throughout the year.
Annual Board of Directors’ Report
2023
Prepared in accordance with the National Bank of Romania Order no. 27/2010, the Financial Supervisory
Authority Regulation no.5/2018, the National Bank of Romania Regulation no. 5/2013
Contains both Annual Board of Directors’ Report and Consolidated Annual Board of Directors’ Report
C
ONTENTS
1.
THE COMPANY AND ITS SHAREHOLDERS ................................................................................ 3
2.
CORPORATE GOVERNANCE ....................................................................................................... 8
3.
HUMAN RESOURCES .................................................................................................................. 30
4.
GROUP ACTIVITY AND RESULTS .............................................................................................. 35
5.
RISK MANAGEMENT ................................................................................................................... 45
6.
CAPITAL MANAGEMENT AND ADEQUACY .............................................................................. 53
7.
INTERNAL CONTROL FRAMEWORK ......................................................................................... 57
8.
CONCLUSIONS AND PERSPECTIVES FOR 2024 ..................................................................... 59
9.
BOARD OF DIRECTORS’ PROPOSALS ..................................................................................... 60
APPENDIX 1: STATEMEN T OF COMPLIANCE WITH THE PROVISIONS OF CORPORATE
GOVERNANCE CODE OF BUCHAREST STOCK EXCHANGE (BSE) .............................................. 61
APPENDIX 2: NON-FINANCIAL STATEMENT .................................................................................... 67
Note: Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
1. T
HE COMPANY AND ITS SHAREHOLDERS
BRD
–
G
ROUPE
S
OCIÉTÉ
G
ÉNÉRALE PROFILE
BRD - Groupe Société Générale (“BRD” or “the Bank”) was set up on December 1
st
, 1990 as an
independent bank with the legal status of a joint-stock company and with the share capital mainly held by
the Romanian State, by taking over the assets and liabilities of Banca de Investitii (the Investment Bank).
In March 1999, Société Générale (“SG”) bought a stake representing 51% of the share capital, increasing
its holding to 58.32% in 2004, through the acquisition of the residual stake from the Romanian State. As at
December 31, 2023, SG was holding 60.17% of the share capital.
Starting 2001, BRD-Groupe Société Générale operates as an open joint-stock company, admitted to trading
on a regulated market, according to the companies’ legislation, banking legislation, capital market
regulations, provisions of the Articles of Incorporation and other internal regulations.
BRD identification data are the following:
Ø
Head Office:
Ø
Phone/Fax:
021.3016100 / 021.3016800
Ø
Sole registration number with the Trade Registry:
361579/10.12.1992
Ø
Fiscal Code:
RO 361579/10.12.1992
Ø
Order number with the Trade Registry:
Ø
Number and date of registration in the Credit Institutions Register:
RB - PJR - 40 –
007/18.02.1999
Ø
Share capital subscribed and paid:
Ø
Regulated market on which the issued securities are traded:
Premium Tier
Ø
The main characteristics of securities issued by the company:
ordinary shares with a nominal
value of 1 RON
E
XTERNAL RATING
As at December 31, 2023, the Bank had the following ratings:
* Fitch affirmed LT IDR at 'BBB+' with Stable Outlook
** Moody's affirmed Bank’s LT and ST foreign currency deposit rating to Baa1/Prime-2 in Oct. 2021 and
change the outlook to stable from negative.
On the last update of credit analysis, as of Sep 2023 end, rating and
outlook remained unchanged.
BRD
G
ROUP
(„G
ROUP
”)
-
-
-
-
S
OCIÉTÉ
G
ÉNÉRALE PROFILE
Société Générale was set up in 1864 as a banking company, registered in France. Its registered office is
located on 29 Boulevard Haussmann, 75009, Paris, France, and its shares are listed on the Paris Stock
Exchange.
Société Générale is one of the largest European financial services groups. Based on a diversified integrated
banking model, the Group combines financial strength and proven expertise in innovation with a strategy
of sustainable growth, and aims to be the trusted partner for its clients, committed to the positive
transformations of the world.
Active in the real economy for nearly 160 years, with a solid position in Europe and connected to the rest
of the world, Societe Generale has 117,000 members of staff in more than 60 countries and supports on a
daily basis 25 million individual clients, businesses and institutional investors around the world by offering
a wide range of advisory services and tailored financial solutions.
The Group runs three complementary sets of businesses, embedding ESG offerings for all its clients:
Ø
French Retail Banking,
with leading retail bank SG and insurance franchise, premium private
banking services, and the leading digital Bank Boursorama.
Ø
Global Banking and Investor Solutions,
a top tier wholesale bank offering tailored-made solutions
with distinctive global leadership in Equity Derivatives, Structured Finance and ESG.
Ø
International Retail, Mobility & Leasing Services,
comprising well -established universal banks (in
Czech Republic, Romania and several African countries), and ALD / LeasePlan, a global player in
sustainable mobility.
The latest credit ratings of Société Générale are available at
htts://investors.societegenerale.com/en/financial-and-non-financial-information/ratings/credit -ratings
BRD
S
OCIÉTÉ
G
ÉNÉRALE
SG has been present in Romania since 1980, being the only significant bank from Western Europe that
was present in Romania during the communist era.
In 1999, it takes part in the process of privatization of Banca Romana pentru Dezvoltare and acquires 51%
of the Bank’s share capital.
Starting with this period, BRD lined up its operational procedures and business practices to those of the
parent company.
BRD is part of the international network of Société Générale, managed by the
International Retail, Mobility
& Leasing Services
professionals and corporates. International Retail, Mobility and Leasing Services are building their networks
in Africa, Central and Eastern Europe, comprising well-established universal banks (in Czech Republic,
Romania and several African countries), Ayvens (the new ALD I LeasePlan brand), a global player in
sustainable mobility, as well as specialized financing activities.
KEY
FIGURES
Notes:
*CAR at Dec 2022 end, including 2022 full year profit and the impact of OCI (other comprehensive impact) quick fix adjustments in own funds. CAR
without the impact of OCI quick fix adjustment as at Dec 2022 end stands at 21.8%. Starting 1
st
Throughout this document, net loans outstanding and new loans production at Group level is presented excluding BRD Finance IFN SA, as a result its
decision to sell its entire loan portfolio, decision taken in January 2024. For the scope of consolidated financial statements of BRD Group as at December
31, 2023, the BRD Finance IFN SA financial statements were no longer prepared as “going concern” and the loans were presented according to IFRS 5
as “held for sale/discontinued operation”, but continued to be measured at amortized cost (no change in the business model).
BRD
Starting with January 15
th
, 2001, the Bank’s shares are listed in the Premium category of the Bucharest
Stock Exchange. The shares are included in the BET, BET Plus, BET-XT, BET-XT-TR , BET-BK , BET-TR
and ROTX indexes. The Bank’s shares are ordinary, nominative, dematerialized and indivisible. According
to the Articles of Incorporation, article 17, letter k, the shares of the Bank are traded freely on those capital
markets set by General Shareholders Meeting („AGA”), while complying with the legislation on the trade of
shares issued by bank institutions.
The closing price for BRD share as at December 31, 2023, was of RON 17.92 /share (RON 13.00 /share
at December 31, 2022). On the same date, the market capitalization was RON 12,488.48 million (RON
9,059.72 million at December 31, 2022).
During January – December 2023, neither the Bank, nor its subsidiaries bought back own shares.
As of December 31, 2023 neither the Bank, nor its subsidiaries held own shares.
Evolution of BRD’s share price versus the BET Index and BRD’s volume of shares for the period
December 31, 2014 – December 31, 2023
Source: Bloomberg
Dividends 2022 2021 2020 2019
Distributable profit (RON million) 1,285.9
1,279.3 951.6 1,528.5
Total dividends (RON million)
643.0 895.5 52.2 -
Number of shares (millions)
696.9 696.9 696.9 696.9
Dividend per share (RON), gross 0.9226
1.2850 0.0749 -
Distribution rate from distributable profit
50.0% 70.0%
5.5% -
64.5%* 70%*
Amount of dividends effectively paid by 31.12.2023
893.2 52.0 -
Percentage of dividends effectively paid by 31.12.2023
99.8% 99.8% -
Exceptional dividend payment* from 2019 and 2020 retained profit
1,684
Exceptional dividend payment* (RON/ share)
2.4164
Percentage of exceptional dividend* effectively paid by
31.12.2023
D
IVIDENDS
According to the Romanian legislation and the Articles of Incorporation, dividends are paid from the funds
created for this purpose after the approval of the General Shareholders Meeting, within maximum 6 months
from the date of the General Shareholders Meeting for deciding the dividends. In case the General
Shareholders Meeting does not establish the date when dividends are paid, these shall be paid in 30 days
from the date when the decision of the General Shareholders Meeting to establish dividends has been
published in the Official Gazette of Romania, Part IV.
The distribution of dividends is made according to the General Shareholders Meeting’ decision, upon the
Board of Directors’ proposal and depends on the distributable profit and of the future capitalization needs
of the Bank.
The change in the volume of approved and distributed dividends for the last four years is presented below:
* exceptional dividend payment from 2019 and 2020 retained profit, distribution approved by the GSM in Feb 2022
The BRD’s General Assembly of Shareholders (OGSM) on April 27, 2023 approved the allocation of the
2022 profit of LEI 1,285,937,894 to retained earnings.
Further, the BRD’s General Assembly of Shareholders (OGSM) on December 14, 2023, approved the
distribution as dividends of the amount of LEI 642,961,341, representing 50% from the retained profit of
2022 as an extraordinary payment. The gross dividend approved was of 0.9226 lei /share, the dividends
were paid on January 26, 2024 and the deferred payment date is November 29th, 2024.
The number of shares remained unchanged in the last 3 years.
D
IVIDEND PAYMENT
The dividends are distributed to the shareholders proportionally to their participation in the share capital.
The dividend income is subject to withholding tax.
Dividends are paid in accordance with the legal provisions and the General Shareholders Meeting’s
resolution regarding profit distribution, dividend setting and the dividend payment procedure made available
to the shareholders on the Bank's website.
Unclaimed dividends are prescribed within 3 years from the payment start date, according to legal
provisions.
R
ESEARCH AND DEVELOPMENT ACTIVITIES
There are no development and research activities performed by the Bank or by the Group.
2. C
ORPORATE GOVERNANCE
The BRD-Groupe Société Générale S.A.’s Corporate Governance Model is aligned with that of the parent
company, Société Générale.
The Corporate Governance Model adopted by BRD ensures:
Ø
prerogatives;
Ø
Ø
well as its responsibility of supervising the activity of the Executive Committee;
Ø
of the relevant financial and operational information.
Constantly concerned by the principles of corporate governance, BRD - Groupe Société Générale has
adopted and applied the provisions of Corporate Governance Code of the Bucharest Stock Exchange
(BSE) since 2012. “The statement of compliance with the provisions of Corporate Governance Code of the
BSE as of December 31, 2023” is presented in Appendix 1.
BRD-Groupe Société Générale has its own Corporate Governance Code available to the interested parties
on institutional site in section: https://www.brd.ro/en/about-brd/shareholders -and-investors/corporate-
governance.
The corporate governance of BRD-Groupe Société Générale represents an ongoing process in which
integrity, responsibility and transparency are fundamental elements in making correct decisions and setting
goals that contribute to increasing the confidence of shareholders in the company, economic efficiency,
sustainable growth and financial stability.
As at December 31, 2023, Société Générale is the only significant shareholder of the Bank, holding
60.1684% of the share capital.
T
HE
G
ENERAL
S
HAREHOLDERS
M
EETING
The general shareholders meetings are an occasion for the members of the Board of Directors and the
senior management to present to the shareholders the results obtained during their office, based on the
responsibilities entrusted to them.
General shareholders meetings are ordinary and extraordinary. The Ordinary General Shareholders
Meeting is held at least once a year, within no more than 4 months from the end of the financial year, and
the Extraordinary General Shareholders Meeting is held whenever necessary.
The Bank makes the best efforts, in compliance with the legal provisions in the field, to facilitate the
shareholders’ participation at the works of the General Shareholders Meetings, as well as the full exercise
of their rights.
The Ordinary General Shareholders Meeting decides on: the annual financial statements (based on the
reports presented by the Board of Directors and by the financial auditor), the dividend, election/ revocation
of the members of the Board of Directors and of the financial auditor, fixing the minimum duration of the
financial audit contract, the remuneration due to the members of the Board of Directors for the current
financial year, the budget and the business plan for the following financial year.
The Extraordinary General Shareholders Meeting decides on: change of the company duration, increase,
decrease or completion of the share capital by issuance of new shares, change of the headquarters, merger
or division, early dissolution of the Bank, issuance of bonds, conversion of a category of bonds into another
category or into shares, approval by the Bank executive officers’ of the legal papers regarding the
acquisition, alienation, rental, change or transformation into collaterals of the assets in the Bank's
patrimony, the value of which exceeds the limits set forth by the applicable laws, designation of the capital
markets on which the Bank’s shares will be listed and traded, change of the main activity area and main
activity.
The decisions on the amendment of the Articles of Incorporation shall be adopted in accordance with the
principles of competence laid down in the Articles of Incorporation of the Bank.
In order to ensure equal treatment and full and equitable exercise of the shareholders’ rights, the Bank
makes available to them all the information related to the General Shareholders Meeting and to the adopted
decisions, both by mass communication means and in the special section on its own Internet page
(www.brd.ro).
The procedures regarding the works of the General Shareholders Meeting are available to shareholders
and other interested parties on the institutional site in section https://www.brd.ro/en/about-brd/investors-
and-shareholders/gsm-brd/procedure-organizing-and-running-gsm.
Within the General Shareholders Meeting, dialogue between the shareholders and the members of the
Board of Directors and/or executive management is encouraged. Each shareholder can ask the directors
questions regarding the activity of the Bank.
In 2023, there were four General Shareholders Meetings (two Ordinary General Shareholders Meetings on
April 27, 2023 and December 14, 2023 and two Extraordinary General Shareholders Meetings on February
16, 2023 and April 27, 2023).
A
DMINISTRATION AND MANAGEMENT OF THE BANK
BRD - Groupe Société Générale adopted a unitary management system that is fully consistent with the
principles of good corporate governance, transparency of relevant corporate information, protection of
shareholders and of other categories of concerned persons (stakeholders), as well as of an efficient
operation on the banking market.
The management body, the Board of Directors and the Executive Officers (acting together in the Executive
Committee), operate under rules of organization and functioning clearly defined in the "Directive on the
organization and functioning of the Management Body".
The Management Body promotes high ethical and professional standards and a strong internal control
culture.
The Board of Directors annually assesses the adequacy of the Management Body and its members based
on the reports of the Nomination Committee, prepared in accordance with "The policy of suitability of the
members of the Management Body and persons holding key functions and the policy of induction and
training of the members of the Management Body".
The composition, the size and the skills of the Management Body are well suited for the dimension and the
complexity of the Bank's activity.
The members of the Management Body meet the eligibility conditions and criteria established in the "The
policy of suitability of the members of the Management Body and persons holding key functions and the
policy of induction and training of the members of the Management Body", required for an efficient
administration/management of BRD-Groupe Société Générale:
Ø
with the rules of prudent and healthy banking practices;
Ø
nature, extent and complexity of the banking business and of the entrusted responsibilities, as well
as experience in a management position, acquired in an entity comparable, in terms of size and
activity, to the Bank;
Ø
highly performing administration of the Bank's activity;
Ø
Ø
the statutory bodies.
The selection of candidates for positions within the Management Body is made through a rigorous process
as defined in "The policy of suitability of the members of the Management Body and persons holding key
functions and the policy of induction and training of the members of the Management Body".
The main objective of the selection process is to ensure the suitable candidates for the vacant positions in
the Management Body or to ensure the succession of the existing members.
The selection of the candidates excludes any discrimination on gender, age, ethnicity or any other kind of
discrimination, stipulated by the law.
Criteria such as reputation, theoretical knowledge and practical professional experience in specific areas
of BRD's activities, diversity, ensure a suitable structure of the Management Body.
The Bank recognizes and supports the benefits of the diversity of the members of the Management Body
and considers that it is an essential element in protecting and extending the competitive advantage
considering that, through diversity, maximum efficiency and performance, increasing innovation and
cooperation will be achieved within the Management Body, as well as within the Bank.
In this context, from the moment of the selection process, the aim must be to ensure diversity within the
Management Body from the perspective of educational and professional skills, competencies, ensuring that
the decision-making process of the Management Body is not dominated by any person or small group of
people, in a way that is detrimental to the Bank's interests.
Gender diversity, age and geographical origin are important elements, as they determine different
developments in terms of understanding cultural values, specific aspects of the financial-banking sector
and legislative framework that has an impact on the activity, so as to consciously facilitate the decisional
process regarding the Bank's strategy. The parameters mentioned above must be taken into account in
determining the best component of the Management Body.
In order to ensure diversity within the Management Body and to achieve the established target regarding
the representation of the under-represented gender, the Nomination Committee considers the following
actions:
●
●
●
●
The principle of diversity aims to achieve the goal of gender representation, male or female, poorly
represented. In this sense, the policy also aims to ensure equal opportunities for selection within the
Management Body based on their qualifications and professional experience. In the process of selecting
the members of the Management Body, all candidates will be evaluated based on the same criteria,
regardless of their gender.
Educational and professional training is another important element in order to achieve the diversity of the
Management Body, including from the perspective of collectively understanding all procedural, economic,
legal, financial, risk aspects etc.
In this sense, the existence of balance is pursued so that the members of the Management Body have
theoretical knowledge and practical experience regarding:
●
●
●
implementation;
●
risk, including previous activity / responsibilities in this regard);
●
●
supervision and control mechanisms;
●
on this information and appropriate controls and measures.
The selection of independent directors is subject to compliance with the criteria stipulated by the
Companies' Law no. 31/1990, the NBR Regulation no. 5/2013 on prudential requirements for credit
institutions and by the Bucharest Stock Exchange Code of Corporate Governance.
The exercise of the responsibilities by members of the Management Body is subject to obtaining NBR
approval.
B
OARD OF DIRECTORS
Starting with April 18, 2015, the Board of Directors is composed of 9 members, elected by the General
Assembly of the Shareholders for a 4-year mandate.
The structure of the Board of Directors ensures a balance between executive and non-executive members,
so that no person or limited group of persons can dominate, in general, the decision-making process of the
Board of Directors.
As at December 31, 2023, the Board of Directors includes 4 independent members.
The year 2023 brought changes to the composition of the Board of Directors, as follows:
ü
exercised this mandate starting to January 5, 2023 until April 27, 2023 (the date of the first BRD’s
Ordinary General Shareholders Meeting in 2023).
ü
- the nomination of Mrs. Veronique SCHREIBER LOCTIN as director subject to obtain the NBR
approval.
NBR approved the nomination of Mrs. Veronique SCHREIBER LOCTIN as director
and her
mandate entered into force starting to June 23, 2023.
- the renewal of Mrs. Liliana IONESCU – FELEAGĂ’s mandate as Independent director, for a 4-
years period, starting with June 6, 2023,
- the renewal of Mr. Bogdan-Alexandru DRĂGOI’s mandate as Independent director, for a 4-years
period, starting with November 22, 2023,
- the designation of Mr. Benoit Jean Marie OTTENWALTER as Independent director.
ü
the Board of Directors, starting with December 8, 2023.
ü
2023.
ü
-
Directors, until the first Ordinary General Shareholders Meeting is held in 2024, on the vacant
position existent in the Board following Mr. Giovanni Luca SOMA’s renunciation to his mandate as
Member of the Board Directors starting to December 8, 2023.
-
first Ordinary General Shareholders Meeting is held in 2024 on the vacant position existent in the
Board following Mr. Francois Bloch’s renunciation to his mandate as Member of the Board Directors
starting to December 8, 2023.
-
Directors, starting to December 8, 2023 until May 30, 2024.
Also, pursuant the provisions of NBR Regulation no. 5/2013 on prudential requirements for credit
institutions and EBA Guidelines, the Board of Directors decided on December 7, 2023 to review the
structure of the Committees set up in its support.
MEMBERS
OF
THE
BOARD
OF
DIRECTORS
AS
AT
DECEMBER
31,
2023
Jean – Pierre Georges VIGROUX
Independent Chairman of the Board of
Directors
Chairman of the Audit Committee
Member of the Remuneration Committee
Date of birth: 31 July 1953;
Year of the appointment as Independent member in
the BRD-Groupe Société Générale’s Board of
Directors: 2016;
Latest renewal of the mandate as Independent
member: 2020;
Year of the election as Independent Chairman: 2023
1
Term of mandate expires in: 2024;
He has no shares in BRD-Groupe Société Générale’s
capital.
Information on mandates held
According to the information provided through the statement of affiliation, he fulfils the conditions
regarding the number of mandates established by the law - two non-executive mandates: he holds one
within BRD-Groupe Société Générale and one outside the Société Générale Group.
He is also member of the Management Board of ‘’Fundatia 9’’.
Biography
He graduated ESSEC France. He also studied Financial Audit at the CAFR University.
Until September 2014, Mr. Jean – Pierre Georges Vigroux held various management positions such
as: CEO Mazars Romania (2008-2014), partner responsible for Southeast Europe, Chairman of the
Supervisory Board of Pricewaterhouse Coopers Central and Eastern Europe (2001 -2004 and 2004-
2006), founder and CEO of the Pricewaterhouse Coopers – Romania, member of the Pricewaterhouse
Coopers’s Executive Committee and Board of Directors – Central and Oriental Europe (1996-2001),
Chairman of FIC (2003-2004).
Benoît Jean Marie OTTENWAELTER
Independent Member of the Board of Directors
Chairman of Risk Management Committee
Date of birth: December 28, 1954;
Year of the appointment as Member in the BRD-
Groupe Société Générale’s Board of Directors:
2017;
Latest renewal of the mandate as Member of the
Board of Directors: 2021;
Year of the designation as Independent member in
BRD-Groupe Société Générale’s Board of
Directors:2023
2
Term of mandate expires in: 2025;
He has no shares in BRD-Groupe Société
Générale’s capital.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law - he holds one non-executive mandate within Société Générale
Group.
1
the Board of Directors, starting to December 8, 2023 until May 30, 2024.
2
Benoit Jean Marie OTTENWALTER as Independent director.
Biography
He graduated the “French Ecole Polytechnique” and the “French Ecole Nationale de la Statistique et
de l’Administration Economique (ENSAE)”. He has a vast experience acquired within Groupe Société
Générale, over 35 years, in areas such as risk management, capital markets and treasury and in
interaction with the international banking regulators.
During his career, he held top management positions such as: Group Chief Risk Officer, Member of
the Executive Committee at Société Générale Group (2009-June 2016), Deputy then Co-Head of the
Corporates, Institutions and Advisory Division, Member of the Group Management Committee at
Société Générale Corporate and Investment Banking Paris (2004-2009), Head of Fixed Income,
Currencies and Commodities Division of Société Générale Corporate and Investment Banking Paris
(2001-2004), Deputy Head then Head of Treasury and Foreign Exchange of Société Générale Capital
Markets Division Paris (1994-2000), Chief Administrative and Financial Officer then Head of
Derivatives Department of Société Générale Strauss Turnbull London (1990-1994), Back-office
manager in Société Générale Paris (1988-1990).
Other positions occupied: within the French Ministry Of Economy And Finance (1979 -1988), Professor
of Statistics and Econometrics, Director of Graduate Studies at Ecole Nationale de la Statistique et de
l’Administration Economique (1985-1988), Economic Forecaster at INSEE - French National Statistical
Office (1981-1985), Researcher in Econometrics, Research Unit at INSEE - French National Statistical
Office (1979-1981).
Liliana IONESCU – FELEAGA
Independent Member of the Board of Directors
Chairman of the Remuneration Committee
Member of the Audit Committee
Member of the Nomination Committee
Date of birth: October 31, 1969;
Term of mandate as interim independent member of
BRD-Groupe Société Générale’s Board of Directors;
December 20, 2018 – April 18, 2019;
Year of the appointment as Independent member of
BRD-Groupe Société Générale’s Board of Directors:
2019;
Latest renewal of the mandate as Independent
member of the Board of Directors: 2023;
Term of mandate as Independent member expires
in:2027;
She has no shares in BRD-Groupe Société
Générale's capital.
Information on mandates held
According to the information provided through the statement of affiliation, she fulfils the conditions
regarding the number of mandates established by the law - one non-executive mandate within BRD-
Groupe Société Générale.
She is also member of ASE’s Board of Directors and Member of the Board of Directors and Vice-
President of Romanian Chamber of Financial Auditors.
Biography
She graduated from the Bucharest University of Economic Studies, Finance and Accounting (ASE).
Starting 2003 she is University Professor Doctor and starting 2005, she is PhD supervisor. She has
also an International Management Degree obtained at Toulouse University.
She has a vast academic experience (over 30 years in Bucharest University of Economic Studies -
ASE). Currently Mrs. Feleaga is Dean of Accounting and Management Information Systems Faculty,
member of the ASE’s Board of Directors, member of Chamber of Financial Auditors of Romania,
Member of International Association for Accounting Education and Research.
Bogdan-Alexandru DRĂGOI
Independent Member of the Board of Directors
Chairman of the Nomination Committee
Member of the Risk Management Committee
Date of birth: May 27, 1980;
Year of the appointment in the BRD-Groupe Société
Générale’s Board of Directors: 2019;
Latest renewal of the mandate as Independent
member of the Board of Directors: 2023;
Term of mandate expires in:2027;
He has no shares in BRD-Groupe Société Générale's
capital.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law – he holds one executive mandate outside Société Générale Group
and two non-executive mandates – one within BRD-Groupe Société Générale and one outside Société
Générale Group.
Biography
He graduated from the Tufts University, Fletcher, Boston, Massachusetts, specialization International
Relations and Economics, graduated Magna cum Laudae. Is member of Golden Key Honor Society,
has Order of the Star of Romania – rank of Knight and Sovereign Order of the Knights of Malta –
Mare Cruce pro Merito Melitensi.
He has 21 years’ experience in areas such as finance, capital market and banks. He has also
experience in relation with public state authorities.
Currently, he is Chairma n of the Board of Directors of LION CAPITAL S.A., current name of SIF
Banat - Crișana (starting March 2015) and CEO (starting July 2015).
Through his previous positions, he acquired experience and expertise in different areas of activity
(Presidential Adviser – The Administration of the President of Romania, May 2012 - December 2014;
Ministry of Public Finance, February 2012 - May 2012; Secretary of State – Ministry of Public Finance,
January 2009 - February 2012; CEC Bank – Member of the Board, April 2009 - February 2012;
EximBank – President of Interministerial Committee for Financing, Warranties and Insurance (CIFGA),
January 2009 - February 2012; Fondul Proprietatea – Member of the committee for selecting the
manager of Fondul Proprietatea, March 2008 - October 2009; President of the Committee of the
representatives of Fondul Proprietatea SA, September 2010 - February 2012; European Investment
Bank – Member of the Board, January 2009 - February 2012; Council of Europe Development Bank –
Member of the Board, January 2009 – February 2012; General Director, Economic Dept. – Bucharest
Municipality, November 2007 - June 2008 etc.).
Valerie Marcelle Paule VILLAFRANCA
Member of the Board of Directors
Member of Nomination Committee
Date of birth: July 1, 1970;
Year of the appointment as member of BRD-
Groupe Société Générale’s Board of Directors:
2020;
Term of mandate expires in: 2024;
She has no shares in BRD-Groupe Société
Générale's capital.
Information on mandates held
According to the information provided through the statement of affiliation, she fulfils the conditions
regarding the number of mandates established by the law - one non-executive mandate within BRD-
Groupe Société Générale.
Biography
She graduated Classe préparatoire aux grandes écoles, Lycée du Parc, Lyon (France) and has a
Master degree in Finance from Paris IX Dauphine University and another Master in business
administration with a specialization in Finance from Bordeaux Business School.
She has an experience of 29 years as strategy and business consultant of which 25 years in top
management positions such as Director - Head of Risk and Compliance practice for WESA region -
Western Europe, South America and Africa in Boston Consulting Group (01/03/2014–17/03/2018),
Managing Director - EMEA (Europe, Middle East and Africa) Head of Risk Management practice in
Accenture (01/10/2010–28/02/2014), Managing Director - Founder and Global Head of Aon
(01/05/2006–30/09/2010), Senior Manager in the Risk Management Practice of Ernst & Young, Paris
(01/05/2002–31/03/2006), Manager in the Risk Management practice of Arthur Andersen, Paris
(01/09/2000–30/04/2002), Manager in the business consulting practice - Head of Treasury services of
Arthur Andersen, Paris (01/09/1998–31/08/2000).
Since March 18, 2018, she is Group Head KYC Transformation, CPLE/KTP Société Générale.
Aurore Brigitte Micheline GASPAR
Member of the Board of Directors
Member of the Risk Management
Committee
Date of birth: October 27, 1978;
Year of the appointment as member of BRD-Groupe
Société Générale’s Board of Directors: 2021;
Term of mandate expires in: 2025;
She has no shares in BRD-Groupe Société Générale's
capital.
Information on mandates held
According to the information provided through the statement of affiliation, she fulfils the conditions
regarding the number of mandates established by the law - one executive mandate and one non-
executive mandate within Société Générale Group.
Biography
She has a master’s degree from Ecole de Management de Lyon (EM Lyon), specialization Finance,
Accounting, Economy, marketing.
She has 21 years experience in banking field over which 14 years in management positions such as:
Managing Director, General Inspection of Société Générale (January 2009 to February 2012), Deputy
Head of Payment and Cash Management department delivering services to corporate clients from
professionals to large corporates of Société Générale (February 2012 to June 2013), Chief of staff of
2 Deputy CEO of Société Générale (June 2013 to April 2016), Deputy CEO – SG Equipment Finance
US (April 2016 to November 2017), Deputy CEO – Boursorama - subsidiary of Société Générale and
the 1
st
Since January 3
rd
, 2022, she is Deputy Head of French Retail Banking, member of the Group Société
Générale Management Committee. In addition, she is Member of the Board of Directors of Sogecap
(subsidiary of Société Générale, specialized in insurance) and Shine.
Veronique SCHREIBER LOCTIN
Member of the Board of Directors
Date of birth: August 10, 1966
Term of mandate as Interim member of BRD-Groupe
Société Générale’s Board of Directors;January 5, 2023
– April 27, 2023;
Year of the appointment as member of BRD-Groupe
Société Générale’s Board of Directors: 2023
3
;
Term of mandate expires in: 2027;
She has no shares in BRD-Groupe Société Générale's
capital.
Information on mandates held
According to the information provided through the statement of affiliation, she fulfils the conditions
regarding the number of mandates established by the law - one executive mandate and one non-
executive mandate within Société Générale Group.
Biography
She has a master’s degree from Ecole de Management de Lyon (EM Lyon), specialization Finance,
Accounting, Economy, marketing.
She is a person with over 36 years experience in banking field, in Societe Generale, in management
positions such as: Co-Head of Coverage France, Member of Societe Generale Group Management
Committee (January 2021-March 2022), Head of Corporate Accounts for Societe Generale Retail
Banking in France, Member of Societe Generale Group Management Committee (July 2018 –
December 2021), General Delegate of the Regional Direction of Lille, France (June 2014 –June 2018),
Chief Operating Officer of Societe Generale Retail Banking Activities in France (October 2010 to May
2014), Director of Trade Services within Societe Generale Global Transaction and Payment Services
(2007 to September 2010), Commercial Director of Corporate Clients for the French Retail Network
(2003 to 2007), Commercial Director of Corporate Clients within SG Chambery Branch (2000 to 2003),
Corporate Relationship Manager within SG Grenoble Branch (1997 to 2000), Head of Oil and Metals
structured Financing – Corporate and Investment Banking (1993 to 1997); Head of Multisource Export
Financing - Corporate and Investment Banking (1987 -1993).
Since April 2022, she is Head of CSR Program for the French Retail Banking Network, Member of
Societe Generale Group Committee. In addition, currently she is member of the Boards of Directors of
Genefim & Sogefimur (companies specialised in leasing) and member of the Supervisory Committee
of Lumo Glba 3.
A
TTRIBUTIONS AND RESPONSIBILITIES OF THE
B
OARD OF
D
IRECTORS
The main competences of the Board of Directors, including those that cannot be delegated to members of
the executive management, are set by law, by the Articles of Incorporation, Internal Regulations of the
Bank, the “Directive on the management of approval of limits for loans and commitments”, and also by the
Directive ‘’Regulation of organization and functioning of the Management Body’’. In cases permitted by the
law, the General Shareholders Meeting may delegate other attributions to the Board of Directo rs as well.
The Board of Directors sets the main business and development directions of the Bank and supervises the
activity of the Bank and of the executive management, and also has the ultimate responsibility for the
operations and the financial strength of the Bank. The Board of Directors decides on the accounting and
financial control systems and approves the financial planning.
The Board of Directors approves the Bank’s business and risks management strategy, and makes sure
that the activity of the executive management complies with the approved strategy and policies.
The Board of Directors approves the organisational structure of the Bank, the risk management policy, the
general remuneration policy of the employees, directors and officers of the Bank.
3
The Ordinary General Shareholders’ Meeting held on April 27, 2023 approved the nomination of Mrs.
Veronique SCHREIBER LOCTIN as director. NBR approved Mrs, Veronique SCHREIBER LOCTIN
nomination as director
and her mandate entered into force starting to June 23, 2023.
M
EETINGS OF THE
B
OARD OF
D
IRECTORS
The Board of Directors meets whenever necessary, but at least once every 3 months.
The notices of the Board of Directors’ meetings specify the place, date and the draft agenda for the meeting,
and no decision can be made regarding unexpected issues, except for emergency cases and provided they
are ratified by the absent members at the next meeting.
Minutes are drafted for each meeting and include the names of the participants, the order of the
deliberations, the decisions made, the number of votes cast and the separate opinions.
On February 10, 2016, Mrs. Flavia Popa – Corporate Secretary was nominated as Secretary of the Board
of Directors.
A
CTIVITY OF THE
B
OARD OF
D
IRECTORS IN
2023
In 2023, 43 meetings of the Board of Directors took place, and the decisions of the Board were generally
made with unanimity of votes. In specifics cases where certain directors were in conflict of interest, they
abstained from voting.
The Directors attended to the Board of Directors' meetings as follows:
Ø
4
), Mr.
Benoît Jean Marie Ottenwaelter (Independent Member
5
), Mr. Bogdan-Alexandru Drăgoi
(Independent Member), respectively Mrs. Liliana Feleaga (Independent Member), Mrs. Valerie
Marcelle Paule Villafranca (Member) attended to all the Board's meetings (43);
Ø
6
7
,
attended to all the Board's meetings organised until their renunciation to the mandates (40 Board's
meetings);
Ø
Ø
meetings organised the entry into force of his mandate.
On the Board of Directors’ agenda, the following subjects were included: the financial statements, 2022
Sustainability Report, 2023 Audit Plan and 2024 Audit Plan, the report regarding the 2022 internal control,
approval of the Liquidity Risk Management Framework, Remuneration Policy, Update on Horizons 2025
strategy. Risks’ assessment for 2023 and 2024, Risk Appetite Framework, Risk Appetite Statement,
Business and Risks Management Strategy for 2023-2025, Internal Capital and Liquidity Adequacy
Assessment Process (ICLAAP) for December 31, 2022, The results of the annual reporting campaign of
monitoring the outsourced services, Report on Transparency and Disclosure Requirements, , BRD
Contribution to Société Générale Group Recovery Plan 2023, the main axes for the Bank's transformation,
changes in the Bank's management body, annual reports on adequacy of the members of the management
body and the key functions, changes in the structure of the committees set up to support the activity of the
Board of Directors, modifications in internal regulations in its specific power, changes in the organizational
structure, calls of the shareholders' meetings organized in 2023 and all the notes related to the items on
the agenda, changes of the secondary object of activity, quarterly compliance reports, 2022 Safeguarding
Annual Activity Report - MiFID 2, action plan for the implementation of a local SWIFT back-up solution,
Approval of the 2023 Plan for the sale of unused buildings.
During its meetings, the Board of Directors is regularly updated on the economic, monetary and financial
environment, on the evolution of the regulations in force, Bank's financial and commercial results, significant
4
30, 2024. Until December 8, 2023, he has the position as Independent member of the Board of Directors.
5
the position as Member of the Board of Directors.
6
including.
7
risks, on the main events that took place within BRD and on the activity of committees set up to support the
activity of the Board of Directors: the Audit Committee, Risks Management Committee, Nomination
Committee and Remuneration Committee.
C
OMMITTEES SET UP IN SUPPORT OF THE BOARD OF DIRECTORS
In order to develop and maintain good practices of business administration, the Board of Directors set up
four committees that assist it in performing its attributions. The structure, the organisation and operation
rules as well as the attributions of these committees are set and defined in the Committee Directive set up
to support the Board of Directors.
A
UDIT
C
OMMITTEE
The Audit Committee consistes of 3 non-executive directors, of which 2 are independent. As at December
31, 2023, the members of the Audit Committee were: Mr. Jean-Pierre Georges Vigroux (Independent
Chairman), and Mrs. Liliana Ionescu - Feleaga (Independent Member).
The year 2023 brought the following changes to the composition of the Audit Committee:
ü
ü
committee, subject to obtaining the prior approval of the NBR as Interim member of the Board of
Director.
The members of the Audit Committee have the experience required for their specific attributions within the
committee.
The Audit Committee meets on a quarterly basis or whenever necessary.
The Audit Committee assists the Board of Directors in performing its responsibilities in terms of internal
control and financial audit. To this effect, the Audit Committee makes recommendations to the Board of
Directors regarding the strategy and policy of the credit institution in the field of internal control and financial
audit. The Audit Committee’s responsibilities are presented in the Bank's Corporate Governance Code
available to the interested parties on institutional site in section: https://www.brd.ro/en/about-
brd/shareholders-and-investors/corporate-governance.
In 2023, 12 meetings of the Audit Committee took place, in which there were analysed the activity and
reports of internal control and conformity, internal audit and external audit.
The attendance was as follows:
Ø
Committee's meetings (12 meetings);
Ø
After each meeting, minutes were drafted, specifying the aspects that required improvements, as well as
recommendations for their application.
R
EMUNERATION
C
OMMITTEE
The Committee consisted of 3 non-executive directors, of which 2 are independent directors. As at
December 31, 2023, the members were: Liliana Ionescu – Feleaga (Independent Chairman),and Mr. Jean-
Pierre Georges Vigroux (Independent member).
The year 2023 brought the following changes to the composition of the Remuneration Committee:
ü
ü
committee, subject to obtaining the prior approval of the NBR as Interim member of the Board of
Director.
The Remuneration Committee meets annually, or whenever necessary. In 2023, 6 meetings of the
Remuneration Committee took place. The attendance was of 100%.
In order to perform the attributions entrusted, the Remuneration Committee analyses the Bank's
remuneration policy which it submits to the Board of Directors for approval; it submits proposals regarding
the individual remuneration of non-executive directors and the additional individual compensation of the
directors entrusted with specific functions within the Board as well as the individual remuneration of the
officers; it supervises directly the remuneration of the coordinators of the risks’ management and
compliance functions; and it supervises the application of the principles of the staff remuneration policy and
informs the Board of Directors in this respect.
The Remuneration Committee responsibilities are presented in the Bank's Corporate Governance Code
available to the interested parties on institutional site in section: https://www.brd.ro/en/about-
brd/shareholders-and-investors/corporate-governance.
R
ISKS
M
ANAGEMENT
C
OMMITTEE
The Committee consisted of 3 non-executive directors. As at December 31, 2023, the members were: Mr.
Benoît Jean Marie Ottenwaelter (Chairman), Mr. Bogdan-Alexandru Drăgoi (Independent Member) and
Mrs. Aurore Brigitte Micheline Gaspar (Member).
The Risks’ Management Committee meets on a quarterly basis or whenever necessary.
In 2023, 4 meetings of the Risks’ Management Committee took place.
The attendance was as follows:
Ø
Management Committee's meetings (4 meetings);
Ø
At the meetings of the Risks’ Management Committee may participate, as permanent guests, the members
of the Executive Committee, Chief Financial Officer, Risk Piloting Pole Executive Officer/Risk Deal Flow
Pole Executive Officer, Retail Distribution Executive Officer, Top Corporates Executive Officer/Sales
Manager Top Corporates, DPF Executive Officer, BIS Director and Corporate Secretary.
The Risks’ Management Committee assists the Board of Directors in defining the global risks strategy of
the Bank and the risk appetite and assists the Board of Directors in overseeing the implementation of such
strategy.
Its objective is the management of significant risks, risks with high impact on the assets and/or image of
the Bank (credit risk, market risk, liquidity risk, operational risk and reputational risk), as well as the risks
associated to the outsourced activities.
The Risks’ Management Committee’s responsibilities are presented in the Bank's Corporate Governance
Code available to the interested parties on institutional site in section: https://www.brd.ro/en/about-
brd/shareholders-and-investors/corporate-governance
N
OMINATION
C
OMMITTEE
As at December 31, 2023, the Committee was composed of 3 non-executive directors of the Board of
Directors: Mr. Bogdan-Alexandru Drăgoi (Chairman), Mrs. Liliana Ionescu-Feleaga (Independent Member)
and Mrs. Valerie Marcelle Paule Villafranca (Member).
The Nomination Committee meets half-yearly or whenever necessary.
In 2023, 5 meetings of the Nomination Committee took place.
The attendance was as follows:
Ø
Nomination Committee's meetings (5 meetings);
Ø
In exercising its powers, the Nomination Committee identifies, makes proposals and submits for approval
by the Board of Directors, the nominees to fill positions within the management body; is involved in
formulating the policy on the selection, evaluation and sequencing of the management body members,
which it submits to the Board of Directors for approval; it assesses periodically and at least once a year the
structure, size, composition and performance of the management body and makes recommendations to
the Board of Directors on any modifications which it considers necessary.
The Nomination Committee’s responsibilities are presented in the Bank's Corporate Governance Code
available to the interested parties on institutional site in section:
https://www.brd.ro/en/about-brd/shareholders -and-investors/corporate-governance
E
XECUTIVE
M
ANAGEMENT
The management and the coordination of the current activity of the Bank is delegated by the Board of
Directors to the executive officers.
The executive officers of the Bank are elected by the Board of Directors, among directors or from outside
the Board, and act together in the Executive Committee.
The term of mandate is of 4 years and can be renewed.
The Executive Committee is composed of the CEO and six
8
Deputy CEOs. The Executive Committee is
led by the CEO.
The year 2023 brought changes to the composition of the Executive Committee, as follows:
ü
Otilia TEODORESCU as Deputy CEO Retail, for a 4-years
mandate, on the vacant position existent
in the Management Committee. NBR approved her nomination in this position as Deputy CEO
Retail and Mrs. Mădălina – Otilia TEODORESCU mandate entered in force starting to June 9,
2023;
ü
2023, in order to pursue a new opportunity within the Societe Generale Group.
ü
Koytcheva ROUSSEVA as CEO, for a 4-years mandate, on the vacant position existent in the
Management Committee. NBR approved the nominations and the mandate entered in force starting
to November 24, 2023.
ü
mandate as Deputy CEO of Global Corporates ceased.
ü
of his term as of November 22, 2023.
ü
Legal & Administrative starting to the date of November 22, 2023 when Mr. Tiberiu - Mihai
SELEGEAN mandate as Deputy CEO reached to term and to distribute the responsibilities to other
members.
ü
- decided to transfer the structures previous coordonated by the Deputy CEO Legal and
Administrative, within coordination arias of Mrs. Maria Koytcheva ROUSSEVA ’s as CEO and
respectively,of Mr. Etienne Jean LOULERGUE’s as Deputy CEO Finance Treasury, subject to
obtaining the prior approval, by the National Bank of Romania, to exercise the additional
responsibilities.
- approved the nomination of Mr. Jean-Philippe GUILLAUME as Deputy CEO Global Corporates,
for a 4 – years mandate, on the vacant position, existent in the Management Committee, following
Mrs. Maria ROUSSEVA renunciation to her mandate as Deputy CEO Global Corporates starting
to November 24, 2023. The nomination is subject to obtaining the prior approval by the National
Bank of Romania.
M
EMBERS OF THE
E
XECUTIVE
C
OMMITTEE AS
OF
D
ECEMBER
31,
2023
8
Maria Koytcheva ROUSSEVA
CEO
9
Date of birth: April 24, 1972;
Year of the appointment as CEO: 2023;
Term of mandate expires in: 2027;
She has no shares in BRD-Groupe Société Générale's
capital.
Compliance Officer, person responsible for coordinating the implementation of internal policies and
procedures for the application of ''Law No. 129/2019 for the prevention and combating of money
laundering and terrorist financing'' and of the ''NBR Regulation no. 2/2019 on preventing and combating
money laundering and terrorism financing''
Structures coordinated: General Secretariat, Compliance Department, Human Resources Department
and Internal Audit Department.
Member of various Committees set up to support the Executive Committee activity: Data Governance
Committee, Crisis Committee, Risk Retail Committee, Project Review Committee, Communication
Committee, Innovation Committee, Customer Board Committee, Benchmarks and Market Conduct
Oversight Committee and Chairman of Internal Control Committee, Compliance Committee, Assets
and Liabilities Management Committee, Pricing Committee, Human Resources Committee, Climate,
Environmental and Social Change Committee.
Information on mandates held
According to the information provided through the statement of affiliation, she has no executive and
non-executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates in companies established by the applicable law - one executive and one non-executive
mandate within BRD Group.
Biography
She graduated from University of National and World Economy, Sofia, Bulgaria, specialization
International Economic Relations and she has a master’s degree from Leipzig University, Germany,
specialization Business studies.
She is a person with 23 years’ experience in the banking field, out of which over 20 in management
positions, outside and inside the SG Group, such as: Relationship Manager, Corporate Clients at
HypoVereinsbank Bulgaria (April 2000 – March 2002, Head of Multinational Corporates at HVB Bank
Biochim, Bulgaria (April 2002 – October 2005); Head of Corporate and Investment Banking at Société
Générale Expressbank, Bulgaria (November 2005 – October 2011); Deputy CEO/ Deputy Chairman of
the Management Board, Head of Corporate and Financial Markets at Société Générale Expressbank,
Bulgaria (November 2012 – June 2015); CEO/ Chairman of the Executive Board at Société Générale
Bank Serbia (July 2015 – July 2019); Member of the Supervisory Board at Ohridska Banka, Société
Générale Group (February 2012 – December 2019); Member of the Board of Directors at SKB Banka
Slovenia, Société Générale Group (May 2018 – December 2019), Member of the Board of Directors at
Rusfinance Bank LLC, Rosbank Group (August 27, 2019 -March 1
st
, 2021), First Deputy CEO/ First
Deputy Chairman of the Management Board at PJSC Rosbank, Société Générale Group (August 21,
2019 - Aprilie 29, 2022), Member of the Board of Directors of Societe Generale Insurance LLC and
Societe Generale Life Insurance LLC (September 18, 2019 – May 31, 2022).
In 2021, she joined the Board of Directors of BRD Groupe Société Générale S.A. as a non-executive
member and held this mandate between July 26, 2021 and June 9, 2022.
Subsequently, between October 4, 2022 and November 23, 2023, she held the position of Deputy CEO,
Global Corporates of BRD - Groupe Société Générale S.A and since November 24, 2023, she has been
holding the position of CEO of BRD.
9
Deputy CEO Global Corporates and ccoordinated the Global Corporates Pole including the following structures: Deputy Head of GCP, Top
Corporates Coverage Division, SME Coverage Department, Corporate Marketing & Sales Management Department, Corporates Credit Group
Department, Structured Finance Division, Corporate Finance Division, Global Transaction Banking Department.
In addition, within the BRD Group, she has been Chairman of the Board of Directors of BRD Sogelease
IFN S.A. (BRD's leasing subsidiary) since July 28, 2022.
Alexandru-Claudiu CERCEL-DUCA
Deputy CEO - Financial Markets
Date of birth: February 17, 1968;
Year of the appointment as Deputy CEO: 2008;
Term of mandate expires in: 2025;
He has 1,030 shares in BRD-Groupe Société Générale's
capital.
Coordinated the Financial Markets Pole including the following structures Financial Markets Division,
Securities Division, Financial Markets Solutions and Governance Division, Markets AI Hub, Markets’
Research Service Unit.
Member of
various Committees set up to support the Executive Committee activity
: Internal Control
Committee, Compliance Committee, Data governance Committee, Assets and Liabilities Management
Committee, Pricing Committee, Crisis Committee, Project Review Committee, Human Resources
Committee, Communication Committee, Climate, Environmental and Social Change Committee,
Innovation Committee, Customer Board Committee and Chairman of Benchmark Indices and Market
Conduct Oversight Committee.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law- one executive mandate within BRD-Groupe Société Générale.
Biography
Graduated the Economic Studies Academy - Cybernetics Faculty, in 1992, as well as various
management and leadership training courses organized both by Société Générale and other banking
institutions: Nomura Bank (London), Bank of America (San Francisco), or the Montreal University and
London Business School. He graduated the Executive Master of Business Administration (EMBA) -
ASEBUSS Bucharest / University of Washington, USA. Between 1992 and 1993, he was a sales
manager in the field of communications products. He has worked within BRD-Groupe Société Générale
since 1993, and occupied the positions of Treasury Officer, FX technical analyst, FX trader, Treasury
Deputy Manager, Market Operations Manager and Executive Officer of Financial Markets.
Philippe Yves Henri Pierre Marie
THIBAUD
Deputy CEO Risks
Date of birth: February 5, 1968
Year of the appointment as Deputy CEO: 2020;
Term of mandate expires in: 2024;
He has no shares in BRD-Groupe Société Générale's
capital.
Structures coordinated : Risk Piloting Pole, Risk Deal Flow Pole and the Special Credit Management
Department.
Member of various Committees set up to support the Executive Committee activity: Internal Control
Committee, Compliance Committee, Data Governance Committee, Assets and Liabilities Management
Committee, Pricing Committee, Crisis Committee, Risk Retail Committee, Project Review Committee,
Human Resources Committee, Communication Committee, Climate, Environmental and Social Change
Committee, Innovation Committee, Customer Board Committee and New products Committee – Co-
Chairman.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law- one executive mandate within BRD-Groupe Société Générale and
two non -executive mandates– one inside BRD-Groupe Société Générale Group and one outside
Société Générale Group.
Biography
He graduated from Université Paris I - Panthéon Sorbonne, has a diploma from Ecole Normale
Supérieure de Cachan, qualification on Aggregation Economics and Management and also a diploma
from Université Paris XI – Val de Marne Créteil - Postgraduate (DEA) Management.
Mr. Thibaud has 23 years of experience in risk management and credit analysis field.
During his career, Mr. Thibaud acquired a significant expertise in various fields of risk management:
credit risk, operational risk, market risks, experience in all markets from retail to very large CIB clients,
LOD2 as well as LOD1 positions held in France as well as in The Netherlands, management of large
teams.
Mr. Thibaud held the following positions in banking field: Deputy Head of Risk France with Société
Générale, Paris (January 2018-August 2019), Head of Risk North of France at Société Générale, Paris
/ based in Lille (September 2014-December 2017), Co-Head of Credit Société Générale, Paris CIB –
France (March 2008-August 2014), Relationship Manager, CIB - The Netherlands at Société Générale,
Amsterdam branch (September 2001-February 2008), Credit Manager at GE Access –European
headquarters (May 2000-August 2001).
He also has academic expertise as Allocataire Moniteur Normalien (Lecturer / Researcher) at the
Université Paris XII, Université Paris I Pantheon-Sorbonne and at the Institut Universitaire de
Technologies de Sceaux (September 1994-August 1996), Teacher of Accounting and Management,
Training co-coordinator of the Chartered Accountant Preparation at Ecole Nationale de Commerce de
Bessieres (September 1996-April 2000).
In September 1
st
, 2019, he joined BRD - Groupe Société Générale as Advisor of BRD’s CEO.
Mirela Virginia MEDELEAN
Deputy CEO Projects and Operations
Date of birth: September 14, 1971
Year of the appointment as Deputy CEO: 2021
Term of mandate expires in: 2025;
She has 20,000 shares in BRD-Groupe Société
Générale's capital.
Structures coordinated: Business Solutions Center Pole; Infrastructure & Production Operations
Department, Information Security Division, Strategy Consulting and Support Division, Business Process
Performance Division, Operations Pole; Financial Market Services Division, Business Intelligence
Center Department.
Member of various Committees set up to support the Executive Committee activity: Internal Control
Committee, Compliance Committee, Data Governance Committee, Crisis Committee, Project Review
Committee, Human Resources Committee, Communication Committee, Climate, Environmental and
Social Change Committee, Innovation Committee, Customer Board Committee.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates in companies established by the applicable law - one executive mandate within BRD - Groupe
Société Générale.
Biography
She graduated from West University of Timisoara, Economic Sciences Faculty, specialization:
Accounting and Management of Information System and has a Master of Economic Science, Business
evaluation and diagnosis specialization.
Mrs. Mirela Virginia MEDELEAN has 28 years experience in various fields of banking activity, of which
over 20 years in management positions such as: Business Analysis Deputy Director/Projects and
Organization Department (July 2003 – August 2005), Deputy Director/Projects and Organization
Department (August 2005 – Oct. 2008), Network Systems and Processes Director/ Network
Administration Department (Oct. 2008 - Dec.2011), Deputy Director/ Human Resources Department
(Jan. 2012 – June 2016), Director/Business Intelligence Center Department (June 2016 – Nov 2019),
Human Resources Department/ Executive Director (Nov.2019-July 2020), Business Intelligence Center
Director (July, 2020 to Sept. 2020), Projects and Operations Director (Sept. 2020 - June 2021).
She also has academic expertise as University assistant within West University of Timisoara, Economic
Sciences Faculty, since 1995 to 1998.
ETIENNE JEAN LOULERGUE
Deputy CEO Finance/Treasury
Date of birth: July 28, 1973
Year of the appointment as Deputy CEO: 2022;
Term of mandate expires in: 2026;
He has no shares in BRD-Groupe Société Générale's
capital.
Structures coordinated: Financial Department, Level 2 Financial Control Service, Acquisitions Division,
Cash Administration Department.
Member of various Committees set up to support the Executive Committee activity: Internal Control
Committee, Compliance Committee, Data governance Committee, Assets and Liabilities Management
Committee, Pricing Committee, Crisis Committee, Project Review Committee, Human Resources
Committee, Communication Committee, Climate, Environmental and Social Change Committee,
Innovation Committee, Customer Board Committee.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law- one executive mandate and two non-executive mandates as follows:
one non-executive mandate within BRD Group and one non-executive mandate outside Société
Générale Group.
Biography
He graduated from Ecole Nationale Superieure de l’Aeronautique et de l’Espace and has a Master
degree in audit and one in accounting and financing.
He has 18 years experience in banking field, in large credit institution, occupied positions such as BRD’s
Finance Department Executive Director (July 2020 – October 3, 2022), Advisor of BRD’s Deputy CEO
Finance Treasury (August 2019 –July 2020), Deputy Executive Director for Strategy and Finances at
Komercni Banka (July 2015 –August 2019), Project manager for the development of finance activities
in shared service centers to Société Générale (September 2014 - June 2015), Head of IFRS
consolidation for the international banking business line at Société Générale (July 2010 -August 2014),
Controlling Manager of Banque de Financement et d'Investissement at Société Générale (March 2005
– June 2010).
He has also experience in insurance as Non-executive Chairman of Audit Committee of Komercni
Pojistovna (January 2018 - August 2019) and audit as Audit Manager (September 1999 – February
2005) at Ernst & Young.
In the non –financial sector he has experience as Non-executive and independent member of the
Board of Directors of NEVA Aerospace (September 2017 and August 2019).
In August 2019, he joined BRD - Groupe Société Générale by taking over the position of Advisor of
BRD’s Deputy CEO Finance Treasury.
In July 2020, he received the NBR approval as Finance Department Executive Director, position
occupied until October 3, 2022.
Since October 4, 2022, he holds the position of Deputy CEO Finance/Treasury.
Other mandates: member of the Supervisory Board of CIT ONE SA ( since July 16,2022) and
member of the Board of Directors of BRD Sogelease IFN S.A. (since July 28, 2022).
Mădălina - Otilia TEODORESCU
10
Deputy CEO Retail
Date of birth: May 24, 1974
Year of the appointment as Deputy CEO: 2023
Term of mandate expires in: 2027;
She has no shares in BRD-Groupe Société Générale's
capital.
Coordinates Retail Pole including the following structures: Retail Customers Value Management
Department, Retail Distribution Department, Contact Centre Department, Retail Digital Transformation
Department, European Funds, National Programs and Partnership Department and Network Regions
Retail.
Member of various Committees set up to support the Executive Committee activity: Internal Control
Committee, Compliance Committee, Data governance Committee, Assets and Liabilities Management
Committee, Pricing Committee, Crisis Committee, Risk Retail Committee, Project Review Committee,
Human Resources Committee, Communication Committee, Climate, Environmental and Social Change
Committee, Innovation Committee, Customer Board Committee.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates in companies established by the applicable law - one executive mandate within BRD- Groupe
Société Générale.
Biography
She graduated from Faculty of Finance, Banking and Trade Relations of the Romanian-American
University.
She has over 28 years of experience in the banking field, out of which 23 in management positions such
as: Manager - Citibank Romania (Sept 2000 – June 2002); Head of department for VIP Sales and
Strategic Partnerships; Retail Area – Raiffeisen Bank SA (June 2002 – Dec.2003); Director of Consumer
Division, Retail Area – Raiffeisen Bank SA (January 2004 –October 2005); Executive Director of Private
Individuals Lending Division, Retail Area – Raiffeisen Bank SA (October 2005 –June 2008); Executive
Director – Chief Commercial Officer – Raiffeisen Bank SA (June 2008 –Aug. 2014); Deputy General
Manager - Piraeus Bank Romania (Sept. 2014 – June 2018); Vice President - First Bank Romania,
Member of Executive Management Committee (since June 2018 - March 3, 2023).
Other positions occupied in the banking industry: Member of the Board of Directors, Raifeissen Asset
Management (September 14, 2009 – August 31, 2014); Member of the Board of Directors, Raiffeisen
Leasing (December 8, 2011 - August 31, 2014); Advisor to the Chairman, Romanian Commercial Bank
- BCR - Head-office (Sept. 1999 - Sept. 2000); Head-office – Documentary Operations - Documentary
10
Affairs officer, Victoria Branch – Documentary Operations – Senior Economist Head office - Corporate
Banking Department - Relationship Manager BANCOREX (1995 –Sept. 1999).
A
TTRIBUTIONS AND RESPONSIBILITIES
The executive officers are in charge of taking all the measures in relation to the company’s management,
within the limits of the company's object of activity and in compliance with the powers exclusively reserved
by law or by the Articles of Incorporation to the Board of Directors and the General Shareholders Meeting.
Each executive officer is vested with all the powers to act on behalf of the Bank and to represent it in the
relationships with third parties, in any circumstances related to the activities that they coordinate, in
compliance with the legal provisions, the Articles of Incorporation and the Internal Regulations of the Bank.
Within the limit of the powers and responsibilities set forth by the Board of Directors, the executive officers
act jointly, organised in the Executive Committee, for a series of activities / operations specific to the activity
of the Bank, detailed in the Articles of Incorporation, in the Internal Regulations of the Bank, the “Directive
on the management of approval limits for loans and commitments” and in the Directive ''Regulation of
organization and functioning of the management body''.
M
EETINGS OF THE
E
XECUTIVE
C
OMMITTEE
The meetings of the Executive Committee are held at least once every two weeks, or any time the activity
of the Bank requires it.
In 2023, 142
meetings of the Executive Committee took place.
The decisions of the Executive Committee are made with votes “FOR” of at least half of the members of
the Executive Committee. The CEO shall have the casting vote in case of tie of votes.
Voting cannot be delegated within the meetings of the Executive Committee.
The minutes of the meeting are signed by the executive officers who attended the meeting immediately
after their drafting.
The Executive Committee provided the Board of Directors, regularly and comprehensively, detailed
information about all the major aspects of the Bank's activity, including risk management, potential risk
assessment and compliance matters, measures taken and recommended, irregularities found while
performing its attributions. Any major event is communicated immediately to the Board of Directors.
C
OMMITTEES SET UP IN SUPPORT OF THE
E
XECUTIVE
C
OMMITTEE
The committees set up to support the Executive Committee assist it in performing its attributions on various
business lines, particularly on the operational activity of the Bank. The members of these committees are
the members of the Executive Committee and the management of the structures impacted.
The most important committees are:
I
NTERNAL
C
ONTROL
C
OMMITTEE
It is a permanent consultative committee, which has as main task to analyse the adequacy of the internal
control framework, including business continuity and crisis management as regards organizing /
functioning, by analysing the results obtained and the deficiencies found in the internal control activity. In
order to fulfil its mission, the main themes subject to debate in the committee are management of the
operational risks, fraud risks, IT risk managementul riscului, IT security risk, Level 2 Control (CN2), Financial
Level 2 Control, activity continuity and crisis management, managerial supervision, managerial supervision
of accounts, claim, audit, conformity and reputational risk, , deficiencies found in the supervision reports /
minutes of the authorities, protection of personal data.
A
SSETS AND
L
IABILITIES
C
OMMITTEE
It is a permanent consultative committee which assists the Executive Committee in performing its
attributions related to the management of assets and liabilities structure, liquidity and funding sources
management, structural risks management (interest rate risk and foreign exchange risk in the banking book)
and capital management.
Name Number of shares
Mirela Virginia MEDELEAN
20,000
Alexandru - Claudiu CERCEL - DUCA 1,030
TOTAL
C
OMMITTEE FOR
N
EW
P
RODUCTS
It is a permanent consultative committee that ensures the identification, the analysis and the reliable
measurement of risks associated to new products, offered to the Bank's clients, including material changes
of the existing products.
P
RICING
C
OMMITTEE
It is a permanent consultative committee whose mission is to analyse and propose measures to the Bank's
decisional bodies on pricing policy and strategy (commissions and fees, interest rates) regarding the Bank's
products, taking into consideration the budgetary targets, the competitive environment, the commercial
strategy and market developments.
R
ISK
R
ETAIL
C
OMMITTEE
It is a committee whose mission is to formalize the measures proposed by Bank's structures in order to
improve the Bank's retail lending activities.
C
USTOMER BOARD
It is a permanent consultative committee dedicated to customer experience, which aims to ensure at the
level of the whole Bank the efficiency of the process of improving the quality of the experiences offered to
the clients, from the perspective of the feedback received from the clients.
C
OMPLIANCE
C
OMMITTEE
It is a permanent consultative committee whose main mission is to analyze the way in which the compliance
risk is managed, including the presentation of the deficiencies found in the compliance control activity.
C
LIMATE
,
E
NVIRONMENTAL AND
S
OCIAL
C
HANGE
C
OMMITTEE
It is a permanent consultative committee whose main mission is to carry out strategic CSR analyzes by
reporting to the Bank's objectives, in order to present to the Management Committee the measures for
implementing the CSR strategy in this area. This mission includes making proposals for setting the Bank's
objectives, adopting the relevant regulatory framework, monitoring the Bank's commitments,
communication and any other topics related to environmental, climate and social issues.
O
THER COMMITTEES
: Crisis Committee, Safety and Occupational Health Committee, Projects Review
Committee, Follow-up Committee, Human Resources Committee, Communication Committee, Innovation
Committee, Data Governance Committee and Benchmarks and Market Conduct Oversight Committee.
BRD
-
G
ROUPE
S
OCIÉTÉ
G
ÉNÉRALE
’
S SHARES HELD BY THE MEMBERS OF THE
B
OARD OF
D
IRECTORS AND OF
THE
E
XECUTIVE
C
OMMITTEE AS AT
D
ECEMBER
31,2023:
R
IGHTS OF SHAREHOLDERS
BRD-Groupe Société Générale respects the rights of its shareholders and ensures equal treatment for all
of them.
V
OTING RIGHT
The Bank's shares are indivisible and confer equal rights to their holders, each share entitling to one vote
in the General Shareholders Meeting.
General Assemblies are called by the Board of Directors.
The notice of meeting is sent at least 30 days before the date set, in compliance with the legal provisions
regarding the publicity and notification of the Financial Supervisory Authority - Financial Instruments and
Investments Sector and of the Bucharest Stock Exchange ("BVB").
The shareholders can attend the General Assemblies personally, through a representative or they can vote
by correspondence. Forms of power of attorney and vote by correspondence are made available to the
shareholders in the special section on the Bank's own Internet page.
The procedures regarding the works of the General Assembly of the Shareholders are available to
shareholders and other interested parties on the institutional site.
R
IGHT TO DIVIDENDS
Each share of the Bank, held by a shareholder at the registration date (set according to the specific
regulations and approved by the General Shareholders Meeting) entitles the shareholder to dividends for
the prior financial year, in the quantum and conditions established by the General Shareholders Meeting.
The Dividend Policy is available to shareholders and other stakeholders on institutional site in Corporate
Governance section:
https://www.brd.ro/en/about-brd/investors-and-shareholders/corporate -guvernance/dividend-policy
The dividend policy reconfirms the engagement of the Board of Directors to offer shareholders the
opportunity to obtain a return for the invested capital and for the Bank the opportunity for a sustainable
development.
R
IGHT TO INFORMATION
BRD makes sure its shareholders have access to relevant information, so that they may exercise all their
rights in an equitable manner. The communication strategy of the Bank relies on the following principles:
Ø
Ø
Ø
BRD-Groupe Société Générale sets up and maintains a dedicated structure managing the relation with
investors and other stakeholders.
Shareholders / investors may send their requests to the Bank through e-mail or over the telephone, at the
contact data displayed on the institutional site. The relevant information is published on the Bank's internet
page, both in Romanian and in English.
For the information of shareholders and investors, the Bank sets at the beginning of the year a financial
reporting calendar, which it sends to the Bucharest Stock Exchange and to the Financial Supervisory
Authority. The quarterly financial reporting is prepared according to International Financial Reporting
Standards as adopted by the European Union - and in compliance with the regulations specific to the capital
markets.
In order to communicate on its financial results, BRD-Groupe Société Générale organizes meetings/ live
audio webcasts with financial analysts, investment consultants, brokers and investors. These meetings
during which the results of the Bank are presented, are an opportunity for Bank’s management and the
financial market analysts to exchange opinions. The same policy of transparency has been adopted
regarding the communication with the rating agencies and with capital markets institutions. In 2023, BRD
Group organised 4 live audio webcasts for presenting its financial results.
Publication of the preliminary financial results December 31, 2023 and
meeting with journalists for presenting these results
February 8, 2024
Presentation of the financial preliminary results for the year 2023 and
Q4 2023, broadcast through a live audio webcast
February 9, 2024, starting at
10:30 AM (local time, EET) |
08:30 (GMT).
General Assembly of Shareholders April 25, 2024
Publication of the Annual Report 2023 – financial results as of
December 31, 2023
April 25, 2024
Communication of results as of Q1 2024 May 2, 2024
Communication of results as of 1st half of 2024
August 1, 2024
Communication of results as of Q3 - 2024 October 31, 2024
2024 financial calendar
3. H
UMAN RESOURCES
K
EY FIGURES
2023
Ø
5,854
active employees in BRD, with:
●
701
external recruitments
●
1,045
functional mobility
●
13.2%
8.8%
voluntary turnover.
The number of active employees of the Group as of 2023 end was 6,070 (2022 end: 6,126), while the
number of active employees of the Bank as of 2023 end was 5,854 (2022 end: 5,833). Active employees
are those present at work (excluding maternity leave and long - term sick leave).
In 2023, the Human Resources Department (HR) continued to deliver projects and actions in line with the
strategic HR axes: career management, managerial development, employee engagement, efficiency and
communication.
B
USINESS SUPPORT AND CONTINUOUS IMPROVEMENT
During 2023, the Human Resources Department continued to support business by sustaining the evolution
of the business model. The purpose of the Bank was to ensure efficient and dynamic structures, in order to
better respond to the needs of the clients (increased focus on remote banking) and to maximize the results
obtained. Among the main projects are: optimizing the structure of the different departments at the Head
Office level, territorial reorganizations at the network level (relocations and mergers of agencies) etc.
C
AREER
M
ANAGEMENT
Throughout 2023 the Human Resources Department has continued to have individual meetings with the
employees in order to identify their potential as well as their career evolution expectations, according to
their competencies and skills. Also, meetings were held with all the new employees to effectively
accompany them during the on boarding process.
Over 1000 employees changed their position as a result of the Bank’s internal mobility policy, changes that
required specific trainings for each role, with different learning methods.
700 persons were recruited in 2023 from outside the Bank, the majority being within the Network for
covering the vacancies, extending the commercial capacity and reaching the sales objectives of the Bank,
but also niche positions within headquarter, with focus on IT domain as a support to omni-channel and
digital strategy.
90% of our employees have graduate studies and 10%, undergraduate studies.
T
RAINING
&
R
ISK
A
WARENESS
In a challenging and changing business environment, continuous skills development is the right way to go
to support the Bank's short and medium-term goals.
The 2023 training strategy aimed at developing both commercial skills, technical skills (according to the
business strategy), managerial development skills, and specific regulations’ knowledge through risk
management and compliance courses for BRD employees. The diversified training offer covered the
training needs of the employees, in a format adapted to all profiles (juniors, seniors, experts / specialists),
correlated with the support and development of the critical competencies aimed for each role, in a mix of
theoretical and experiential learning with direct involvement of the participant in the choice of training
actions, identifying his training needs together with his manager.
In order to adapt to the rapid changes in the business environment, strategic workforce planning projects
have been implemented in retail and corporate areas. Employee skills are a major asset of the Bank's
success. Our aim is to promote the permanent adaptation of employees' skills to the rapid changes in our
environment and to allow them to access motivating career paths. At the same time, the e-learning project
developed together with CPBR (Romanian Board of Banking Employers), with the representatives of the
Trade Unions (through Federation of Insurance and Banking Trade Unions) and the 4 member banks (BCR,
Raiffeisen, ING and Unicredit) was continued. Its main objective is to develop the skills of employees so
that we can adapt more easily to the labour market changes and the digital future. The course catalogue in
the new platform focuses on 3 major topics that address digital technology:
Ø
Ø
Intelligence and collected the needs for non IT departments for further customised trainings)
Ø
digital perspective);
Ø
collaboration tools such as video conferencing, distance learning, etc.).
During 2023, face to face training has restarted in Bucharest and regions and we continued to be also
adapted to the distance / hybrid and online interaction format.
The main axes of development were:
Ø
cooperation with Société Générale Group (“Code of Conduct”, “Information security”, “Market
abuse”, “Fatca”, “Anti bribery and corruption”, “Environmental risk management", "Anti-money
laundering", etc.) and local e-learning (SSM – health and safety at work, “Physical security events”,
“GDPR”, “KYC-AML-CFT” module for new comers), increasing the number of case studies
presented during face-to-face / virtual trainings;
Ø
the area of ESG Academy (Environment, Social Impact, Governance) through e-learning training
using training platforms as well as through courses organized in physical format, Climate Fresk
workshops (over 1600 participants at the end of 2023);
Ø
o
information about the Bank, BRD values, basic knowledge regarding compliance, credit
risks, as well as HR issues regarding training, career management;
o
products and applications, related risks, behavioural skills, and the development of specific
business skills, through an experiential approach to lea rning Business
Ø
well as for the corporate segment.
These trainings are modular programs, on levels of knowledge and expertise, adapted to the roles
in the organization (both for managerial functions and for operational teams), having different
degrees of complexity and covering as main directions: offer, financial and risk analysis, skills -
sales, customer portfolio management, communication, and negotiation .
There are training programs dedicated to each business-line, curricula developed and updated
according to the commercial requirements expressed and regulatory developments, with business
guests - bank specialists on various topics, along with internal trainers and new technology
programs – technical trainings delivered both internal and extern.
Ø
behavioural training programs (topics such as: customer relationship management,
communication, sales and negotiation techniques, stress management, conflict management,
teamwork, feedback - a tool for development and performance, how to make a team meeting more
attractive, hybrid management, simplification webinars etc.), teambuilding seminars for developing
the collaboration and cooperation skills within BRD teams, coaching sessions program dedicated
to all employees.
Ø
ü
ü
E
MPLOYEE ENGAGEMENT AND IMPACT ON THE EDUCATIONAL ENVIRONMENT
In 2023 BRD continued employee’s engagement with impact in educational environment, being one of the
strategic axes.
W
ORK
/
LIFE BALANCE
In order to ensure a balance between professional and personal life, the Human Resources Department
continued the projects:
Ø
well-being: "The risks of a sedentary lifestyle", "World No Tobacco Day", "Summer and the
problems associated with sun exposure and high temperatures", "Safe food today, better Health in
the future”, "Problems associated with cold season") together with our medical services partner.
Ø
In 2023 the majority of functions are eligible for telework with 2-4 days/week of remote work.
Furthermore, depending on the needs of our colleagues, we will continue to improve the current
way of working to support the balance between the professional and personal life of the employees.
Ø
Regina Maria, centered on stress and burnout prevention, work-life balance and wellbeing, with
tree pillars: monthly webinars for all staff, work-shops for managers, Emotional HelpLine for
employees and family members. The duration of the program is 18 months, starting September
2023.
Ø
under a series of agreements.
R
EMUNERATION
P
OLICY AND
P
RACTICES
The BRD Remuneration Policy and Practices respects:
Ø
Regulation 2/2022, CRD V, delegated Regulation (UE) 923/2021, MiFID II, Volker
Ø
Ø
The Remuneration Policy is approved by the Board of Directors of BRD upon recommendation of the
Remuneration Committee.
BRD
Ø
of the Bank, as well as its control framework;
Ø
Financial Markets and investment advice, sound and prudent management of the risks related to
sustainability is also considered starting with March 2021;
Ø
Bank's risk tolerance level. The Bank encourages a prudent behavior (avoiding excessive risks);
Ø
and competitive remuneration subject to strictly complying with the powers and performance;
performance is assessed in a multiannual framework;
Ø
accumulated knowledge, personal development, contribution to the team's performance etc.
Ø
female staff members, for performing the same work or work of equal value.
The Bank ensures a correct and competitive remuneration, by strictly complying with competences and
performances, with 2 components correctly proportioned:
Ø
Ø
Fixed remuneration - reflects the relevant professional experience and organisational responsibility,
according to the employee's job description as part of the employment terms. Fixed remuneration
represents a sufficiently high proportion of the total remuneration to allow the application of a fully flexible
policy on the components of variable remuneration, including the possibility of not paying any of its
components.
Variable remuneration - reflects a sustainable and risk-adjusted performance as well as the performance
that exceeds the necessary performance to fulfill the duties provided for in the employee's job description
as part of the employment terms.
Variable remuneration:
Ø
component distribution mechanisms do not guarantee the granting of sums over several years.
Thus, the variable remuneration is subject to a fair annual review process;
Ø
employment and can only be granted in the first year of employment and when the Bank has a
sound and solid capital base. BRD personnel is not overly dependent on bonuses;
Ø
Ø
Ø
Ø
Ø
do not reward failure or misconduct.
The Bank may decide to reduce or not even grant the variable remuneration if it cannot be supported in
accordance with the overall financial situation of the Bank, of the structure in which the activity is carried
out and the employee concerned.
The variable remuneration is considerably reduced if the Bank records a poor or negative financial
performance, taking into account both the current remuneration as well as the reductions in payments
related to the sums due, as previously determined, including malus or clawback agreements signed. Up to
100% of the variable remuneration is subject to malus or clawback signed agreements.
For different types of jobs, it is possible to use different schemes for granting the variable remuneration.
There is a maximum limit defined for the variable component, which may not exceed 100% of the fixed
component of the total remuneration.
For sales staff, commercial objectives are set to take into account the rights and interests of the customers,
so that:
Ø
Ø
over other products/ services such as products/ services which are more profitable for the institution
or for an employee, to the detriment of the consumer.
The special principles applicable to the categories of identified staff are:
Ø
Ø
including the deferred part thereof only if the variable remuneration can be supported in accordance
with the Bank's overall financial situation and if it can be justified in accordance with the
performance of the Bank, the structure in which the activity is carried out and the individual
concerned.
Ø
to the fulfillment of the minimum performance requirements.
Ø
is deferred for a period of at least 4 years. For identified staff, at least 50% of any variable
remuneration shall consist of shares equivalent, which are subject to an appropriate retention
policy, designed to harmonise the incentives with the Bank's long-term interests.
Ø
to counteract the risk alignment effects stipulated in the personnel remuneration agreements are
prohibited. One may insure the currency risk hedging using derivative instruments.
Financial data for 2023, according to the disclosure requirements covered by Art. 450 (h), EU Regulation
575/2013, will be published at a later date, on the Bank's website.
R
EMUNERATION OF THE MEMBERS OF THE
B
OARD OF
D
IRECTORS AND EXECUTIVE
C
OMMITTEE
a) Remuneration of the members of Executive Committee (including CEO)
Remuneration is composed of monthly fix remuneration and variable annual remuneration granted as
performance bonus. For management expatriate staff there are granted some benefits according to Société
Générale’s policy, in order to facilitate their living with families in Romania.
b) Remuneration of the members of the Board of Directors
For 2023, the Ordinary General Shareholders Meeting approved an individual remuneration for the non-
independent non-executive directors amounting to EUR 1,800/ month (gross amount, RON equivalent) and
for the independent non-executive directors amounting to EUR 3,600/ month (gross amount, RON
equivalent) including 19.9% for the contributions’ transfer.
Also, the Ordinary General Shareholders Meeting approved the general limit for the directors’ and members’
of the Executive Committee remunerations, including additional remunerations, for 2023, to amount to RON
22 million, gross amount (tax transfer compensation is included).
4. G
ROUP ACTIVITY AND RESULTS
E
CONOMIC AND BANKING ENVIRONMENT IN
2023
The economy exhibited a deceleration compared to preceding years, experiencing the impacts of elevated
inflation, tightening monetary policy, and declining external demand. In Q4’23, the Euro area's seasonally
adjusted GDP remained unchanged compared to the previous quarter and saw a marginal expansion of
0.1% compared to the same quarter of the previous year. According to preliminary estimates, the Euro area
is expected to achieve 0.5% annual growth for 2023.
In Romania, the gross numbers show that the economy accelerated by 1.1% y/y in the last quarter of 2023,
while the seasonally adjusted data indicates that Q4’23 GDP decreased by 0.5% q/q (vs. +0.8% q/q prev).
Annual dynamics gained pace, with Q4’23 GDP reaching +3.0% y/y, gross series, up from +1.1% y/y in
Q3’23. This translated into an overall GDP growth of 2.1% in 2023 (vs. 4.1% in 2022). On the supply side,
except for Industry, all sectors made positive contributions to GDP growth story, although varying in extent.
On the demand side, Gross fixed capital formation was in the driver’s seat (+12.0% y/y, +2.9pp to 2023
GDP growth), with Private consumption coming in second (+2.9% y/y, +2.0pp to growth). The drawdown of
inventories weighed heavily on growth (-3.1pp), amid the on-going post-pandemic rebalancing of supply
and demand.
On a medium to longer run, the National Recovery and Resilience Plan remains a strong catalyst for
Romanian economy. Regarding allocation, as amended by the Council Implementing Decision of Dec 11,
2023, PNRR stands at EUR 28.5 bn (EUR 14.9 bn in loans, EUR 13.6 bn in grants) covering 66 reforms
and 111 investments (177 measures), structured around 16 components. In December 2023, Romania sent
the third RRP payment request to the European Commission, worth EUR 2.7 bn (EUR 1.9 bn grants and
EUR 0.8 bn loans), adding to the EUR 9.1 bn received so far.
Regarding inflation, the level for Euro area inflation stood at 2.9% in December 2023, while strong price
increases were still registered in the CEE region: Czech Republic (7.6%), Romania (6.6%), Slovakia (6.6%)
and Poland (6.0%).
During 2023, Romania inflation embarked into a downward trend, reaching 6.6% in December 2023, from
a high level of 16.4% in December 2022, posting faster than expected decrease during Q4’23. amid lower
growth rate of food and energy prices, as well as declining fuel prices. Nevertheless, the average for the
full year was still double digit, at 10.4%. Inflation is expected to continue its gradual decline, albeit at a
slower pace, despite short-term pressure stemming from new fiscal measures applying in 2024, and
external backdrop, as evidenced by January 2024 reading, of 7.4%
The inflation rate in Romania remains far from the upper bound of the NBR target range (2.5% ± 1 ppt).
The estimated inflation rate for 2024 end, according to NBR latest Report on inflation, stands at 4.7%.
Regarding monetary policy, after successive key rate increases since the start of the tightening cycle in
October 2021, with 575 bps in total (from 1.25% in August 2021 to 6.75% in November 2022), at the
beginning of 2023, NBR indicated the end of the rate hiking cycle with an increase of 25 bps to 7%, in line
with market expectations. Due to persistent core inflation, labor market strain, and uncertainty surrounding
fiscal consolidation, the NBR opted to keep the key rate steady at 7% during subsequent monetary policy
meetings.
In terms of banking activity, the annual growth rate of gross loans outstanding reached +6.4%* YoY at
December 2023, after the very low dynamic, of +2.9% *YoY from July and August 2023, recovering by
more than double in annual pace of growth, largely sustained by corporates (+10.2%* YoY). Loans to
individuals reversed the negative performance from June – September 2023, with its annual dynamic re-
entering into positive territory (+1.3% YoY at December 2023, from -0.1% YoY at August and September
2023 end), mainly on favourable evolution for consumer loans, which maintained a positive and increasing
growth rate, reaching +4.4%* YoY at December 2023 (+1.5%* YoY at August 2023). Housing segment
presented a weak, but improving performance (-0.5%* YoY at December 2023, from -1.0%* YoY at August
2023 and -1.2%* YoY at September 2023.
Deposits regained momentum towards the end of the year, with growth rate reaching +6.0% YoY at
December 2023, from 3.3%* at August 2023 end, and +7.2%* in average during 2023, with individuals and
companies RON savings on a high growth, while FX component remained within the negative territory with
slight recovery.
Relating to asset quality, the Romanian banking sector is classified into EBA defined low risk bucket with a
level of NPL (non-performing loans) ratio <3% and NPL coverage ratio > 55%. As at December 2023 end,
NPL ratio reached a new historically low level of 2.33% (vs. 2.65% at December 2022 end). NPL coverage
ratio stood high at 65.1% at September 2023 end (vs. 65.4% at December 2022 end).
The Romanian banking system is well capitalized, as reflected by the capital adequacy ratio of 22.51% as
of December 2023 end (23.40% as of December 2022 end), remaining above EU average (19.9% at
September 2023 end). The contraction compared to December 2022 end was mainly driven by the fading
effects of CRR “quick-fix” adjustments and higher RWA on dynamic lending, partially compensated by profit
retention, given the regulatory recommendation.
As regards liquidity, the banking system has also a comfortable position, with a Liquidity Coverage Ratio of
248% as of September 2023 end (209% at December 2022 end), remaining well above regulatory
requirement (100%) and EU average (160.7% at September 2023 end). The positive evolution built on the
substantial rise in the liquidity buffer, generally driven by the increases in the stock of central governmental
assets and in the liquidity surplus.
* variation at constant exchange rate
Source: BRD Research, IMF, NBR
C
OMMERCIAL ACTIVITY
As at December 31, 2023, the Bank had 423 branches (31.12.2022: 460 branches), ensuring the
distribution of its products and services throughout the whole country.
BRD continues to advance on digital deliverables by extending the offer of investment products to 100%
online, with document flow and trading being easily accessible on its website. In addition, YouBRD mobile
application is constantly enhanced: with new functionalities, ready to be used now also by authorized
physical persons, by improving its way of communication with customers and offering preferential
exchanges rates.
The ongoing surge in digital adoption is evident, as YouBRD, becomes the everyday financial application
for over 1.4 million customers, reflecting a remarkable +33% YoY increase in 2023.
BRD held a market share of 10.1% of total assets at December 31, 2023,
according to its internal
computation.
The structure of the customers’ net loans at Group level evolved as follows:
Net loans’ outstanding (including leasing) reached RON 42.3 billion, recording a double-digit growth by
12.2% versus December 31, 2022, building on both retail and corporate segments.
On retail (net loans outstanding +5.8% YoY at 2023 end), BRD marked a record level of RON 7.6 billion
new loans granted to individuals in 2023 (excluding BRD Finance IFN SA, as a result of the decision to sell
its entire loan portfolio, decision taken in January 2024) and the best year for new consumer loans, with an
impressive growth of +18% YoY (excluding new consumer loans granted by BRD Finance in 2023). Having
granted 1 out of 7 loans in stock in the market, BRD consolidated its position on individuals segment. Net
loans outstanding on small businesses contributed also to the segment growth, reaching an impressive
dynamic of +46.4% YoY at 2023 end, above RON 1 billion threshold for the 1
st
Corporate financing continued to deliver a remarkable performance (net loans outstanding +23% YoY at
2023 end), fueled by a robust contribution of SMEs segment (+18.4% YoY at 2023 end) and exceptional
achievement in loans granted to large companies (+25.8% YoY at 2023 end). Additionally, leasing activity
preserved a substantial growth pace (+20.2% YoY at 2023 end).
BRD remained a trusted partner for SMEs through its active participation in IMM Invest Plus program, with
RON 2.6 bn loans approved in 2023, +27% YoY vs. 2022.
BRD plays an important role in financing the green transition by incorporating ESG principles into its lending
operations and defining clear strategic objectives in this direction. The milestone of EUR 1 bn of sustainable
financing to be granted by 2025 end defined in Horizons 2025 is expected to be reached in advance.
In 2023, the value of new sustainable finance transactions which sustained, among others, an important
photovoltaic project or co-financed energy efficiency projects, amounted to RON 2.3 bn, bringing the
cumulative sustainable financing for both retail and corporate clients above EUR 900m as of 2023 end.
The customers’
deposits
Deposit base had a steady expansion (+10.1% YoY at 2023 end). Most stable and ample funding source,
retail deposits, are constantly increasing, marking a strong performance of +9.9% YoY at 2023 end.
Corporate deposits had a similar evolution, being up by +10.6% YoY, mainly driven by higher net inflows
from SMEs customers (+15.1% YoY at 2023 end).
For the evolution of the main components of the net banking income please refer to “Financial results”
section.
S
UBSIDIARIES
’
BRD
S
OGELEASE
IFN
SA
As of December 31, 2023, net outstanding of leasing financing granted by BRD Sogelease increased by
+20.2% year-on-year to RON 1,692 million. New leasing production increased to RON 1246.4 million in
2023, +23% year-on-year. BRD Sogelease activity had a strong dynamic during 2023, with significant
increase of the financing volumes. Demand for leasing financing was very consistent during the period,
driven by SME’s and large corporates active in various sectors as agriculture, construction, logistics and
transportation, manufacturing which use financial leasing as an efficient and accessible financing solution
offered by BRD Group.
BRD
F
INANCE
IFN
SA
At December 2023 end, total net loan portfolio amounted to RON 210 million vs. RON 431 million at
December 2022 end.
In January 2024, BRD Finance IFN SA took the decision to sell its entire loan portfolio. For the scope of
consolidated financial statements of BRD Group as at December 31, 2023, the BRD Finance IFN SA
financial statements were no longer prepared as “going concern” and the loans were presented according
to IFRS 5 as “held for sale/discontinued operation”, but continued to be measured at amortized cost (with
no change in the business model).
BRD
A
SSET
M
ANAGEMENT
SA
BRD Asset Management is one of the most important actors on the Romanian UCITS market, with a market
share of 19.46%* and RON 4 billion assets under management (+27% YoY), as of 2023 end. BRD Asset
Management now offers investment solutions to more than 130 thousand clients across its 12 investment
funds. The diversified products of BRD AM, offer multiple investment possibilities, intended for the
objectives of our clients.
* market share computation based on total open-end funds assets under management
F
INANCIAL POSITION ANALYSIS
The below financial position analysis is made based on the separate and consolidated financial statements
prepared according to the International Financial Reporting Standards, for the period ended December 31,
2023 and the comparative periods.
F
INANCIAL POSITION
–
Total assets at December 31, 2023 increased by 13.6% for the Group and 13.8% for the Bank versus 2022
end.
The asset structure is presented below:
T
HE GROUP
T
HE BANK
L
OANS AND ADVANCES TO CUSTOMERS
The net loans’ outstanding amount to customers registered a strong performance year-on-year (Group:
+12.2% YoY at December 2023 end, o/w leasing +20.2%; Bank: +13.1% YoY) given a strong contribution
from both retail and corporate segments, as elaborated above in Chapter 3.
C
ASH
,
C
ENTRAL
B
ANK AND LOANS AND ADVANCES TO CREDIT INSTITUTIONS
Cash and current accounts with the Central Bank and loans and advances to credit institutions increased
by 20.6% versus December 2022 end, for both the Bank and the Group, driven by higher cash and current
accounts with the central bank, while placements to credit institutions reduced on a yearly basis. These
items represented 21.4% of total assets for the Group and 22.0% for the Bank at December 2023 end.
The minimum compulsory reserve held with the National Bank of Romania accounted for 26% of this
aggregate at December 31, 2023 (28% at December 2022 end) at Group level. It amounted to RON 4,587
million, up by 11.4% vs December 31, 2022, mainly linked to increasing customers’ deposits as detailed
above. The level of RON and FX minimum reserve requirements for liabilities with residual maturity of less
than 2 years are at 8% and 5% respectively, unchanged from May 2015 for RON and from November 2020
for FX.
O
THER FINANCIAL INSTRUMENTS
Other financial instruments include financial assets at fair value through other comprehensive income,
treasury bills at amortised cost, financial assets at fair value through profit and loss, derivatives and other
financial instruments held for trading, investments in associates and subsidiaries.
These items amounted to RON 20.8 billion at December 2023 end and represented almost 25% of Group
assets. They increased by 11.7% compared to December 2022 end, mainly driven by the increase in
government bonds portfolio measured at amortised cost.
BRD did not participate to the share capital increase of BRD Societate de Administrare a Fondurilor de
Pensii Private from July 2023, therefore the ownership percentage of BRD was reduced from 49% to
26.95%, following the approval from ONRC in October 2023. Additionally, in July 2023, BRD sold its
investment in associate Fondul de Garantare a Creditului Rural IFN SA (FGCR), of 33.33%, to CEC Bank.
T
ANGIBLE AND INTANGIBLE ASSETS
The tangible and intangible assets accounted 2% of the total assets with land and buildings representing
the largest part of the item.
The total value of investments during 2023 was RON 324 million for the Bank and RON 326 million for the
Group, compared to RON 268 million for the Bank and RON 269 million for the Group in 2022. There is no
capitalized research and development expenditure.
F
INANCIAL POSITION
–
L
IABILITIES
The comparative statement of liabilities is as follows:
T
HE GROUP
T
HE BANK
A
MOUNTS OWED TO CUSTOMERS
The Group, as well as the Bank, further consolidated and diversified its already solid savings base. At
December 2023 end, amounts owed to customers increased by 10.1% for both the Group and for the Bank
and accounted for 74.4% of the total liabilities and shareholders’ equity at Group level and for 77.0% at
Bank level. The increase primarily resulted from higher inflows in term deposits from individual customers
and notable advancement in deposits from SMEs customers.
A
MOUNTS OWED TO CREDIT INSTITUTIONS
Amounts owed to credit institutions represent interbank deposits, borrowings from the parent and
International Financial Institutions, and stood at 11.2% of the total liabilities and shareholders’ equity for the
Group and 8.9% for the Bank at December 31, 2023.
BRD Group’s borrowings from Société Générale totalled RON 7.9 billion (10.5% of liabilities) at December
2023 end. Among these, are included 5 senior non-preferred loans in amount of EUR 970 million (EUR 150
million in June 2022, EUR 120 million in December 2022 and EUR 450 million in December 2023, all with
an initial term of 3 years and a call option at 2 years; EUR 100 million with initial term at 7 years and a call
option at 6 years and EUR 150 million with an initial term of 8 years and a call option at 7 years, both drawn
in December 2023) and 2 subordinated loans in amount of EUR 250 million (EUR 100 million drawn in
December 2021, respectively EUR 150 million in June 2022, both with an initial term of 10 years and a call
option at 5 years).
S
HAREHOLDERS
’
Shareholders’ equity increased by 27.3% for the Group and by 28.7% for the Bank compared to December
31, 2022, driven by the YoY higher net result and positive influence of revaluation reserves of debt
instruments accounted at fair value through other comprehensive income, given favorable development of
yield curve compared to December 2022 end, partially compensated by the exceptional dividend payment
(50% payout, RON 643m from 2022 retained profit, approve d by GSM in December 2023).
The structure of the shareholders’ equity evolved as follows:
T
HE GROUP
T
HE BANK
L
IQUIDITY POSITION
Both the Bank and the Group maintained a balanced structure of resources and placements and a solid
liquidity level over the analysed period.
The net loan to deposit ratio increased to 64.2% at December 31, 2023 versus 62.4% at December 31,
2022 for the Bank, and to 67.8% at December 31, 2023 versus 66.5% at December 31, 2022 for the Group
(loans at Group level include financial leasing receivables). The extensive lending activity was the driving
force behind the evolution.
2023
The comparative income statement of the Group for the period 2021 - 2023 is presented below:
The comparative income statement of the Bank for the period 2021 - 2023 is presented below:
BRD Group full year revenues reached RON 3,834 million in 2023 compared to RON 3,459 million in 2022,
higher by +10.8%, with increasing volumes and elevated market interest rates being the main engines of
growth. Net interest revenues marked a solid 15% increase on a yearly basis, tempered by higher
expenses, primarily on growing term deposits.
Net fees and commissions remained rather stable compared to their 2022 level, on counterbalancing
effects: lower revenues from cards activity given higher penetration of current account packages, in line
with market trend, contraction of fees on cash transactions mainly on a base effect, but increasing revenues
from lending, insurance and capital market activities.
Other revenues had a very positive evolution given a strong and stable momentum of financial markets
activity.
Although the disinflationary tendencies were felt throughout the year, with inflation ending the year towards
mid-single digit level, the average for the full year was still double digit, maintaining a high pressure on
operating expenditures. Nevertheless, by preserving a rigorous spending discipline, their increase was
limited at +8.6% in 2023 compared to 2022. The dynamic of staff expenses (+7.1% y/y compared to 2022,
to RON 963 million from RON 899 million in 2022) is reflecting the adjustments of salaries and other benefits
within the collective labor agreement, in an inflationary context and highly competitive market for talents.
The evolution of other costs is mainly linked to external services and increased IT&C related expenses
supporting the advancement on our digital roadmap. Gross operating income reached RON 1,939 million
(+13.1% compared to 2022) and cost to income ratio improved on positive jaws effect (49.4% in 2023 vs
50.4% in 2022).
During 2023, asset quality improved further, with NPL ratio falling below 2% (1.9% at 2023 end vs. 2.6% at
2022 end), while NPL coverage remained comfortable (75.9% at 2023 end vs. 76.5% at 2023 end, Bank
level). Cost of risk registered net release of RON 57.4m during 2023, compared to RON 95.1m net charge
in 2022, given persistent recoveries on defaulted exposures and limited NPL formation.
Given all the above, the full year 2023 performance was excellent and BRD Group net result marked a
robust growth of +24% YoY, touching a record level of RON 1,656 million, compared to RON 1,337 million
in 2022. ROE reached 20.9% vs. 15.9% in 2022. ROA reached 2.1% in 2023 (compared to 1.9% in 2022).
BRD capital position is solid, with total capital ratio of 21.5% at December 2023 (individual level, with own
funds including 40% of H1 2023 profit, early incorporation already approved by NBR).
The Bank recorded similar trends, with a net result of RON 1,634 million versus RON 1,286 million in 2022.
Neither Bank’s, nor the Group’s revenues depend on a single or group of connected customers; hence
there is no risk that the loss of a customer might significantly affect the income level.
Subsequent events identified after the reporting date.
According to Law 296 /2023, the Romanian Fiscal Code was amended in order to introduce, starting
January 1st, 2024, a supplementary tax for credit institutions, i.e. the tax on turnover which is computed as
follows: for 2024 and 2025 the tax is 2% from the turnover, while starting 2026 the rate is 1%. The tax is
additional to the corporate income tax, it is computed and payable on a quarterly basis and is a non-
deductible expense.
AWARDS
2023
ü
ü
ü
ü
MasterCard
ü
ü
ü
awarded by ARIR
ü
ü
ü
ü
5. R
ISK MANAGEMENT
Risk management within BRD is based on an integrated concept that takes into account the statutory and
regulatory norms as defined and required by the National Bank of Romania and European Supervisory
Bodies, the risk management standards of Société Générale, together with the best practices accepted by
the banking industry.
R
ISK MANAGEMENT OBJECTIVES AND
R
ISK
A
PPETITE SETTING
Risks are managed within a continuous process of identification, assessment, monitoring, reporting and
control, considering risk limits, approval authorities, segregation of duties and other risk mitigation
techniques.
The main objectives of the Bank’s risk management strategy are:
Ø
controlled manner, with due consideration for the stated risk appetite
Ø
system for risks’ analysis, measurement, monitoring, reporting and mitigation
Ø
activities of BRD group entities
Ø
Ø
In order to identify all the risks (financial and non-financial) to which BRD is exposed and which are inherent
to its activity, a comprehensive risk assessment exercise is performed on an annual basis. A new Risk
Taxonomy (aligned to SG Group’s approach) was implemented since December 2023. Therefore, the
Bank’s risk management strategy focuses on the following categories of risks identified as significant, any
of which could adversely affect its business, results of operations and financial situation:
Ø
Ø
Ø
Ø
Ø
Ø
Ø
Ø
Excessive usage of leverage effect risk
ESG risks have been identified as factors that may aggravate existing risk categories.
Based on the results of the risk assessment exercise and with due consideration for its strategic objectives,
the Bank defines the risk appetite framework and the risk appetite statement.
The risk appetite represents the aggregate level and types of risk that BRD is willing to assume within its
risk capacity, in line with its business model, to achieve its strategic objectives. The risk appetite statement
sets the Bank’s approach towards taking on and managing risks and is structured along two dimensions:
quantitative and respectively qualitative. At aggregate level, the risk appetite is defined by reference to the
main strategic dimensions -
Profitability, Capital Adequacy, Creditworthiness, Liquidity and Leverage
the basis of the annual strategic planning, in order to ensure alignment of risk, capital and performance
targets, which allows the Bank to:
Ø
Ø
Ø
The aggregate risk appetite is further cascaded down to material risk categories and where appropriate, to
business segments. The qualitative statements are defined to complement the quantitative part of the risk
appetite, setting the overall tone for BRD’s approach to risk taking.
Key risk indicators and corresponding quantitative measures are defined by considering the risk profile,
size and complexity of activities performed by the Bank. Their evolution is regularly monitored over the year
in order to detect any events that may result in unfavorable developments on the risk profile.
R
ISK MANAGEMENT GOVERNANCE
The Group’s risk management governance is based on the following dimensions:
Ø
Ø
of risk culture, throughout the entire organizational structure, from the Board of Directors down to
operational teams
Ø
Ø
accurate, comprehensible and meaningful manner
Ø
procedures
Risk governance relies on the three lines of defense model, which ensures the identification of the functions
within the Bank responsible to address and manage the risks, while reinforcing segregation of duties
between various control functions.
The
first line
management of the risks arisen in conducting their daily activities, taking into account the Bank’s risk
appetite and its policies, procedures and controls.
The
second line
responsible for further identifying, measuring, monitoring, and reporting risks, ensuring compliance with
internal and external requirements and providing support to the business/operational functions in executing
their duties. Although the responsibility for the management of risks within the Bank is shared between
different structures of the second line of defense, Risk Management Structures perform the role of the
centralized risk management function, by delivering the Bank’s wide holistic view on all risks, ensuring that
the risk strategy is complied with.
The
third line
and objective assurance on the quality and effectiveness of the Bank’s internal control system, the first and
second lines of defense and the risk governance framework. The Internal Audit function reports to and
operates under the mandate of the Board of Directors.
Risk management within BRD is governed by the management body, which is and assisted by specialized
committees in accomplishing its risk management and control responsibilities.
Board of Directors
The Board of Directors approves the risk and business strategy of BRD, sets the risk appetite and tolerance
levels and ensures that the Executive Committee properly transposes them at operational level.
Audit Committee
The Audit Committee plays a crucial role in the assessment of the quality of the internal control. It is
responsible for examining the internal framework for risk monitoring to ensure its consistency and
compliance with procedures, laws and regulations in force.
Risk Management Committee
The Risk Management Committee advises the Board of Directors on risk management in order to
develop, implement and update a solid internal governance framework, in accordance with local
regulations and policies of the Societe Generale Group.
Nomination Committee
The Nomination Committee advises the Board of Directors regarding the selection, monitoring and
succession of the members of the management body and the evaluation of the adequacy of key function
holders.
Remuneration Committee
The Remuneration Committee advises the Board of Directors in elaborating and supervising the
implementation of the Bank's remuneration policy.
Executive Committee
The Board of Directors delegates the day to day management of BRD to the Executive Committee. The
Executive Committee is responsible for the implementation of the strategies approved by the Board of
Directors and ensures that a proper organization and informational flows are in place.
Main specialized committees assisting the Executive Committee
The
liabilities structure, of liquidity and funding sources, structural risks (interest rate risk and foreign exchange
risk in banking book) and of the Bank’s capital base.
The
Crisis Committee
and organization to face such situations.
The
products, new activities or outsourced activities or their significant changes, are correctly identified,
analyzed and assessed.
The Internal Control Committee
activities are carried out from an organizational / functional perspective, the results obtained and the
deficiencies found in internal control activities.
The Retail Risk Committee
has as main objective the analysis of the measures proposed by relevant
structures in order to improve the performance of retail lending activity and the monitoring of the associated
risk indicators.
The Projects’ Review Committee
The Data Governance Committee’s
mission is to analyze the data governance activity, mainly concerning
implementation of the data governance strategy and data quality.
The Price Committee’s
measures regarding the pricing policy and strategy (commissions, interest) of the Bank's products, taking
into account budgetary objectives, competitive environment, the Bank's commercial strategy and market
evolution
The Compliance Committee
management, including the presentation of the deficiencies identified during compliance control activity.
The Climate change, Environmental and Social Committee’s
(Corporate Social Responsibility) analyses by relating to the Bank’s objectives in order to present the
measures for implementing the CSR strategy (including climate change and environmental topics).
M
AIN RISK FACTORS
Challenging macroeconomic context
Banking business is highly sensitive to changes in financial markets and economic conditions. Nowadays,
the macroeconomic environment is a very challenging one, on the background of mutually interacting
factors such as: potential intensification of war between Russia and Ukraine, escalation of the Middle East
conflict, the energy crisis, the evolution of inflation and of financing costs, etc. All these elements, in
conjunction with the already existing vulnerabilities in the financial system, led to a readjustment of growth
forecasts, influencing in the same time the consumers and investors’ confidence.
Although the dynamic of the non-performing loan portfolio provides grounds for optimism, the evolution of
credit risk in the period ahead is tightly linked to the persistence of an unfavorable macroeconomic
environment.
Climate related and environmental risks
Environmental, social and governance (ESG) risks are defined as risks stemming from the current or
prospective impacts of ESG factors on counterparties or invested assets of financial institutions. ESG risks
are seen as aggravating factors to the traditional categories of risks and are likely to impact the banks’
activities in the short-, medium- and long-term.
In the coming period, the impact of climate change and the efforts undertaken at European level for the
transition to a green economy will have a growing influence on the financial system. Addressing risks
stemming from climate change and environmental degradation may be one of the main challenges for
banks in the years to come, as they are envisaged to play a more active role in supporting the transition to
a more sustainable economy.
Unpredictability and uncertainty of legal framework
The uncertainty and lack of predictability of legal changes could have an adverse effect on financial
institutions by putting pressure on liquidity, solvency and profitability.
Financial institutions are subject to a more and more extensive supervisory and regulatory framework (for
instance, various EBA guidelines, CRD VI, CRR 3, etc), while adaptation to such changes requires
significant resources that could affect the banks’ performance. Additionally, a new set of regulations arose
as a result of the high-level commitment to tackle climate change (e.g. CSRD - Corporate Sustainability
Reporting Directive, ESRS - European Sustainability Reporting Standards, EU Taxonomy, SFDR -
Sustainable Finance Disclosure Regulation, ESG Pillar 3 package). The high impact of the implementation
of the sustainable finance regulatory framework and the increase in non-financial reporting obligations, in
a relatively short timeframe, sets an additional challenge for banking institutions.
Highly competitive environment, undergoing digital transformation
The Bank operates in an environment subject to intense competition both from banking and emerging non-
banking actors (FinTechs), changing business models, translating in increasing risk to market shares and
margins. Competition refers to digital transformation, the speed of answering to the customers’ requests,
evolving products and services, innovation, reputation, price, technology infrastructure and data
management. Along with digital transformation, it is imperative for credit institutions to also manage the
associated risks may be exposed to (e.g. cyber risk, data leakage risk, etc.).
In addition, certain sectors of the financial services industry have become more concentrated, considering
the mergers and acquisitions of institutions involved in a broad range of financial services. Such changes
could result in the Group’s remaining competitors benefiting from greater capital resources or other
advantages, such as the ability to offer a broader range of products and services, which may enhance their
competitive position.
C
REDIT
R
ISK
M
ANAGEMENT
Credit risk management is regulated through a set of internal documents, which transpose local and EU
regulations, SG Group policy and risk management best practices in the internal framework.
Some of the main principles employed in managing credit risk are presented below:
Ø
Ø
credit competencies and approval limits; credit approval authorities are assigned to individuals
according to their qualifications, experience and training
Ø
borrowers as well as the purpose and structure of the credit, in-depth analysis of sources of
repayment and risk mitigation through requests for collaterals or guarantees
Ø
Ø
limits on single-name, economic sectors, geographical/regions, transactions/products, credit risk
mitigation techniques (defined in line with the Bank’s risk appetite)
Ø
Ø
processes
Ø
Ø
objective indicators
Ø
Ø
Directors
Ø
BRD’s exposure to credit risk is derived from its commercial, treasury and trading activities, the commercial
activities representing the core business of the Bank.
Exposures on sovereign risk are concentrated on the Romanian State and consist of the portfolio of treasury
bills and bonds, placements with the Central Bank for liquidity purposes (including the minimum reserve
requirements) and the guarantees received from the Romanian State for governmental programs.
Undertaking of credit risk is part of the Group’s risk management strategy based on its risk appetite. Société
Générale’s credit policy is based on the principle that approval of any credit risk undertaking must be based
on sound knowledge of the client and the client’s business, an understanding of the purpose and structure
of the transaction and the sources of repayment of the debt. Credit decisions must also ensure that the
structure of the transaction will minimize the risk of loss in the event the counterparty default.
C
REDIT RISK MITIGATION TECHNIQUES
BRD has a cash flow based lending approach, meaning the Bank expects debt to be serviced primarily
through the future cash flow/income generated by the debtor. Collateralization, in the form of collateral
(funded credit protection) or guarantee (unfunded credit protection), is accepted merely to mitigate credit
risk and it cannot serve as a substitute for the borrower’s ability to meet obligations.
The Bank accepts the following main types of securities:
Ø
Ø
instruments)
Ø
issued by guarantee funds and Eximbank, sovereign guarantees, endorsements)
Mortgages are the most frequent type of accepted collaterals. Nevertheless, the collateral structure is
further diversified subject to the type of financing (e.g. for working capital financing, receivables and
inventories are accepted as customary collateral).
Risk department is responsible for approving the operational procedures for regular valuation of guarantees
and collaterals.
Real estate collaterals
The market value of real estate collaterals is estimated by certified internal or external evaluators. The
valuation is performed in accordance with the International Valuation Standards and ANEVAR Standards
and Recommendations. To be noted that real estate valuations have to be verified by the competent units,
independently from the credit approval process.
The Bank uses the following valuation methods for real estate: market approach and income approach.
Revaluation is performed yearly in case of commercial/ industrial/ agricultural real-estate and plots of land
and at least once every 3 years, for residential real estate. Higher frequency reevaluation is performed
when the real estate market displays a significant negative evolution. BRD monitors the risks associated
with the valuation activity via implemented internal controls.
Guarantees
The credit risk mitigation effect of guarantees is closely linked to the guarantor’s creditworthiness and the
secured amount must be reasonably proportionate to the economic performance capabilities of the
protection provider.
The main guarantor for BRD’s clients is the Romanian State, which intervenes to sustain credit activity by
national wide guarantee programs implemented through the intermediation of Guarantee Funds
(FNGCIMM or FGCR) or Eximbank, main exposure of this type being generated by Prima / Noua Casa
program. Another category of guarantors is represented by commercial banks (local or foreign), issuing
LGs in favor of BRD clients. BRD’s indirect exposures on each guarantor are assessed using the same
principles as for direct credit exposures of BRD.
Residual risk management
The Bank systematically manages the residual risk (that could materialize in situations when credit risk
mitigation techniques are less efficient than expected) through the collateral policy (prudent validity,
acceptance and eligibility criteria), regular revaluation of the collaterals, regular monitoring through specific
risk indicators and capital requirement as residual risk is embedded in the methodologies developed as
part of ICAAP Policy.
Detailed information on credit risk is found in Note 44.1 to the consolidated and separate financial
statements as of the year ended December 31, 2023.
L
IQUIDITY RISK AND
F
UNDING RISK
Liquidity and funding risk is defined as the risk of not being able to meet expected and unexpected, current
and future cash flow or collateral requirements when they fall due and at a reasonable price.
The Group manages the exposure to the liquidity risk using a specific framework designed to manage it
both under normal day-to-day conditions and in the event of a potential liquidity crisis.
The liquidity risk management approach starts at the intraday level managing the daily payments flows,
forecasting and managing cash flows, and factoring in the access to central bank monetary policy
operations and standing facilities. It then covers a longer term perspective, comprising the maturity profile
of all assets and liabilities and the funding strategy.
BRD maintains a liquidity buffer of unencumbered, high quality liquid assets as an insurance against a
range of liquidity stress scenarios. A contingency funding plan is designed to protect the stakeholders’
interests and to ensure positive outcome in the event of a liquidity crisis.
In terms of governance, the Board of Directors establishes the liquidity risk appetite and tolerance, reviews
and approves the liquidity risk strategy and liquidity risk management framework at least on an annual basis
and ensures that Executive Committee manages liquidity risk effectively.
The Executive Committee, assisted by Assets & Liabilities Committee (ALCO), develops the liquidity
strategy and designs the liquidity risk management framework in accordance with the liquidity risk appetite
and tolerance in order to ensure that the Bank maintains sufficient liquidity, continuously reviews
information on the liquidity position of the Bank and reports to the Board of Directors on a regular basis,
implements the liquidity risk strategy and ensures that appropriate controls, procedures and information
flows are in place to support the strategy implementation and follow-up.
The liquidity risk position, under normal conditions, is measured at consolidated level using the static
liquidity gaps indicator which is defined as the difference between the expected future outflows and inflows
related to the current transactions (no new business included), determined for each time bucket and
currency based on the contractual maturity of the transactions, or, for non-maturing products, based on a
maturity modeled using historical client behavior or a conventional maturity.
For each budgeting and planning exercise, the future funding needs are assessed starting from the actual
liquidity position and budgeted evolution of assets and liabilities. When a deficit is expected, funding
solutions are assessed and appropriate actions are planned.
BRD performs liquidity risk stress tests on a quarterly basis in order to identify and quantify its exposures
to possible liquidity stresses, analyzing potential impacts on the cash flows and liquidity position. BRD
employs two stress test methodologies, one for a 30 days horizon with focus on the short term survival of
the Bank in a time of liquidity crisis and the other for a 6 month horizon, assessing the Bank’s resilience
and ability to continue to function in times of prolonged stressed liquidity conditions. The Bank also
implemented a reverse stress test scenario which assesses what assumptions could be considered in order
to challenge the viability of the institution, starting from a pre-defined outcome such as a breach of the
minimum required level for the Liquidity Coverage Ratio as it is considered within the Recovery Activation
Dashboard.
Detailed information on liquidity risk is found in Note 44.3 to the consolidated and separate financial
statements as of the year ended December 31, 2023.
I
NTEREST RATE RISK AND FOREIGN EXCHANGE RISK IN THE BANKING BOOK
(
STRUCTURAL RISKS
)
Structural exposure to interest rate and foreign exchange rate risks encompasses all exposures resulting
from commercial activities, their hedging and the proprietary transactions of the Group.
The interest rate and exchange rate risks pertaining to trading activities are monitored separately and
excluded from the structural risk measurement and management scope.
The general principle is to reduce structural interest rate and exchange rate risks to the greatest extent
possible. The interest rate and foreign exchange risks incurred both by the commercial activities and
proprietary activities (transactions regarding the shareholders’ equity, investments and issues of bonds)
are hedged, to the extent possible, on an individual basis or by means of macro-hedging techniques, the
remaining part is maintained within pre-established limits at prudent levels.
The interest rate risk is managed through two metrics: balance sheet sensitivity to yield curve shifts and
net interest income sensitivity. Balance sheet sensitivity is defined as the variation in the net present value
of future principal and interest cash flows of all items in the banking book, balance sheet and off-balance
sheet for two steering scenarios of +/- 10 bps parallel shift in the yield curve and for two stressed scenarios
of +/-100bps parallel yield curve shifts. A set of limits is applied to balance sheet sensitivity and the
compliance with those limits is monitored by ALCO on a monthly basis. The gaps between outstanding
assets and liabilities are determined on the basis of the contractual terms of transactions, models based on
clients’ historic behavior patterns, as well as conventional assumptions relating to certain balance sheet
items. Net interest income sensitivity indicator is calculated monthly and presented to ALCO versus an
approved set of limits. Even though a set of limits is in place for this indicator, the main steering indicator
remains balance sheet sensitivity
Detailed information on interest rate risk is found in Note 43.2 to the consolidated and separate financial
statements as of the year ended December 31, 2023.
M
ARKET RISK IN TRADING BOOK
Market risk is defined as the risk of registering losses in on and off-balance sheet positions arising from
unfavorable movements of market parameters (FX rates, interest rates, share prices etc.).
Market risk management is integrated within Bank’s and Group’s risk management, BRD pursuing market
risks on a prudent approach, the objective being to ensure profitable market activities but undertaking risk
levels and capital needs as low as possible. Bank’s trading portfolio represents a small weight of Bank’s
total risk exposure and contains highly liquid instruments which are traded with good rated counterparts.
Market risk management is carried out according to the below principles:
Ø
Ø
Ø
for all products or activities generating market risk in trading book
Ø
Ø
Ø
the approved limits
Ø
market risk evolutions
Detailed information on market risk is found in Note 44.2 to the consolidated and separate financial
statements as of the year ended December 31, 2023.
O
PERATIONAL RISK
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes,
personnel and systems, or from external events. The Group’s operational risk management system was
developed and strengthened over the years and allows:
Ø
Ø
prevent/reduce operational risk losses
Ø
The day to day management of operational risk is the responsibility of employees from each business unit.
The personnel have to be always aware of their responsibilities in connection with identification and
reporting of operational risks and other duties which may arise in relation with the management of
operational risks.
Operational risk management tools put in place at BRD are:
Ø
Ø
Ø
Ø
Ø
Ø
Ø
new products for Banks’ clients, outsourcing of activities and significant modifications of the existing
products offered to the Bank’s clients
Ø
Ø
In 2023, the operational risk strategy focused on the following axes:
Ø
awareness and staff training, including specific session on fraud risk, information security and
business continuity risk
Ø
the internal and external environment.
6. C
APITAL MANAGEMENT AND ADEQUACY
C
ONSOLIDATION PERIMETER
The basis for calculation of own funds is the consolidated prudential perimeter.
As BRD is parent credit institution in Romania and, at the same time, subsidiary of Société Générale, BRD
Group consolidation perimeter for prudential purposes is defined in accordance with Regulation (EU) No
575/2013 (CRR), Part One, Title II, Chapter 2, Section 3.
The consolidated entities for prudential scope are identified based on the criteria as per Articles 4 (1) (3),
(16) to (27), 18 and 19 of CRR. According to Article 4 of CRR, entities consolidated in the prudential
reporting must have one of the following types of activity: credit institution, investment firm, ancillary
services undertaking and/or other financial institution.
In contrast, in accordance with BRD Group‘s IFRS financial statements, all entities controlled directly or
indirectly (including non-financial entities, insurance companies, etc.) are fully consolidated. Additional
exclusion of subsidiaries from prudential consolidation perimeter is based on criteria from Article 19 of CRR.
Non-consolidated subsidiaries are included in the prudential consolidated statements based on equity
method.
Based on the above, the prudential consolidation perimeter of BRD Group includes the parent company
BRD - Groupe Société Générale S.A and two fully consolidated subsidiaries:
Ø
Ø
O
WN FUNDS
BRD Group regulatory own funds as at December 31, 2023 amounted to RON 7,908 million (after the
exceptional dividend payment of RON 643m from 2022 retained profit, approved by GSM in December
2023 and including 40% of H1 2023 profit, early incorporation already approved by NBR) compared to RON
8,273 million (including 2022 year net result and the impact of OCI quick fix adjustments).
BRD Group regulatory own funds as at December 31, 2023 consist of common equity capital (CET1) and
Tier 2 instruments.
Common Equity Capital (CET1) is formed of:
Ø
accounted until December 31, 2003. As at December 31, 2023, the share capital amounted to RON
696.9 million, unchanged versus previous periods. The hyperinflation adjustment amounted to
RON 1,819 million.
Ø
o
retained earnings arising from IFRS implementation adjustments.
o
risk, representing reserves established by the law and share based payment reserves.
Ø
Other comprehensive income (OCI) includes unrealized gains and losses from changes in the fair
value of debt instruments at fair value through other comprehensive income and from re-
measurement of defined benefit liability arising from the post-employment benefit plan. From 1st of
January 2023 the quick-fix adjustment applied for the recognition of other comprehensive income
reserve in own funds ceased its validity. Previously during 2022, BRD applied the quick fix
adjustment (art. 468 of Regulation (EU) 575/2013 as amended by Regulation (EU) 873/2020) for
the temporary treatment of unrealized gains and losses and removed from CET1 40% of the
amount of unrealized gains and losses accumulated since 31 December 2019 for debt instruments
measured at fair value through other comprehensive income.
Regulatory deductions from CET 1 applicable as at December 31, 2023 essentially involved the following
elements:
Ø
that are not prudently valuated as per Regulation 876/2019 are deducted 100% from CET 1 (as
compared to previous periods when intangible assets accounting value was fully deducted from
CET 1). Under this current approach, the positive difference between the prudential and the
accounting amortisation becomes fully deducted from the CET 1 capital, while the residual portion
of the carrying value of the software prudently valuated is risk weighted at 100%. Goodwill is fully
deducted from CET 1 capital.
Ø
cover losses or risks.
As at December 31, 2023, Tier 2 instruments consist of two subordinated loans concluded with the parent,
EUR 250 million in total (RON equivalent 1,244 million).
C
APITAL REQUIREMENTS
From a regulatory perspective, capital requirements cover:
Ø
Ø
Ø
Ø
The calculation of credit risk capital requirement takes into account the transactions’ risk profile and is
computed according to the standardized approach (CRR Part 3, Title 2, Chapter 2) using the Financial
Collateral Comprehensive Method and information regarding credit assessments performed by external
credit assessment institutions (ECAI). All CRR2 requirements have been implemented starting from June
2021.
The capital requirement for general position risk is calculated using the Maturity-based method.
Capital requirement for credit valuation adjustment is determined using the standardized method.
The capital requirement for operational risk is calculated according to the CRR, Part 3, Title 2, Chapter 4,
using advanced measurement approaches (AMA). BRD, as a member of the Société Générale Group, uses
AMA to measure operational risk since 2008 based on the SG internal methodology and calculation. The
allocation of operational risk capital requirements to the sub-consolidated entities is based on net banking
income and history of operational risk losses.
On top of the total regulatory ratio of 8% set by Art 92 from CRR, starting 2016, based on NBR requirements,
BRD Group maintains additional own funds to cover risks resulting from internal assessment and SREP
(supervisory review and evaluation process). In 2023 this requirement represented 5.05% of RWA (5.87%
during 2022). Thus, the TSCR (total SREP capital requirements) for BRD Group is 13.05% for 2023
(13.87% for 2022).
Overall capital requirements (OCR) represent the total of SREP requirements and capital buffers, namely:
Ø
buffer is mandatory and fully effective from 1 January 2019 and amounts to 2.5% of total RWA.
Ø
system-wide risk is building up, capped at 2.5% of total RWA. According to NBR Order 6/2021
amending the NBR Order 12/2015, the level of countercyclical buffer for credit exposures in
Romania was 0.5% (from 0% previously), starting October 17, 2022 and 1% starting from October
23, 2023, according to NBR Order no 7, from 25
th
Ø
Romania, may be subject to an O-SII Capital Buffer of up to 2% of the total RWA. BRD was
identified as O-SII by NBR and O-SII Capital Buffer is 1% starting with 1 January 2016 until
December 2021 end. Based on a new calibration methodology, starting 1 January 2022 the O-SII
Capital Buffer for BRD is 1.5% of total RWA.
2022
2022 w/o
OCI quick
fix impact
2023
2022
2022 w/o
OCI quick
fix impact
2023
Tier 1 capital
6,714
5,818
6,343
7,037
6,140
6,664
Tier 2 capital
1,237
1,237
1,244
1,237
1,237
1,244
Total own funds
7,951
7,055
7,587
8,273
7,377
7,908
Risk weighted assets
Credit risk (including counterparty risk)
29,150
29,577
32,769
31,067
31,495
34,598
Market risk
76
76
139
77
77
146
Operational risk
2,448
2,448
2,238
2,526
2,526
2,308
Credit valuation adjustment (CVA) risk
218
218
145
218
218
145
Total risk exposure amount (TREA)
31,892
32,320
35,291
33,888
34,316
37,198
Regulatory Capital Adequacy Ratio
24.93%
21.83%
21.50%
24.41%
21.50%
21.26%
Tier 1 ratio
21.05%
18.00%
17.97%
20.76%
17.89%
17.92%
Eligible liabilities (senior non preferred loans)
4,825
Total own funds and eligible liabilities
12,733
MREL (% of TREA)
34.23%
Bank
Group
Ø
with the aim of supporting the adequate management of credit risk and enhancing banking sector
resilience to unanticipated shocks, amid unfavourable structural circumstances. The buffer is
applied to all exposure and is calibrated at 0% - 2%, depending on the level of the non-performing
loans ratio and the coverage ratio. The systemic risk buffer applicable for BRD is 0%. Following the
release of NBR Regulation 2/2022 amending Regulation 5/2013, transposing CRD V, the
requirement for structural buffers will be the sum of O-SII buffer and Systemic Risk Buffer.
M
INIMUM REQUIREMENT FOR OWN FUNDS AND ELIGIBLE LIABILITIES
(MREL)
According to Bank Recovery and Resolution Directive (BRRD), the banks should have the loss-absorbing
and recapitalization capacity necessary to help ensure that, in, and immediately following a resolution,
those institutions can continue to perform critical functions (criticality assessed from the perspective of
impact on the markets) without putting taxpayers’ funds, meaning public funds, or financial stability at risk.
Therefore it was regulated a requirement for own funds and eligible liabilities (MREL) for all credit
institutions and investment firms through BRRD1 (Directive 2014/59) transposed in Romanian legislation
through Law 312/2015, and BRRD2 (Directive 2019/879) transposed in local legislation through Law
320/2021.
BRD received in May 2023 the notification of MREL, according to BRRD2, determined by the resolution
authority considering its consolidated situation. Starting from 17
th
should maintain an intermediary binding level of 22.23% of TREA (total risk exposure amount) and 5.90%
of LRE (leverage exposure) and follow a linear build-up of own funds and eligible liabilities towards the
new requirement starting with 1
st
LRE. On top of the above, combined buffer requirement should be respected (5.0% of TREA, starting 23
October 2023).
As the resolution strategy for Société Générale is Single Point of Entry, with upstream of losses to the
resolution entity (Société Générale SA), the total MREL should be satisfied with own funds and a new
category of debt (senior not preferred, SNP), ranking above own funds and subordinated that is not AT1 or
T2, but below senior preferred. The SNP should be concluded with the parent (Art. 45 f (2) BRRD2).
BRD concluded five senior non-preferred loans with the parent, of EUR 970 million in total, as presented
below:
- EUR 150 million in June 2022, EUR 120 million in December 2022 and EUR 450 million in
December 2023, all with an initial term of 3 years and a call option at 2 years;
- EUR 100 million with initial term at 7 years and a call option at 6 years and EUR 150 million with
an initial term of 8 years and a call option at 7 years, both drawn in December 2023
The summary of the BRD Group and Bank capital adequacy is presented below:
Note: Own funds at December 31, 2022 end include full net profit of the year 2022;
Own funds at December 31, 2023 end, after the dividend payment of RON 643m from 2022 retained profit, approved by GSM in December 2023 and including 40% of H1 2023
profit
L
EVERAGE
R
ATIO
The leverage ratio reached 7.2% (Tier 1 capital including 40% of H1 2023 net result, early incorporation
approved by NBR and dividends distribution of RON 643m from 2022 retained profit) as at 31 December
2023 at Group level, which is well above the 3% minimum requirement enforced based on Regulation
2019/876 amending CRR starting with June 2021.
The sustainable level of leverage ratio results from the strong capital base, namely high level Common
Equity Tier 1 capital and Tier 2 capital, and a balance-sheet structure specific to the universal bank business
model with core focus on retail activities.
I
NTERNAL
C
APITAL ADEQUACY ASSESSMENT PROCESS
(ICAAP)
In accordance with Article 148 of the Emergency Ordinance no. 99/2006 on credit institutions and capital
adequacy, as subsequently amended and NBR Regulation no. 5/2013 on prudential requirements for credit
institutions, BRD has in place a process for internal assessment of capital adequacy to risks.
The Bank performs periodically an evaluation of internal capital adequacy to risks by comparing the
available own funds with internal capital requirements. The general framework for ICAAP is updated
annually and the capital adequacy monitoring is performed on a quarterly basis.
A risk assessment is performed annually, and involves the evaluation of all risks to which the Bank may be
exposed and the identification of the significant risks.
The internally evaluated capital requirement is determined using „Pillar 1 plus” approach, where the capital
requirements for the following risks are added to the regulatory capital requirements:
Ø
to foreign currency lending to unhedged borrowers and risks arisen from applying less
sophisticated approaches
Ø
Ø
Ø
Ø
For the purposes of the internal capital adequacy assessment, the available own funds are considered
equal to the regulatory own funds.
Based on the Business and Risk Strategy and on the Risk Appetite, the Bank makes projections of the own
funds and capital requirements on a three years horizon in order to ensure their adequacy, both in normal
course of business and under stress situations.
7. I
NTERNAL CONTROL FRAMEWORK
Internal Control System relies on the three lines of defense model, which reinforces segregation of duties
between various control functions.
The
first line
of the Bank’s structures (located both in the Network and Headquarters) which are primarily responsible for
the ongoing management of the risks arisen in conducting their daily activities, taking into account the
Bank’s risk appetite and its policies, procedures and controls.
All Bank’s structures (including structures acting as control functions) are responsible with performing the
first level controls. They represent all measures implemented at operational level, in order to ensure the
conformity, validity and security of the performed operations (controls on operational activity and controls
on accounts).
The responsibility for the implementation and operation of first level controls is with the management of all
Bank’s structures (both in first and second line of defense), by the continuous management of risks arising
from their daily activities, as per internal normative framework, but also for the implementation of first-level
controls and by taking the necessary corrective measures in all cases where deficiencies are identified as
a result of the processes or of the carrying out of the control.
Business Integrity Support (BIS) coordinates and harmonizes the managerial supervision by providing
support to operational management in its implementation. BIS centralizes the results of managerial
supervision controls and submits them to the Executive Committee, Risk Management Committee and
Internal Control Committee, if the case.
In a manner similar to BIS, General Accounting Division through the dedicated team, coordinates and
assists the Bank's structures in the managerial supervision of accounts.
The
second line
functions that oversee risks, they ensure that risks are identified, measured, monitored and reported,
according to internal and external requirements, and provide support to operational structures in meeting
their risk management tasks.
Risk Management Function is responsible for overseeing risk identification, evaluation, monitoring, and
reporting activities, independently of operational and support structures. It has the mission to support the
Bank's structures in managing the risks arising from their day-to-day activities. Deputy CEO in charge of
Risk (Chief Risk Officer) is the Coordinator of the Centralized Risk Management function and reports to the
management body, as well as to relevant committees, all the results / conclusions / recommendations for
improving the risk management function. Details regarding Risk Management Function and structures
involved are presented in the chapter regarding risk management governance.
As part of the risk management function, BRD has in place a Level 2 control structure that has the
responsibility to ensure a better internal control system efficiency by evaluating the quality of the level 1
control. This assessment addresses controls to prevent operational risks generated by the activities and
processes within BRD Group. Level 2 control has the following responsibilities:
Ø
Evaluating the design of Level 1 controls / control procedures to ensure that there is a proper
framework for monitoring and controlling operational risks related to activities
Ø
Evaluating the performance of these controls to ensure that all operational risks and anomalies
have been identified by the first level of control, and that there are appropriate remedial actions and
that they are implemented
Compliance Function is an internal control function independent of the other control functions. Its staff has
no attributions that fall within the scope of the activities they are to monitor and control and must not be in
any conflict of interest from the point of view of compliance responsibilities. The compliance function is
coordinated by the Director of the Compliance Department, who is the coordinator of the compliance
function at Bank level, being hierarchically subordinated to the Bank's CEO.
The
third line
and objective assurance on the quality and effectiveness of the Bank’s internal control system, the first and
second lines of defense and the risk governance framework. Internal audit function reports to and operates
under the mandate of the Board of Directors.
The main instruments implemented at BRD level for ensuring an efficient internal control system are:
Ø
instructions, work procedures) and their periodic review
Ø
apply working procedures adapted to the nature and volume of activity, taking into account all risk
types
Ø
and organizational structures, including appropriate segregation of duties at all organizational
levels, in order to prevent assignment of conflicting responsibilities
Ø
risks
Ø
Ø
Ø
management level, who should address the issues promptly
Ø
The internal control framework described above is applicable to the financial reporting processes and
provides reasonable assurance on the reliability of financial reporting, compliance with applicable laws and
regulations, as well as with the internal policies and procedures.
It is the Board of Directors’ assessment that the Group has adequate internal control and risk management
arrangements in place with regard to the Group’s risk profile and strategy.
8. C
ONCLUSIONS AND PERSPECTIVES FOR
2024
Romanian economy decelerated during 2023, but remained an outperformer in the region. Inflation ended
the year in single digit territory, even below expectations, nevertheless, the average for the full year was
still double digit. Interest rates reduced gradually and stabilized around 6% in the second semester.
In this context, which remained rather challenging, BRD continuously adapted its offer to align with
economic trends, ensuring that its services remain relevant and responsive to the evolving needs of its
customers, delivering an outstanding performance, in terms of both commercial activity and financial
results.
Loan portfolio grew by +12% compared to 2022, reflecting BRD strong commitment as a trustworthy partner
of Romania’s economy and of its customers. BRD granted a record of 7.6 bn RON of new loans to
individuals, marked the best year for new consumer loans and granted 1 out of 7 loans to individuals in
stock on the market, as of 2023 end. Net loans outstanding for small businesses surged by 46.4% year-on-
year, surpassing the RON 1 billion threshold for the first time.
Corporate financing also exhibited an outstanding performance, with net loans outstanding increasing by
23% year-on-year, driven by strong contributions from SMEs and large companies.
BRD remained a top
partner for large corporates and an active financier of eligible companies under IMM Invest Plus program,
approving RON 2.6 billion new loans in 2023, representing a 27% year-on-year increase compared to 2022.
BRD took the commitment to play a pioneering role in the field of sustainable products and accompanying
its clients in their energy transition. In 2023, new sustainable finance transactions, totaled RON 2.3 billion,
pushing cumulative sustainable financing to above EUR 900m as of 2023 end.
Deposit base grew steadily by 10.1% year-on-year by the end of 2023, driven by strong performances on
both retail deposits (+9.9% YoY) and corporate deposits (+10.6% YoY).
On the digital front, BRD continued to expand YouBRD mobile banking application functionalities to offer
its customers a truly on-the-go banking experience. The ongoing surge of digital adoption is evident, with
YouBRD, becoming the everyday financial application for over 1.4 million customers, marking a remarkable
+33% YoY increase in 2023.
The very dynamic commercial activity was the foundation for a robust financial performance of BRD Group
during the 2023, with double digit revenue growth, while operational expenses were closely managed. This
positive trend led to an improved cost-to-income ratio. Coupled with a net release in the cost of risk, these
strong business outcomes resulted in a noteworthy increase of +24% in net result and ROE of 21%,
demonstrating the strength and resilience of BRD business model.
These results were accompanied by the most valuable prize a bank can receive, as BRD has been awarded
“Bank of the Year in Romania”, for 2023, by the prestigious publication The Banker.
Looking forward, BRD is strongly committed to continue its progress on its "Horizons" 2025 strategic plan,
following closely its main lines of action: customer satisfaction and digitalization, transition to sustainability,
engaging bank for its staff and business efficiency.
Further details on the Bank’s perspectives and objectives are presented in the budget for 2024 which is
submitted for approval to the General Assembly of Shareholders.
Jean – Pierre Georges VIGROUX Maria ROUSSEVA
Chairman of the Board of Directors Chief Executive Officer
Etienne LOULERGUE Simona PRODAN
Deputy Chief Executive Officer Finance Executive Director
9. B
OARD OF DIRECTORS
’
1) Considering the present report, we submit for the approval of the General Assembly of the
Shareholders of BRD the separate and consolidated financial statements prepared according to
the International Financial Reporting Standards as adopted by the European Union, for the period
ended December 31, 2023, made of:
-
-
-
-
-
-
2) Dividend distribution corresponding to a payout ratio of 60% of the Bank’s 2023 net result (gross
dividend of RON 1.4070/share).
3) Discharge of the Board of Directors.
A
PPENDIX
1:
S
TATEMENT OF
C
OMPLIANCE WITH THE PROVISIONS OF CORPORATE
GOVERNANCE CODE OF
B
UCHAREST STOCK EXCHANGE
(BSE)
PROVISION
COMPLY WITH
PARTIAL
COMPLY
WITH
DO NOT
COMPLY
WITH
REASON FOR FAILURE
TO COMPLY WITH
Section A – Responsibilities
A.1. All companies should have internal
regulation of the Board which includes
terms of reference/responsibilities for
Board and key management functions of
the company, applying, among others,
the General Principles of Section A.
X
A.2. Provisions for the management of
conflict of interest should be included in
Board regulation. In any event, members
of the Board should notify the Board of
any conflicts of interest which have
arisen or may arise, and should refrain
from taking part in the discussion
(including by not being present where
this does not render the meeting non-
quorate) and from voting on the adoption
of a resolution on the issue which gives
rise to such conflict of interest.
X
A.3. The Board of Directors or the
Supervisory Board should have at least
five members.
X
A.4. The majority of the members of the
Board of Directors should be non-
executive. At least one member of the
Board of Directors or Supervisory Board
should be independent, in the case of
Standard Tier companies. Not less than
two non-executive members of the Board
of Directors or Supervisory Board should
be independent, in the case of Premium
Tier Companies. Each member of the
Board of Directors or Supervisory Board,
as the case may be, should submit a
declaration that he/she is independent at
the moment of his/her nomination for
election or re-election as well as when
any change in his/her status arises, by
demonstrating the ground on which
he/she is considered independent in
character and judgement in practice and
according to the following criteria:
A.4.1. Not to be the CEO/executive
officer of the company or of a company
controlled by it and not have been in such
position for the previous five years.
A.4.2. Not to be an employee of the
company or of a company controlled by
it and not have been in such position for
the previous five (5) years.
A.4.3. Not to receive and not have
received additional remuneration or
other advantages from the company or
from a company controlled by it, apart
from those corresponding to the quality
of non-executive director.
A.4.4. Is not or has not been an
employee of, or has not or had not any
contractual relationship, during the
previous year, with a significant
shareholder of the company, controlling
more than 10% of voting rights or with a
company controlled by it.
A.4.5. Not to have and not have had
during the previous year a business or
professional relationship with the
X
company or with a company controlled
by it, either directly or as a customer,
partner, shareholder, member of the
Board/Director, CEO/executive officer or
employee of a company having such a
relationship if, by its substantial
character, this relationship could affect
his/her objectivity.
A.4.6. Not to be and not have been in the
last three years the external or internal
auditor or a partner or salaried associate
of the current external financial or
internal auditor of the company or a
company controlled by it.
A.4.7. Not to be a CEO/executive officer
in another company where another
CEO/executive officer of the company is
a non-executive director.
A.4.8. Not to have been a non-executive
director of the company for more than
twelve years.
A.4.9. Not to have family ties with a
person in the situations referred to at
points A.4.1. and A.4.4.
A.5. A Board member’s other relatively
permanent professional commitments
and engagements, including executive
and non-executive Board positions in
companies and not-for-profit institutions,
should be disclosed to shareholders and
to potential investors before appointment
and during his/her mandate.
X
A.6. Any member of the Board should
submit to the Board, information on any
relationship with a shareholder who
holds directly or indirectly, shares
representing more than 5% of all voting
rights. This obligation concerns any kind
of relationship which may affect the
position of the member on issues
decided by the Board.
X
A.7. The company should appoint a
Board secretary responsible for
supporting the work of the Board.
X
A.8. The corporate governance
statement should inform on whether an
evaluation of the Board has taken place
under the leadership of the chairman or
the nomination committee and, if it has,
summarize key action points and
changes resulting from it. The company
should have a policy/guidance regarding
the evaluation of the Board containing
the purpose, criteria and frequency of the
evaluation process.
X
A.9. The corporate governance
statement should contain information on
the number of meetings of the Board and
the committees during the past year,
attendance by directors (in person and in
absentia) and a report of the Board and
committees on their activities.
X
A.10 The corporate governance
statement should contain information on
the precise number of the independent
members of the Board of Directors or of
the Supervisory Board.
X
A.11. The Board of Premium Tier
companies should set up a nomination
committee formed of non-executives,
which will lead the process for Board
appointments and make
recommendations to the Board. The
majority of the members of the
X
nomination committee should be
independent.
Section B - Risk management and
internal control system
B.1 The Board should set up an audit
committee, and at least one member
should be an independent non-
executive. The majority of members,
including the chairman, should have
proven an adequate qualification
relevant to the functions and
responsibilities of the committee. At least
one member of the audit committee
should have proven and adequate
auditing or accounting experience. In the
case of Premium Tier companies, the
audit committee should be composed of
at least three members and the majority
of the audit committee should be
independent.
X
B.2. The audit committee should be
chaired by an independent non-
executive member.
X
B.3. Among its responsibilities, the audit
committee should undertake an annual
assessment of the system of internal
control.
X
B.4. The assessment should consider
the effectiveness and scope of the
internal audit function, the adequacy of
risk management and internal control
reports to the audit committee of the
Board, management’s responsiveness
and effectiveness in dealing with
identified internal control failings or
weaknesses and their submission of
relevant reports to the Board.
X
B.5. The audit committee should review
conflicts of interests in transactions of the
company and its subsidiaries with related
parties.
X
B.6. The audit committee should
evaluate the efficiency of the internal
control system and risk management
system.
X
B.7. The audit committee should monitor
the application of statutory and generally
accepted standards of internal auditing.
The audit committee should receive and
evaluate the reports of the internal audit
team.
X
B.8. Whenever the Code mentions
reviews or analysis to be exercised by
the Audit Committee, these should be
followed by cyclical (at least annual), or
ad-hoc reports to be submitted to the
Board afterwards.
X
B.9. No shareholder may be given undue
preference over other shareholders with
regard to transactions and agreements
made by the company with shareholders
and their related parties.
X
B.10. The Board should adopt a policy
ensuring that any transaction of the
company with any of the companies with
which it has close relations, that is equal
to or more than 5% of the net assets of
the company (as stated in the latest
financial report), should be approved by
the Board following an obligatory opinion
of the Board’s audit committee, and fairly
disclosed to the shareholders and
potential investors, to the extent that
such transactions fall under the category
X
of events subject to disclosure
requirements.
B.11. The internal audits should be
carried out by a separate structural
division (internal audit department) within
the company or by retaining an
independent third-party entity.
X
B.12. To ensure the fulfilment of the core
functions of the internal audit
department, it should report functionally
to the Board via the audit committee. For
administrative purposes and in the scope
related to the obligations of the
management to monitor and mitigate
risks, it should report directly to the chief
executive officer.
X
Section C - Fair rewards and
motivation
C.1. The company should publish a
remuneration policy on its website and
include in its annual report a
remuneration statement on the
implementation of this policy during the
annual period under review.
The remuneration policy should be
formulated in such a way that allows
stakeholders to understand the
principles and rationale behind the
remuneration of the members of the
Board and the CEO, as well as of the
members of the Management Board in
two-tier board systems. It should
describe the remuneration governance
and decision-making process, detail the
components of executive remuneration
(i.e. salaries, annual bonus, long term
stock-linked incentives, benefits in kind,
pensions, and others) and describe each
component’s purpose, principles and
assumptions (including the general
performance criteria related to any form
of variable remuneration). In addition, the
remuneration policy should disclose the
duration of the executive’s contract and
their notice period and eventual
compensation for revocation without
cause.
The remuneration report should present
the implementation of the remuneration
policy vis-à-vis the persons identified in
the remuneration policy during the
annual period under review.
Any essential change of the
remuneration policy should be published
on the corporate website in a timely
fashion.
X
Section D - Building value through
investors’ relations
D.1. The company should have an
Investor Relations function - indicated,
by person (s) responsible or an
organizational unit, to the general public.
In addition to information required by
legal provisions, the company should
include on its corporate website a
dedicated Investor Relations section,
both in Romanian and English, with all
relevant information of interest for
investors, including:
D.1.1. Principal corporate regulations:
the articles of association, general
shareholders’ meeting procedures.
D.1.2. Professional CVs of the members
of its governing bodies, a Board
X
member’s other professional
commitments, including executive and
non-executive Board positions in
companies and not-for-profit institutions;
D.1.3. Current reports and periodic
reports (quarterly, semi-annual and
annual reports) – at least as provided at
item D.8 – including current reports with
detailed information related to non-
compliance with the present Code;
D.1.4. Information related to general
meetings of shareholders: the agenda
and supporting materials; the procedure
approved for the election of Board
members; the rationale for the proposal
of candidates for the election to the
Board, together with their professional
CVs; shareholders’ questions related to
the agenda and the company’s answers,
including the decisions taken;
D.1.5. Information on corporate events,
such as payment of dividends and other
distributions to shareholders, or other
events leading to the acquisition or
limitation of rights of a shareholder,
including the deadlines and principles
applied to such operations. Such
information should be published within a
timeframe that enables investors to
make investment decisions;
D.1.6. The name and contact data of a
person who should be able to provide
knowledgeable information on request;
D.1.7. Corporate presentations (e.g. IR
presentations, quarterly results
presentations, etc.), financial statements
(quarterly, semi-annual, annual), auditor
reports and annual reports.
D.2. A company should have an annual
cash distribution or dividend policy,
proposed by the CEO or the
Management Board and adopted by the
Board, as a set of directions the company
intends to follow regarding the
distribution of net profit. The annual cash
distribution or dividend policy principles
should be published on the corporate
website.
X
D.3. A company should have adopted a
policy with respect to forecasts, whether
they are distributed or not. Forecasts
means the quantified conclusions of
studies aimed at determining the total
impact of a list of factors related to a
future period (so called assumptions): by
nature such a task is based upon a high
level of uncertainty, with results
sometimes significantly differing from
forecasts initially presented. The policy
should provide for the frequency, period
envisaged, and content of forecasts.
Forecasts, if published, may only be part
of annual, semi-annual or quarterly
reports. The forecast policy should be
published on the corporate website.
X
D.4. The rules of general meetings of
shareholders should not restrict the
participation of shareholders in general
meetings and the exercising of their
rights. Amendments of the rules should
take effect, at the earliest, as of the next
general meeting of shareholders.
X
D.5. The external auditors should attend
the shareholders’ meetings when their
reports are presented there.
X
D.6. The Board should present to the
annual general meeting of shareholders
a brief assessment of the internal
controls and significant risk management
system, as well as opinions on issues
subject to resolution at the general
meeting.
X
D.7. Any professional, consultant, expert
or financial analyst may participate in the
shareholders’ meeting upon prior
invitation from the Chairman of the
Board. Accredited journalists may also
participate in the general meeting of
shareholders, unless the Chairman of
the Board decides otherwise.
X
D.8. The quarterly and semi-annual
financial reports should include
information in both Romanian and
English regarding the key drivers
influencing the change in sales,
operating profit, net profit and other
relevant financial indicators, both on
quarter-on-quarter and year-on-year
terms.
X
D.9. A company should organize at least
two meetings/conference calls with
analysts and investors each year. The
information presented on these
occasions should be published in the IR
section of the company website at the
time of the meetings/conference calls.
X
D.10. If a company supports various
forms of artistic and cultural expression,
sport activities, educational or scientific
activities, and considers the resulting
impact on the innovativeness and
competitiveness of the company part of
its business mission and development
strategy, it should publish the policy
guiding its activity in this area.
X
APPENDIX
2:
NON-FINANCIAL
STATEMENT
This non-financial statement represents only a very brief description of the BRD approach on sustainability
and corporate social responsibility. A detailed description of BRD activity shall be presented in a separate,
dedicated sustainability report.
I. DESCRIPTION OF THE ACTIVITY
Details on chapter 4 of the Report – Group Activity and Results.
II.
CORPORATE SOCIAL RESPONSIBILITY
As part of Société Générale Group which is a signatory to the United Nations (UN) Global Compact since
2003, BRD Group is fully committed to integrate these principles relating to human rights, working
conditions and the fight against corruption in all its activities and to actively promote the principles within
the value chain. Furthermore, BRD Group supports and contributes meeting the UN Sustainable
Development Goals (SDGs), recognizing their importance in addressing the biggest societal challenges of
the world.
In the following years, BRD Group wants to increase its contribution to these global objectives and establish
more actions trough which will better contribute to their achieving.
Through the Corporate Social Responsibility (CSR) policy established since 2020, BRD reinforces its
assumed role in society: a reliable partner for its employees, customers and suppliers that the Group
support to achieve their dreams and goals and a factor of progress for the economy, the environment and
the future Romanian society. Through the CSR policy the BRD supports development, innovation and
sustainability for both the Bank and its internal and external stakeholders. In developing and implementing
its CSR policy, BRD builds on seven values and principles and the above mentioned UN SDGs.
The 7 BRD Values and Principles
1. Client first - Trustworthy partners for our customers
2. Integrity - Always do the right thing
3. Care - We care about our people
4. Team spirit - We are One Team built on mutual trust
5. Innovation - We believe in simplicity
6. Responsibility - We lead by example and courage
7. Commitment - We hold ourselves, with professiona lism, to the highest standards
For BRD, mitigating climate change is one of the most important global objectives to which we can
contribute considering the financing products and solution we can offer to support the transition to a low-
carbon and less-intensive resource consumption economy in line with the objectives of the European Green
Deal, the Paris Climate Change Agreement and the EU climate targets.
As a consequence, SG Group become a stronger supporter and a direct contributor to the main international
initiatives that fight against climate change and encourage climate change mitigation measures. Thus, in
2017, SG adopted the Principles for Positive Impact Finance (UNEP -FI) and became a supporter of the
recommendations of TCFD. In 2019, SG Group adhered to the Katowice commitment to align financing
portfolios with global climate objectives and joined, as the first French bank, the Climate Bonds Partner
Programme, an international network of financial actors working with Climate Bonds to shift investment
towards a low-carbon and climate resilient economy. In the same year, SG Group signed the Poseidon
Principles that promote low carbon emissions for the global shipping industry, by integrating climate
objectives into portfolio management and bank lending decisions. Starting 2020, the Group is aligned with
the Paris Agreement and helped found the Net Zero Banking Alliance in April 2020. As part of the SG
Group, BRD Group supports and acknowledges all these international initiatives, striving to contribute to
the achievement of these ambitious objectives. In addition to the fight against climate change, BRD Group
also supports other environmental issues, such as biodiversity. SG Group has implemented a special cross-
sector policy on biodiversity conservation, which applies to all Group banking and financial operations and
involves procedures for reviewing dedicated transactions (for which the underlying asset is known and fit
in the perimeter of evaluations) and customers. As a direct consequence, Environmental and Social (E&S)
standards apply to all activities carried out by the Bank. The principles of sustainable financing with a
positive impact are based on BRD’s vision and commitments in the field of CSR. Beyond the E&S risk
assessment activities, the Bank is committed to promoting sustainable investments and financing with a
positive impact.
Implementation of the CSR policy
In order to implement the CSR policy and ensure a follow-up of its performance within BRD, the structures
of the Bank directly involved in the interaction with stakeholders fulfil the attributions presented below. In
this sense, each structure has the freedom and responsibility to detail the stated principles as well as how
to inform the partners of these principles according to the specifics of its own activity in the normative
documents that regulate its activity. The obligations of the bank’s structures for the implementation of the
CSR policy are the following:
●
related to CSR policy in relation to employees, customers, suppliers and other third parties;
●
as to partners, to the principles of positive impact financing taking into account the principles of the
Bank’s CSR policy; communicates to the Communication Division the relevant information on the
actions taken to implement the CSR policy and their results, upon request and within the deadlines
set by SEGL (General Secretariat);
●
progress. In addition to the above, the following structures fulfill specific attributions related to the
implementation of CSR policies at the level of the Bank.
The General Secretariat (SEGL) - Corporate Affairs Division
●
structures involved in this activity and in consultation with the Climate Change, Environmental and
Social Change Committee;
●
with specialized bodies and plays the role of interface with the outside world in CSR issues;
●
necessary, the reports requested by the SG regarding the CSR activities carried out at BRD level;
●
by the Bank with external suppliers;
●
progress on CSR related topics;
●
obligations by other Bank structures;
●
the management; Together with the Communication Division, it communicates to internal and
external stakeholders the carried-out CSR projects and their results;
●
transposing the specific steps that the Bank takes in order to achieve the CSR objectives;
●
group - CSR Team - responsible for monitoring and evaluating how the principles of CSR are
implemented. The CSR Team meets whenever necessary.
The General Secretariat (Communication Division) implements the Bank’s CSR policy in relation to
the categories of stakeholders in its area of responsibility, as follows:
●
implements the policy of sponsorship and support of communities;
●
to the Bank. These will take into account: the field of activity of the organization and the purpose of
the project, the size and history of the organization, the history of the relationship between the Bank
and the organization, the financial value of the projects;
●
the CSR projects carried out and their results. Provides the Corporate Affairs Division support in
the drafting of the Sustainability Report.
Human Resources Department (DRU)
●
in CSR projects carried out within the communities in which the Bank operates and in collaboration
with its partners among NGOs, sports and / or cultural associations, etc.
Environmental Social and Positive Impact Financing Division (ESPIF)
●
and in structuring sustainable financing transactions with a positive impact. BRD is planning to draft
a specific sustainability strategy in the next period in order to take into account the latest
developments in the field, the general strategy of the bank and stakeholders’ expectations. In
addition, in order to strengthen the general approach of the group in this field of sustainability, there
are other initiatives at the level of each entity.
Climate Change, Environmental and Social Committee is a permanent consultative committee whose main
mission is to carry out strategic CSR analysis by reporting to the Bank’s objectives, in order to present to
the Management Committee, the measures for implementing the CSR strategy in this area.
The mission includes making proposals for setting the Bank’s objectives, adopting the relevant regulatory
framework, monitoring the Bank’s commitments, communication and any other topics related to
environmental, climate and social issues. The committee was established in 2021 and is chaired by the
CEO.
The Committee discussed as follows: ESG roadmap, CNSM Report on Green Finance, UNEP FI Report
on testing the applicability of EU Taxonomy to core banking products, EU Taxonomy preparation,
programmes meant to prepare BRD for the new and/or upcoming legislation in the area of sustainability,
CSR disclosure, etc. In order to implement the CSR Group policy and to ensure a follow-up of its
performance, there are more structures established at the Bank level.
Group Commitments and CSR topics
As part of Société Générale Group, BRD conduct its business with the utmost respect for the values
under:
ü
ü
ü
ü
and Development);
ü
In addition, Société Générale has shown its proactive commitment since 2000 to the following public or
private initiatives:
ü
ü
ü
principles relating to human rights, working conditions and the fight against corruption;
ü
ü
ü
ü
February 2019);
ü
ü
Consumer Goods Forum) to fight tropical deforestation;
ü
Institutions”, launched during COP21;
ü
United Nations, and the International Labour Organization’s Global Business Charter on
ü
Disability
ü
2017: Adoption of the Principles for Positive Impact Finance (UNEP-FI);
ü
(TCFD);
ü
ü
international network of financial actors working with Climate Bonds to shift investment towards a
low-carbon and climate resilient economy.
ü
industry, by integrating climate objectives into portfolio management and bank lending decisions.
ü
ü
ü
Working Group, Sustainable STEEL Principles
III.
Throughout its activities, the Bank aims to build customer relationships based on trust, responsibility and
ethics. As a bank, BRD contributes to the sustainable economic, social and environmental development of
the economy in which it operates. Being responsible and ethical means responding quickly to customers’
needs while protecting the long-term interests of all stakeholders, through strict compliance with the
applicable rules.
Customer satisfaction is subject to periodic studies. Société Générale conducts annual group-level surveys
for each subsidiary, the main segments of clients (individuals, small business and corporate clients), to
evaluate the level of satisfaction in terms of customer-bank interaction. These polls show us both general
satisfaction and detailed satisfaction with each interaction with the Bank. In addition, we evaluate the extent
to which clients recommend us as a company, level measured through the NPS (Net Promoter Score)
indicator.
In 2023, the NPS score at the individual customer level was 54 and at the small business customer, level
was 60. Both values place us in the top 3 among major credit institutions: 3th place in the top if we refer to
individuals and 2nd place in the top for small business.
Regarding corporate clients, with yearly turnover greater than 1 mil euro, NPS score for 2023 shows also
a high level of general satisfaction. Its value of 72 for 2023 and 65 for 2022 are a recognition of the
permanent BRD effort to meet customer expectations. The fact that, also in 2023, we rank first among
main competitors, for a market segment with complex business needs, is a strong motivation for further
improvements, in order to preserve a top position for customer satisfaction.
Starting with Q4 2018 we have been conducting continuous studies to evaluate individuals and small
business clients’ satisfaction following their interactions with the Bank. These.
studies help us gain a clearer
picture of the reasons and actions that contribute to maintaining and increasing customer satisfaction.
Additionally, they allow us to intervene promptly in cases of dissatisfaction
.
studies and pre-post surveys testing new products launched to adapt as much as possible the offer to our
clients' needs.
We have also contact point with customers and dedicated services that respond to the questions, claims
and suggestions: call centre (MyBRD Contact) with dedicated line for emergencies, on line on social media
(Facebook), dedicated email and address to write to Customer Relations Department We also have a
dedicated chat and contact form on the website.
The term for responding to a complaint depends on its complexity.
If the Bank's response does not fully meet the customer's request, the client is informed in writing of its right
to address the competent authorities or to resort to alternative dispute resolution mechanisms (CSALB
Alternative Dispute Resolution Centre, The Alternative Dispute Resolution Entity in the NonBanking
Financial Sector - SAL-FIN, etc.).
In 2023, we handled around 10,000 complaints, suggestions and requests at the relevant department level
within the Bank.
During 2023, BRD remained in the top 3 most important contributor to CSALB, as a result of its focus on
amicably resolving disputes in which the Bank is involved in customer relations.
BRD is one of the banks that has built a commercial and responsible relationship with CSALB, being
strongly involved in supporting this alternative dispute resolution approach.
BRD Groupe Société Générale has proven, in recent years, not only that it understands the role of the
conciliation procedure, but also its willingness to effectively help its customers, and to assist in identifying
real solutions to the needs of consumers who turn to CSALB. The BNR annual reports on CSALB's activity
particularly appreciate the involvement of the bank's top management but also of the team directly involved
(SEGL/Quality Department) in supporting CSALB's activity, including in the line of communication & PR
and financial education projects.
CLIENT SATISFACTION
2021 2022 2023
Response time following a complaint (days)
30
30
30
Ombudsman response time in case of disagreement (CSALB)
(days)
90
90
90
Number of mediation requests
222
164
173
Cases handled by the ombudsman (CSALB)
222
164
173
Cases handled by the ombudsman (CSALB) decision issued
70
40
45
IV.
RESPECT FOR HUMAN RIGHTS
Société Générale is guided by the following conventions, standards and initiatives:
●
the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights
and the International Covenant on Economic, Social and Cultural Rights;
●
the Fundamental Conventions of the International Labour Organization (ILO), which cover, in
particular, the elimination of forced labour and child labour, discrimination in employment as well
as the freedom of association and the effective recognition of the right to collective bargaining;
●
the United Nations Guiding Principles on Business and Human Rights;
●
OECD Guidelines for Multinational Enterprises;
●
the United Nations Global Compact.
The Bank is determined to act with integrity and in compliance with the applicable laws in all its activities.
Several policies developed at the Société Générale Group level include provisions that directly or indirectly
uphold human rights.
A notable example is the Code of Conduct, in which BRD undertakes to respect human rights and to comply
with the rules laid down by the ILO. The same applies to policies and processes developed by BRD in
connection with its obligations to combat money laundering, terrorist financing and corruption.
BRD is committed to maintain and improve the systems and processes that enable it to ensure that human
rights are respected in its operations and its human resources management, in its supply chain, and in its
products and services.
CULTURE AND PROFESSIONAL CONDUCT
BRD has adopted the conduct and cultural directory lines and rules of Société Générale Group. The trust
invested by BRD clients, shareholders and partners into the Bank and the personnel of the Bank, represents
the fundament for building and preserving a long-term successful relationship.
The Code of Conduct gathers a set of strict rules and guidelines that aim to promote the values of BRD
and Société Générale Group, at internal level and in relation with stakeholders involved in Bank’s activity.
These values promote: moral integrity and honesty, professionalism and transparency, respect for
implemented legislation and internal regulations, avoiding of conflicts of interest, impartiality and non-
discrimination, ensuring confidentiality, prevention and fight against corruption, anti-money laundering
and anti-financing of terrorist acts, social responsibility.
All BRD employees continued and completed e-learning sessions regarding culture and professional
conduct. Code of Conduct is available and applicable for all employees, including relevant and affiliated
people, for initiated people and for BRD employees in charge with Bank’s activity on financial markets.
Given the above, BRD has not registered any major incident pertaining to aspects related to human rights,
the fight against corruption and anti-bribery activities. A more detailed description of the actions taken in
each of those areas is provided below in the respective section of the report.
FIGHT AGAINST CORRUPTION
Société Générale Group conducts its business ethically and in compliance with all applicable laws,
including laws prohibiting corruption, bribery and influence peddling in all countries in which it operates.
BRD, as part of the Société Générale Group, has adhered to the Société Générale Group's anti-corruption
code, principles and rules. Any act of bribery or influence peddling is strictly prohibited in BRD.
As part of the projects initiated at Société Générale Group level in the field of anti-corruption and in line
with the Group's standards, the Bank continued to strengthen its governance framework on anti-corruption
/ ABC (Anti-Bribery and Corruption) governance and to develop the regulatory framework by revising new
regulations and strengthening specific processes. Dedicated ABC governance structures and specific
roles in this area continued their work during 2023 and strengthened their perimeter, including through
dedicated reporting at the Bank's management level.
At BRD level, there are assessments on corruption -related risks, both from the perspective of the Bank's
awareness of the associated risks (e.g. monitoring of training sessions conducted for Bank staff and
evaluation of the results) and as part of the risk assessment exercises conducted at Société Générale
Group level on anti-bribery and corruption.
As part of the fight against corruption, on Societe Generale level is WhistleB, a group wide tool for
reporting concerns to a dedicated central team in Societe Generale, on an anonymous basis if desired.
The tool is available at: https://report.whistleb.com/fr/societegenerale
BRD, as part of the Societe Generale Group, has an independent and autonomous channel for internal
reports for reporting actual or potential breaches of regulatory or internal requirements, which ensures the
confidentiality and anonymity of the date in line with legal regulations in force. The tool is available at:
https://report.whistleb.com/en/brd
OTHER CORPORATE GOVERNANCE ELEMENTS
CONFLICTS OF INTEREST
The main obligations of the members of the Board of Directors and the Management Committee, imposed
at Bank level to prevent and avoid conflicts of interest, are:
◾
the obligation to act solely in the Bank's interest and to take decisions without being influenced by
any self-interest that may arise in their activity;
◾
the obligation to keep confidential any facts, data or information that they become aware of in the
course of their responsibilities and understand that they are not entitled to use or disclose them
either during or after their activity;
◾
the obligation to inform the other members of the Board of Directors and the internal auditors of
any operation in which they have, directly or indirectly, interests contrary to the interests of the
Bank and not to take part in any deliberations concerning that operation;
◾
the members of the Management Body shall abstain when the agenda of the Board of Directors
and the Management Committee includes decisions on third parties with whom they are in a conflict
of interest by nature.
◾
the obligation to respect professional secrecy with regard to confidential information to which they
have access, debates and decisions in which they have participated and which have not yet
become public.
◾
Members of the Management Body must not take part in any deliberations on any matter in respect
of which they are or may be in a conflict of interest or in which their objectivity or ability to perform
their duties properly might otherwise be compromised.
REGIME APPLIED TO RELATED PARTIES
The internal regulations establish a set of rules for identifying, monitoring and reporting the transactions
with related parties.
In this respect, the related party transactions are concluded on fair terms that respect competition law, are
subject to the same pricing rules and competences applicable to the transactions with non-affiliated parties.
The transactions with related parties whose value places them in the competence of the Board of Directors'
approval are prior to the approval reviewed by the Audit Committee from the conflict of interest perspective.
PERSONAL TRANSACTIONS OF STAFF EXPOSED TO INSIDE INFORMATION
In order to establish a preventive and secure framework of action for personal market transactions
performed by persons who, through their position in the Bank, may have access to inside information in
relation with BRD, the Bank has established and applied a series of deontological rules to be respected by
directors, managers and a specific group of other staffers with potential access to inside information, in
order to avoid breaching the legal framework applicable in respect with preventing and identifying market
abuse on trading financial instruments issued by BRD. Similar rules are also implemented for the trading
of listed financial instruments issued by other issuers for which BRD provides certain services and which
may provide inside information during their regular business activity with the Bank.
These rules consists in:
- Implementation of physical and functional segregations (Chinese Walls) for arias where such inside
information may occur;
- Blackout periods (prohibition) for trading in financial instruments issued by BRD before publication
of the Bank's financial reports or any other important report that may request such a preventive
measure, as well as temporary trading restrictions in relation with other issuers, when the case;
- Implementation of specific rules for pre-approval of transactions for specific categories of staff (top
management included) in order to prevent suspicions of insider trading that may arise at the level
of the Bank's senior management, in the commercial areas (trading, corporate finance, structured
finance etc.), as well as in their support and control areas.
Rules for reporting personal transactions with financial instruments (including BRD listed shares) performed
via other intermediaries;
TRANSACTIONS CARRIED OUT BY PESONS DISCHARGING MANAGERIAL RESPONSIBILITIES
According to internal normative framework based on Regulation EU no. 596/2014 (MAR), persons
discharging managerial responsibilities (as established based on MAR Regulation, BRD’s Board of
Directors members and Management Committee members,), as well as persons closely associated with
them shall notify the Bank (General Secretary /Corporate Governance) and ASF for each transaction
performed on their behalf in connection with BRD's listed shares and, when will be the case, BRD debt
instruments or any other instruments related with BRD as an issuer. Notifications are made promptly and
no later than three business days after the transaction date, since the total value of transactions, regardless
buys or sells, reaches a specific threshold set by ASF.
General Secretary/Corporate Governance takes the necessary actions to ensure that the transactions
notified by the persons discharging managerial responsibilities will be promptly published, no later than 2
working days from the receiving date of the above-mentioned notification, in a way allowing quick and non-
discriminatory access to this information, in accordance with the legal provisions.
The reporting requirement shall only apply when the transactions exceed the threshold set up by the
Financial Supervisory Authority (equivalent of EUR 5,000). The threshold is calculated by summing up all
transactions made within one calendar year, without netting between sales and purchase transactions.
CYBER SECURITY
In respect of CyberSecurity, BRD Groupe Société Générale is aligned and guided by the global SG Group
policies implemented for managing cybersecurity.
According to the SG - NIST v2 Barometer Security Program, BRD is rated at a score of 3.74 out of 5, the
highest amongst all SG subsidiaries. The target for BRD at the end of 2024 is set to 4.
The function of CISO – Director of Information Security Division - is managing the cyber security activity in
BRD Groupe Société Générale. Information Security Division is the governance and the second level of
defense team for Information Security. One team (SOC) is dedicated for operational security and is
equivalent to first level of support. The SOC team is reporting to the Chief Technical Officer, Head of
Infrastructure Production and Operations Department.
To fight cybercrime, BRD Groupe Société Générale has an ongoing activity of implementing, managing
and monitoring cyber security solutions in order to protect the assets and transactions of its customers
(individuals and legal entities), as well as the personal data of its customers, employees and suppliers.
Thus, there have been significant improvements in the prevention, detection and response to cyberattacks,
which are growing in a continuous fast pace on an international level.
During 2023, BRD was not affected by any major information security incident and also increased its
maturity level by designing and implementing its Cyber Defense Strategy enforcing the Detection, Reaction
and Response capabilities:
-
attacks, including sophisticated “low and slow” attacks, and On-Cloud Radware services, effective
for volumetric attacks.
-
During 2023, the IT Pole of BRD Groupe Société Générale has continued to maintain the certifications for
the Bank:
-
-
traders in Electronic Cards activity.
Starting 2020, BRD Groupe Société Générale has been registered as an Essential Services Operator at
national level in the financial domain. As a consequence, a legal audit according to the national law
implementing the EU NIS Directive (Law 362/2018) was conducted during January-March 2023 by an
external certified auditor. The audit opinion was positive.
In 2022, National Bank of Romania asked for the performance of audit missions in order to assess the
implementation in BRD of several European Banking Authority’s Guides, like EBA/GL/2019/04 on
outsourcing and EBA/GL/2019/04 on ICT and security risk management. For EBA/GL/2019/04 on ICT and
security risk management, there has also been conducted an external audit, performed by a certified
auditor. The audit opinion was positive (out of 98 controls: no controls has been evaluated as “Not
compliant”, only 1 control evaluated as “Partially Compliant” and 7 controls “Compliant, with
Recommendations for Improvement”).
In 2023, all the Remote Banking applications, for Individuals and Corporate customers, have been audited
by external certified auditors and received their functioning approval from ADR (Romanian Authority for
Digitalization). BRD Groupe Société Générale is one of the few Romanian commercial banks offering
security solutions for clients in remote banking applications, for both legal entities and individuals, also
acting to raise awareness on the topics of information security through the contractual clauses of the
“Remote Bank” services, through institutional website and periodical e-mails to clients.
As a mature organization, BRD continuously improved its security posture according to its Cyber Defense
Strategy through:
Prevention
o
o
normative documents new or reviewed in 2023);
o
mandatory maintenance schedules by technology and obsolescence, while decreasing the
Remediation Objectives times;
o
InfoSec Annex signed with the Individual Labour Contract by more than 96% of the employees and
training) and yearly, through regulatory web-trainings, as well as through periodical e-mails and
webinars;
o
(ISEC and IPO): C-CISO, (ISC)
2
o
systematically including the specific information security clauses in the contracts in which BRD is
the beneficiary, from the moment of selection (RFP);
o
proven the capability of Bank’s defence dispositive to detect and respond to cyber-attacks;
o
Design/Privacy by Design” and a new information security testing strategy, applicable for each new
application acquisition and/or development in order to release in production applications complying
with appropriate security rules and to reduce the cybersecurity debt;
o
events and the counter-measures for their prevention (dreadful scenarios with an outstanding
impact on the Bank if they materialize; a detailed analysis on the sensitive assets potentially
affected by those dreadful scenarios is currently in the 4th out of 5 phases);
o
tools, according to the audit requirements;
o
order to increase the security in depth controls on different technologies (ex. the eradication of the
dangerous protocols on the border firewalls);
o
the projects, by providing and validating the security requirements;
o
Committee (NPC);
o
between the two main actors involved in the process of managing and authorizing access to IT
resources: Level 1 - Operational (represented by User Rights Management) and Level 2 -
Governance, which ensures the management of the roles and profiles in business applications;
o
o
enhance the management of the roles and profiles in business applications.
Detection, Reaction and Response capabilities
o
Management) and of the DLP (Data Leakage Protection) rules;
o
cloud environment which represents the next evolution in technology, increase our capacity of
detection (introducing new technologies like AI-artificial intelligence and ML – machine learning)
with automation in reaction (SOAR – Security Orchestration and Automation Response)
capabilities, in order to sustain and support all Business Activities unaffected by any cyber threats.
PREVENTING FINANCIAL CRIME AND PERSONAL DATA PROTECTION
BRD is engaged in the fight against fraud and considers this effort as a fundamental part of its policy, along
with a general commitment to initiate and maintain business relationships in full compliance with applicable
laws and standards of ethics and integrity, managed by the Bank through the Control functions.
Fraud risk management is part of the general Bank’s risk management and represents all the principles
that should be taken and respected by all employees.
In order to prevent and reduce fraud risk and the associated risks, and also to impose the conduct needed
to prevent and identify the frauds, all the Bank employees are responsible for learning, assumption,
enforcing and implementation of fraud risk management policy, whether their labour relations are
established through individual contracts on undetermined period, on limited period, full time or part-time
working program, temporary employment, working home contracts, apprenticeship contracts. To comply
with BRD Policy of fraud risk management is also mandatory for persons in relation with the Bank (detached
from other employers to provide work in the BRD - Groupe Societe Generale SA during the detachment
period, persons in temporary relation with bank provided by labour agencies under a disposal contract,
service providers having contractual relation with the bank, and staff conducting practice or other
professional internships in the Bank’s units, without limiting to doctorates, pupils or students).
This fraud risk management policy presents the main guidelines to manage the fraud risk (internal and
external) in BRD, establishing the general principals applied by the bank in the fight against fraud: definition,
objectives, evaluation instruments, control, conduct, roles and responsibilities, internal regulation
framework, in accordance with legal regulations, the reality of the markets where the bank operates and
with the policies in the field of Groupe Societe Generale.
The main objective of managing the fraud risk is to reduce exposure to such risks and to the associated
risks, by implementing some actions of preventing fraud, by mitigating the impact if the fraud occurred, by
early detection of potential fraud or occurred fraud and by recovery the loss from any operation/action taken
in scope to fraud the Bank, Groupe Societe Generale or their clients. Also, the management of fraud risk
aims to create a stable and safe environment for the Bank and its clients/partners through effective antifraud
approach and to facilitate the creation of an organizational culture that protects the bank's reputation and
values.
Antifraud Bank’s strategy is to entirely cover “antifraud process” in accordance with the best international
standards in the field, legal requirements and polices / code of SG Group, starting with prevention and
detection, finalizing with investigation and remediation of fraud. BRD is based on integrity, high standards
of ethic, promoting bank’ values, respecting internal regulatory framework and laws, in order to achieve
specific quality objectives and to achieve targeted performance.
BRD has zero tolerance for any type of fraud, which means that all suspected incidents of fraud are
thoroughly analysed / investigated.
During the last years, BRD Group went through a complex process for GDPR implementation and
continuously improves its processes, services, products, operations involving the processing of personal
data in order to comply with European and national data protection legislation. BRD Groupe Société
Générale aligns and follows the global policies of the SG Group implemented for the protection of personal
data. The main purpose is to be compliant with law requirements, to avoid financial losses as a
consequence of fines applied by the authority (ANSPDCP), reputational losses, and possible negative
impact on data subjects, including affecting their rights and freedoms. For the management of data
protection, the Bank has in place internal policies which are reviewed annually and are submitted to the
Management Committee's and/or Board of Directors’ approval.
Personal data collected from data subjects (i.e. customers, potential customers, collaborators, partners,
employees, candidates for open positions within the bank etc.) is processed only for specific purposes on
which data subjects were clearly informed. When necessary, the Bank collects the consent from data
subjects.
The Bank has implemented processes aimed to efficiently respond to exercising of rights requests and to
manage potential personal data security breaches.
A Data Protection Officer (DPO) has been appointed since the application of GDPR and a structure has
been established within the Bank – the Data Protection Cell (DPO), monitoring the compliance of Bank’s
processes, services, products, operations from the perspective of data protection at central level, in close
cooperation with Legal and Compliance departments. Beside the DPO, at Bank level have been appointed
Data Protection Correspondents within central structures. Data Protection Correspondents ensure the
operational tasks of the activity carried out by the DPO, including the following: providing necessary
information to keep the Processing Register up to date, support for preparing responses to requests for
exercise of rights received from data subjects, providing advice and support to business departments
regarding the assessment of the impact on data protection, support for the analysis and documentation of
security breaches, involvement of DPO in all activities that require this thing. For local affiliates, even they
have appointed their own PDPO or not (for the latter case being nominalized only a Data Protection
Correspondent with the above responsibilities), the activity is closely monitored and Group's rules and
principles are applicable.
Also, at Bank's level is developed a GDPR Program, monitored quarterly by BRD's Top Management
through a dedicated Steering Committee, program within which are assured the implementation of GDPR
requirements, improvement of different data protection aspects, and the management of certain transversal
projects involving GDPR aspects.
The Bank has taken measures to continuously improve the security of its applications in order to keep pace
with technological developments. Moreover, the selection process of services/goods providers that could
have access to Bank’s data considers only the third parties that have implemented adequate technical and
organizational measures to keep Bank’s data secure. Also, in situations where the suppliers with whom the
Bank enters into contracts act as 'data processors' according to GDPR, they are obligated to act in
accordance with BRD's instructions and comply with BRD's data protection policies and rules.
The technical and organizational measures implemented by the Bank to ensure compliance with GDPR
requirements include the following:
●
branches and/or published on the Bank’s website
●
o
subjects in accordance with the requirements/guidelines (e.g., pop-ups on the website,
etc.).
●
processing is based on this legal basis and exercise their rights through various channels (bank
units, website, email, etc.)
●
●
ANSPDCP and the data subjects, if applicable
●
●
●
analysis for sensitive processing and minimization of data
●
●
●
●
●
●
regulation, inform and advise on the obligations arising under the Regulation, manage requests
from the ANSPDCP (investigations, inquiries, requests for additional information, PIAs, etc.), and
the relationship with it, evaluate the contractual documentation applicable both in relation to data
subjects (clients, potential clients, employees, etc.) and in relation to the Bank's suppliers, spread
the culture of data protection, etc. Some of these tasks are linked to performance assessment.
The data subjects may exercise their rights regarding the personal data as granted by GDPR through the
communication channels provided by the Bank (agencies, contact centre, complaints, electronic form
available on the Bank's website, by contacting directly at dataprotection@brd.ro in case of clients or
pdpo@brd.ro in the case of employees).
The activity (requests from data subjects other than employees) is coordinated by SEGL / QLT with the
support of the Data Protection Cell.
Requests received from employees / collaborators are processed by the Human Resources Department
with the support of the Data Protection Cell.
V.
RESPONSIBLE
EMPLOYER
The strategic objective in the Human Resources are is to be an employer of choice that actively promotes
diversity and new ways of working through:
-
Building an employee-focused organisation, putting people at the heart of our strategy and paying
more attention to health and well-being in the workplace;
-
Continuously developing employee skills;
-
Recognizing individual performance and contribution to the bank's performance;
-
Creating a culture of accountability;
-
Simplification.
Human rights, diversity, anti-discrimination policy, gender equality
Within BRD, the general policy is to treat everyone, with equal respect, offering everyone equal
opportunities to be recruited, promoted, rewarded, trained and based solely on personal qualities, by
respecting human rights, as set out in the Universal Declaration of Human Rights, as well as in the EU
Charter of Fundamental Rights.
Diversity is an important component of the Bank's strategy and is based on an effective and independent
performance management system that ensures that employees' attributes are valued from a competency
perspective.
We are committed to maintain fair relations with our employees, pay particular attention to adequate
working conditions in terms of social protection, health and safety at work, as well as respect for the dignity
of employees in accordance with the relevant legislation in force, the applicable Collective Labour
Agreement and internal regulatory documents.
The internal regulatory framework ensures protection against any form of discrimination and access to jobs
is provided freely throughout the organisation.
Employees have the following main rights:
- the right to collective bargaining; - our employees have the right to exercise their freedom of
association and collective bargaining in accordance with the applicable legal provisions.
- the right to protection of personal data;
- the right to protection in the event of dismissal; the Bank gives 20 working days' notice when
dismissing employees, as well as compensation for dismissal and termination through retirement;
- the right to protection against all forms of harassment;
- other rights provided for by the legislation in force, such as: the right to remuneration for work
performed; the right to daily and weekly rest; the right to annual rest leave; the right to equal
opportunities and treatment; the right to dignity at work; the right to safety and health at work; the
right to access to vocational training; the right to information and consultation; the right to take part
in determining and improving working conditions and the working environment; the right to
collective and individual bargaining;
- the right to participate in collective action;
- the right to form or join a union;
- other rights provided for by law or applicable collective agreements.
When hiring and setting individual rights, the Bank ensure and will ensure equality of opportunity and
treatment for all employees without discrimination, direct or indirect according to criteria of race, colour,
national origin, ethnicity, religion, social origin, age, or union activity, sex, sexual orientation, genetic
characteristics, handicap, family situation or responsibility, or any other criteria that have the purpose or
effect of not offering, reducing or cancelling the recognition, use or exercise of rights under the Collective
Labor Agreement.
Decisions related to salaries, benefits, training, promotions, disciplinary measures or dismissals are based
solely on professional activity, inclusive on employee’s performance, not on personal characteristics, race,
origin, gender, religion, sexual orientation or political opinion.
Individual employment contracts are usually for an indefinite period of time, which is a rule for employment
under the applicable legislation. Employees on fixed-term individual employment contracts will not be
treated less favourably than permanent employees solely on the grounds of the duration of the individual
employment contract, unless different treatment is justified by objective reasons.
Job information is available on the internal platform, MyWorkplace, in order to ensure that employees have
free access to it, as required by law.
The hybrid work programme was launched in 2020. Currently the Bank has adopted a hybrid work
organisation model with a mix of teleworking and physical presence at the office.
In accordance with legal requirements, our employees are entitled to paid leave and days off, depending
on the situation. In addition, under the collective labour agreement, the Bank grants days off for certain
family events.
There is a Collective Labour Agreement in BRD, which is the result of annual negotiations between the
management and the employees' union (40.35% syndication degree).
Communication with our employees is always open and aims to keep them informed and aware of the
reality of the company. To this end, we constantly inform and consult our union representatives about
developments in the company's activities that may affect the interests/rights of employees, in accordance
with the applicable legal and/or contractual provisions.
BRD tools and special programs:
-
Recruitment (job description, selection criteria)
-
Promotion (criteria, specific programs)
-
Remuneration (criteria, compensation packages and benefits)
-
Career management (specific programs)
-
Assessment (skills, rating system)
-
Dismissal (criteria, compensatory packages)
These tools take into account: the needs of the Bank; qualification, professional experience; professional
performance; technical, commercial, managerial skills; professionalism, team spirit, innovation.
The Human Resources Department (DRU) provided specific support through several projects that aimed
to optimize the Bank's structure to be more efficient and provide quality services to our customers. The
Bank's objective was to ensure efficient and dynamic structures, in order to maximize the results from the
point of view of business development. Some of the most important such projects relate to: optimizing the
structure of the various departments located at the central headquarters, territorial reorganization at
network level (relocations, closures and mergers of agencies) and providing support for special projects,
etc.
In BRD, women are not a minority population; they actually represent 76% of all personnel (at the end of
2023).
●
362 women are in maternity leave (6% of all women); when returning from maternity leave, they
receive an integration training according to agreement with the direct manager
The number of active employees of the Group was 6,070 as of 2023 end (6.126 at the end of 2022), while
the number of active employees of the Bank was 5,854 as of 2023 end (5.833 at the end of 2022).
The Bank also recognizes, promotes and supports the benefits of the diversity of the management body
and considers it an essential element in the protection and expansion of the competitive advantage, given
that through diversity, maximum efficiency and performance can be achieved, increasing innovation and
cooperation both within the management body and within the Bank, facilitating the expression of
independent opinions and a solid decision-making process within the management body. In this context,
the Bank has adopted and implemented a diversity policy.
In this respect, in the recruitment process, the Nomination Committee considers a wide range of skills and
competencies, a balance is desired to be achieved, so that the members of the management body have
theoretical knowledge and practical experience regarding: financial markets; framework and regulatory
requirements; strategic planning and understanding of the Bank's strategy and business plan and their
realization; risk management (identification, evaluation, monitoring, control and reduction of the main
types of risk, including past activity / attributions); accounting and audit; assessing the effectiveness of
the governance framework, establishing effective governance, supervision and control mechanisms; the
interpretation of the financial information of a credit institution, the identification of fundamental issues on
the basis of such information and appropriate controls and measures.
The Nomination Committee evaluates and reviews the composition of the governing body annually and
at any time, the committee may propose to improve any aspect of its diversity.
At the end of 2023, the presence for the weakly represented gender within the Management Body was
54% of the total number of the members.
More details on the changes that took place at the level of the management body are available in the
body of Administrators' report.
Creating a culture of responsibility
The environment in which BRD operates is uncertain: numerous regulations, transparency requirements,
tougher competition, the digital revolution, etc. In this context, our values help us to focus on what is
essential, to carry out our activity with pride and to encourage others to want to join us in the development
of tomorrow's bank: the successful awareness of our role as bankers, in the service of our customers.
Responsibility is one of the values of our Bank and is incorporated in the actions of its employees.
As a financial institution, we contribute to the economic, social and sustainable development of the
environment in the economies in which we operate. We want to help our clients fulfil their projects’ potential,
while paying attention to risks in all their aspects.
Our responsibility and code of ethics involve quickly meeting the needs of our clients, while taking into
account the long-term interest of all stakeholders and strictly adhering to the rules of our profession. Our
responsibility is also reflected in the courage to be accountable for our actions and decisions and to express
our opinions in a transparent manner. In short, it's about giving as much importance to how we get results
as to the results themselves.
In 2023, all BRD employees completed a training session on the Code of Conduct in e-learning, training in
which the components of the code were addressed. The course could be promoted only in case of a score
of at least 80% at the final test.
The Code of Conduct is available and applies to all employees, including relevant and affiliated persons,
insiders and BRD employees responsible for the Bank's activity in the financial markets.
Also, during 2023 the Bank's staff received dedicated professional training in order to raise awareness
about risks and specific issues such as: the integrity of financial markets, preventing and combating
corruption, preventing money laundering and terrorist financing, etc.
In the field of Culture and Conduct (C&C) at the Bank level, the actions of promoting C&C aspects among
employees through campaigns and dedicated projects continued, in order to consolidate the maturity of the
organization and promote and strengthen a culture in which the risk of conduct is known, assimilated and
properly administered as part of the day-to-day activities of employees.
In 2023 we launched Speak up and Prevent inappropriate behaviour communication campaign in order to
encourage speak up and to prevent inappropriate behaviours among employees. This campaign was
organized in 2 waves and consists of several screensavers, dedicated messages in the HR Newsletter,
article in internal magazine and Speak up & Prevent inappropriate behaviour conference, dedicated to all
staff, organized in September 2023.
The objective of the event was to emphasis the importance of Speak up and offer information and
transparency on the right to alert process. The event included:
●
●
●
●
●
Acknowledging individual contribution to the Banks’ performance
The Human Resources Department places particular emphasis on the employees’ engagement, something
that improves team performance. Recognizing each person's contribution to the long-term performance of
the group, ensuring well-being in the workplace and using the benefits of diversity in teams are essential to
maintaining employee relationships with the company and improving efficiency.
Performance management is based on three major pillars:
●
Clear and measurable objectives based on the appropriate job description.
●
Continuous feedback and individual development plan.
●
A serious and transparent process of evaluating the employee, both in terms of results and in
terms of how they were achieved.
The assessment process is a way to manage and develop skills aimed at:
●
Discussions on the expected level of achievement of the objectives depending on the deadlines
and means defined at the beginning of the year, as well as in relation to the working environment.
●
Evaluating the results and the way in which they were achieved, taking into account the
responsibilities and objectives set for that year.
●
Identifying acquired skills.
●
Identifying training needs and ensuring the conditions for professional development.
The evaluation of individual and collective performance takes into account the qualitative and quantitative
performance criteria measured with KPIs. The role of the KPI system, a key element of performance
management, is to set challenging but achievable goals with relevant performance indicators. Achieving
these goals is a key element in the organization and is linked to continuous improvement of services and
the achievement of goals, objectives and priorities.
Encouraging an environment that promotes employees’ commitment
One of the principles of our leadership model is that "everyone acts ethically and courageously". This
translates into specific concrete behaviours that can be observed in the organization and that are valued at
the level of employees: we encourage everyone to speak, ask and provide constructive feedback and take
responsibility for actions.
In the context of an ever-changing business environment, BRD launched at the end of 2019, the
Organizational Culture Program which aims to accelerate the speed of the organization's reaction to
external challenges by increasing employee involvement, by adopting behaviours that bring positive change
in organization and improve Bank’s performance.
The Organizational Culture Program launched in 2019 aims to outline a vision for the new way of working,
defining the current organizational culture, establishing and implementing an action plan that will support
the spread of the new crops throughout the Bank.
In the first stage of the project, a series of individual discussions took place with the board members as well
as several workshops with both the board and the Bank's top management in order to define together the
desired cultural vision in BRD.
In the second stage of the project, around 150 interviews and several workshops were held with people
from all areas of the bank, followed by a questionnaire launched throughout the Bank to understand the
point of view of employees regarding current working environment and gather ideas about their ideal
working environment.
We are currently working on defining an action plan to support the spread of the new culture that aims to:
●
developing a way of working focused on simplification,
●
improving the way of collaboration between employees,
●
encouraging the expression of opinions and improving the culture of feedback,
●
increasing the level of responsibility of each employee, regardless of the hierarchical level,
●
sharing examples of good practices in the organization,
●
optimizing communication at the organization level,
●
developing employees' skills,
●
improving the relationship with the client.
In addition to the action plan launched in 2021, on 2023 within the Organizational Culture Program,
coaching programs were developed for both the Board and for top management to support them as
examples of practicing the new way of working for the teams which they lead.
Last but not least, several initiatives were carried out in the Bank in 2023 such as:
●
Transversal projects
●
Agile teams
●
The new format for organizing the Board meeting
●
Workshops and focus group on different business topics
In 2023 the actions in the program focused on practicing desired behaviours that encourage simplification
through collaboration, courage, taking responsibility, learning from mistakes, feedback. Thus, actions such
as: workshops with top management and development programs for managers, events with people who
have been successful in their careers, both internal and external guests, trainings dedicated to employees
with focus on simplification behaviours, focus on communicating new behaviours through all channels,
creation of communities - Codding Academy, informal meetings between colleagues to increase
collaboration, measuring progress through questionnaires.
Below are some BRD’s key human resources indicators for 2023 and in evolution:
Indicator
2021
2022
2023
2021
% from total
employees
/FTE
2022
% from total
employees
/FTE
2023
% from total
employees
/FTE
Total number
of female
employees on
permanent
contracts
4,570
68
4.648
72
4,634
72
Total number
of female
employees on
fixed-term
contracts
468
7
257
4
232
4
Total number
of male
employees on
permanent
contracts
1.530
23
1.468
23
1,489
23
Total number
of male
employees on
fixed-term
contracts
110
2
70
1
63
1
Total number
of employees
6,678
100
6.443
100
6,418
100
Number of
female
employees
present on
permanent
contracts
(FTE)
4,044
66
4.214
70
4,256
71
Number of
female
employees
present on
fixed-term
contracts
(FTE)
463
8
254
4
232
4
Number of
male
employees
present on
permanent
contracts
(FTE)
1,510
25
1.458
24
1,480
25
Number of
male
employees
present on
fixed-term
contracts
(FTE)
110
2
70
1
62
1
Full-time
equivalent
employee
(FTE)
6,127
100
5.996
100
6,030
100
Number of
work-study
participants
present during
the year
30
0.5
110
2
117
2
Number of
work accidents
(as defined by
local
regulation)
2
0
5
0
0
0
Number of
employees
who had an
annual
performance
evaluation
(eligible
employees
with more than
6 months in
the Bank)
6,277
100
5,936
99
5569
95%
●
Data regarding annual performance management is only for BRD – bank. At the reporting time the
performance evaluation process for 2023 was still in progress.
part-time employees are marked as FTE=1
** It includes data for BRD AM and SOGELEASE
Training
2021
2022
2023
Total number of hours of
training
434,197.00
386,745.31
420,063
Total number of hours of
training for female employees
(classroom and e-learning)
331,126.00
305,541.13
336,782.46
Total number of hours of
training for male employees
(classroom and e-learning
103,071.00
81,204.18
83,280.35
Average number of training
hours per employees who
attended at least one training
session during the year
66
62
57
Number of female employees
who attended at least one
training session during the year
4,357
4,281
5,012
Number of male employees
who attended at least one
training session during the year
1,542
1,433
2,360
Number of employees who
have completed at least one
training course
5,899
5,714
7,372
Extra information on our human resources strategy is available in the main body of the annual report, under
the dedicated human resources chapter.
VI.
BEHALF OF BRD
Any purchasing act must comply with the principles and commitments of Responsible Purchasing included
in the Sustainable Sourcing Charter.
Sourcing projects over EUR 50,000 and significant outsourced activities are handled by Sourcing
Department via a normative framework which includes both a responsible purchasing policy, as well as a
code of conduct for suppliers in place.
Sourcing Department works with the Sourcing Network on different streams to support business units in
the identification of levers and to monitor local targets achievement for carbon footprint (Energy / Air Travel
/ Car Fleet) and single use plastics (Catering / Vending machines / Events / Office supplies).
Specific procedures involve:
a)
Actions performed during the selection process of suppliers: starting with October 2020
environmental and social risks related to products and services are evaluated based on the CSR
Risk Matrix. Depending on the sourcing category, a certain CSR percentage is included in the
assessment grid and is part of the final assessment of the suppliers’ selection.
b)
Actions performed before contracting a supplier: checking the suppliers from the CSR point of
view (within the SG Group CSR exclusion lists – “CSR Watch List & CSR Exclusion Risk).
Actions performed while contracting and during the relationship with a supplier: since 2019, any
procurement act must comply with the principles and commitments included in the Sustainable Sourcing
Charter. The Charter sets out the Group’s sustainability commitments, obligations and expectations with
respect to its suppliers and thus procurement contracts include mandatory CSR clauses.
Since 2019, all contracts signed with the involvement of the ACH team, with a value> 50k, EUR, VAT
include the mandatory CSR clauses.
VII.
ENVIRONMENTAL AND SOCIAL FACTORS (E&S) - ENVIRONMENTAL AND SOCIAL RISK
ASSESSMENT STANDARDS
The ESG risk management framework reflects both the regulatory obligations to which the Group and the
Bank is subject and the voluntary commitments the Group has made on these issues. It is centred on the
Environmental and Social General Principles, the Transversal Statements and the E&S sector policies, as
well as on the internal procedures that enable their operational implementation. The Group has defined
(available here: environmental-and-social-general-guidelines-oct2016.pdf) and BRD applies Environmental
and Social General Principles which describe the standards and main principles of responsible E&S risk
management in all its banking and financial activities. The Sector Policies and Transversal Statements
define the standards that Société Générale intends to apply to sectors considered to be potentially sensitive
from an E&S point of view (such as oil and gas, the mining sector, etc.) and to certain sensitive issues (such
as biodiversity). They are drawn up by cross-functional working groups and approved by General
Management. They are public and can be accessed on the following link:
https://www.societegenerale.com/en/responsability/ethics -and-governance. ESG Risk factor management
is based on two complementary approaches:
- Management of risks linked to corporate client relations applicable at the time of entering into a
relationship, at the time of the periodic review or in situations relating to corporate client that may pose a
reputational risk of ESG origin to the Bank;
- Management of risks linked to dedicated transactions, products and services, for which the underlying
(specific assets, projects or activities) is identified by the Group. The result of the third-party assessment
will apply de facto to so-called “non-dedicated” transactions (general purpose, corporate finance) for which
the risk of is comparable to that of the third party.
The management of ESG risks associated with corporate client relations (in the perimeter) and dedicated
transactions (in the perimeter), products and services consists of three main steps:
(i) The research and identification of a potential ESG risk,
(ii) Detailed assessment of identified risks,
(iii) The action phase which includes the implementation of the identified risk mitigation where applicable,
the monitoring of the risk mitigation actions, which may be formalised by commitments, covenants or
restrictions, as well as controls.
The environmental or social risks of a company are generally related to i) its sector of activity, ii) the
vulnerability of the communities and iii) the environment in which it operates. BRD applies in its E&S
evaluations the Group's 10 environmental sectoral policies (to be noted updates occurred in 2023), some
of them from the perspective of climate change, as follows: i) thermal coal, ii) oil and gas, iii) thermal power
energy sector, iv) industrial agriculture and forestry, v) dams and hydroelectric power, vi) shipping, vii)
mining and viii) civil nuclear power, ix) tobacco, and x) defence and security.
In addition, certain instruments are used for the ESG analysis as follows:
• The E&S Exclusion List includes companies and countries with which the Bank does not want to
have a business relationship because, based on external information sources, it has been determined that
they do not meet the Exclusion criteria in the ESG Sectoral Policies or other ESG commitments of the
Group. If a company/ country of destination is present on the E&S Exclusion List, the PCRU will decide to
terminate the business relationship/entry into a relationship with the company or determine the necessary
measures to be implemented before engaging in an Action Plan for risk mitigation and implementation of
any restrictions (in certain exceptional cases arbitration might be possible). The E&S Exclusion list is
updated periodically (usually quarterly) to include other companies, business sectors or criteria, depending
on the evolution of the Group's commitments or new ESG incidents or potential negative opinions.
• E&S Identification lists: include companies, projects or types of activities (in certain regions or
worldwide) for which a potential ESG risk has been identified,
• Negative information / controversy databases-Important elements in the evaluation of a Client or a
dedicated transaction/ service are negative ESG information, which can be found in various public sources,
through various applications or tools available in the Bank (Dow Jones, Reprisk, etc).
• ESG Guidelines are internal documents aimed at facilitating the operational implementation of ESG
standards and instruments.
In 2020, BRD implemented an environmental and social risk assessment process for certain categories of
customers and transactions, a process approved by the Bank's management committee and which has
been enhanced yearly. The process is based on the principle of the 3 lines of defences. BRD takes into
account at onboarding of its clients and in its lending decisions related to corporate clients, environmental,
social and governance risks, applying in this sense the standards of Société Générale Group and other
international standards to which the latter has adhered. The assessment of the ESG risks associated with
corporate clients is performed for certain categories of clients, while the application of exclusion criteria
(dictated by specific activities), and refers to all clients of this type.
In 2023 the ESG risk management framework has been updated in BRD with application starting with
January 2024, as follows:
• the perimeter of evaluations - from currently EUR 50M T/O of a client to all non-retail clients, with
a Group approach and segregated on:
o individual assessment for clients/group of clients with a consolidated T/O> EUR 7.5M;
o portfolio assessment for clients/group of clients with a consolidated T/O < EUR 7.5M,
starting progressively, on a risk-based approach with the clients benefiting of lending products.
• enhances the accountability and responsibility roles in the process.
As part of ESG risks assessments, climate risk is considered and it includes physical and transition risks.
In accordance with the TCFD, the physical risk refers to acute risks (caused by one-off events) or chronic
risks (long-term changes) related to temperature, wind, water or solid waste. In the same manner, the
transition risk refers to the financial risks that could result from the process of migrating to a low-carbon
economy. Changes in policy, technology and physical risks could lead to a reassessment of the value of a
wide range of assets as costs and opportunities become apparent. We also consider the liability risk which
means the impact that could occur if parties who have suffered loss or damage due to the effects of climate
change seek compensation from those they hold liable. In line with the Société Générale Group's policy,
BRD has introduced in 2020 the calculation of a climate vulnerability index (CVI) that reflects the transition
risk associated with a client or group of clients, perimeter that has been extended further in 2022 (reducing
the applicable threshold). CVI is represented on a 7-step impact scale (high positive, moderate positive,
low positive, no impact, low negative, moderate negative and high negative), for certain following portfolios:
oil and gas, electricity generation, metals and mining , automobiles, shipping, aircraft. Thus, if and when
the case, the Bank is in a dialogue with its customers, especially with those classified moderately and high
negatively, on their climate vulnerability, in order to develop a strategy to mitigate the transition risk. In 2023
the methodology of this indicator has been changed, subject to an extension of perimeter (to all the sectors),
scope (clients) and tool to be used for its application. The process of extension of scope (physical risks,
biodiversity risks, transactions, assets etc.) will evolve in 2024.
Based on i) ESG public information (generally non-financial or sustainability reports) or collected through
the engagement with the clients in the scope of ESG risk assessments, ii) sustainability strategies or
commitments and iii) negative information of these nature, BRD performs corporate clients assessments in
terms of ESG risk. As part of customer relationship management, commercial teams continues the efforts
to integrate ESG topics into the dialogue with corporate customers. In some cases, based on the
recommendations included in SG's sectoral E&S policies, the commercial teams encourage customers to
adhere to various international standards applied by the Bank in its E&S evaluation process.
BRD as a lender, also performs for a defined perimeter, ESG assessments on certain transactions. The
scope of the ESG risk assessment related to transactions refers to those operations that fall within the
scope of the Equator Principles or certain categories of services for which the underlying asset is known
and raises certain environmental or social issues. In the case of transactions that fall under the "Equator
Principles" (PE), a systematic evaluation by an E&S expert is necessary. The classification of the
Transaction / services is based on the A-C categories, with projects underlying systematically subject to
review by an independent E&S consultant (acting on behalf of the lenders), if the projects are classified in
category A and, as the case may be, for projects in category B.
This process has been also subject to a review in 2023 and will continue in 2024.
Sustainable financing
Consistent with its purpose of accompanying its clients in their energy transition towards a more sustainable
future and as a result of reaching in advance its targets, in 2022, Societe Generale has reinforced its
commitments to contribute to sustainable finance with €300bn by 2025. As part of this commitment, BRD
aims to contribute to this collective endeavour with EUR 1bn sustainable finance transactions to be
concluded by the same date, as part of its Horizon 2025 program.
In its business relations with corporate clients, the Bank aims to identify the business opportunities with
positive impact deriving from the activity of its clients. BRD’s commercial offer includes green loans,
sustainable loans related to sustainability criteria, mediate green bonds, for different categories of asset
and transactions, based on recognized international standards, such as the LMA Principles of Green
Financing and the LMA Principles of loans related to sustainability criteria. It can also support the Société
Générale Group in issuing green bonds on the international market for clients in its portfolio. In 2022, BRD
enlarged the scope and definition of sustainable finance as to encompass all sorts of sustainable finance
instruments that could be made available to a corporate client.
BRD has transposed its medium term target on yearly objectives, through a dedicated action plan, on the
corporate side and aims for sustainable financing opportunities with an emphasis on energy efficiency and
energy transition, clean mobility, sustainable municipal projects, the circular economy, green buildings,
social inclusion, etc., based on a proactive approach.
Through various transactions, BRD originated and executed in 2023 a volume of sustainable financing of
EUR 327.3M on corporates and EUR 132M on retail, as an expression of its role to increasingly channel
the financing towards more sustainable activities. Also, as part of its mission to contribute to the increased
awareness on sustainability or ESG topics within its ecosystem of clients and partners, BRD had organized
specific actions and events, including the Climate Change Forum in Romania, with an audience of almost
1 million people across all channels.
Environmental impact of own activities
Responsibility to protect the environment goes beyond legal mandatory limits and represents a voluntary
commitment of the Bank, which aims to constantly reduce CO2 emissions coming from its own activities.
Such policy involves the control and improvement of its direct impact on the environment, in association
with its various stakeholders.
To measure environmental indicators (on an annual periodicity) BRD uses Planethic – an internal online
tool managed by Société Générale (which includes at least all consolidated entities of Société Générale
Group and also all companies that are more than 50% owned by SG Group).
Planethic Reporting measures indicators from 6 areas of interest for environment and uses multiple units
of measure:
o
Energy
o
Buildings Management system (number of buildings, number of occupants, surfaces and types of
surfaces – offices, sales offices, dining facilities, parking areas)
o
Paper
o
Transport
o
Waste
o
Water
The indicators (measured and reported by different departments in BRD) are centralized and processed
through the application, so that in the end a general indicator can be calculated for environment, which can
be expressed by the carbon footprint.
The data is used in order to determine the progress against the objectives regarding the reduction of the
emission resulted from our own activities. The target is to cut the emissions by 50% at the end of 2030,
compared to the level registered at the end of 2019. Our ambition is to reduce emissions by 50% by 2025
compared to 2019. We managed to achieve a 39% reduction in our own carbon footprint in 2023 compared
to 2019 and 18% compared to 2022.
BRD's energy management policy has also focused on the creation of an Energy Efficiency Cell and the
training and education of an Energy Manager. In order to prepare and train, a specific Energy Management
course was conducted and a specific certificate was obtained from the Ministry of Energy. Specialised
training was also carried out through the course Sustainable Real Estate: Creating a Better Built
Environment at the Cambridge Institute for Sustainability Leadership.
This year we managed to implement several energy efficiency projects through the Energy Efficiency
Management Cell as follows:
●
on 20 buildings)
●
o
◾
pump principle),
◾
coefficient of 5 (for 1KW of electricity consumed, it will produce 5KW of thermal
energy),
◾
o
◾
conventional boiler which has an efficiency of 85%.
◾
●
o
●
o
to reduce energy waste,
●
●
Indicator
Measurement unit
2019
2021
2022
2023
Total number of employees
employees
7 396
6 678
6 444
5,854
Total number of occupants
occupants
7 488
5 106
4 959
5 138
Occupied area m²
m
2
223 086
184 111
194 467
199 016
Electric energy
kWh
29 745 579
26 027 438
22 476 054
19 555 244
Out of which green electric energy
kWh
13 279 185
11 725 361
18 179 747
19 252 043
Gas
kWh
23 362 909
25 393 051
22 802 582
18 352 708
Thermal energy
kWh
2 963 749
2 627 524
1 975 362
1 536 173
Liquid fuel for heating and for
generators
kWh
590 971
533 557
697 521
529 474
Waste
tonnes
448
212
139
154
Distances travelled for business
purpose
Mil km
11
8,23
7,47
7.08
Distance travelled by plane
Mil km
1,7
0,03
0,26
0.6
Distance travelled by train
Mil km
0,03
0,001
0,01
0.025
Distance travelled by car
Mil km
9,3
8,2
7,2
7.08
Water consumption
Mil m
3
0,07
0,05
0,04
0.05
SCOPE 1
To CO2
5 905
5 941
5 406
4 561
SCOPE 2
To CO2
11 249
9 892
6 702
5 743
SCOPE 3
To CO2
2 917
3 422
2 924
2 006
SCOPE 1+2+3
To CO2
20 071
19 255
15 032
12 310
VIII.
RESPONSIBILITY FOR THE DEVELOPMENT OF THE ROMANIAN SOCIETY
BRD is about building the future by helping people bring to life their projects, their hopes and dreams.
Building future by helping companies grow and succeed. Building the future by helping communities grow
stronger.
People are the greatest agents of change and our mission is to empower each and every one who wants
to positively impact the future.
Besides being a bank, we are also a community investor, a supporter of projects and people that can move
Romania forward. We support creativity, innovation and performance, though several platforms and
programs.
Education, Technology & innovation
: We are a fan of the technology and we love tech creators. The
development of the society and a better future is not possible without innovation and technology. We
support the biggest robotic competition for High schools in Romania, BRD First Tech Challenge and several
tech accelerators and incubators, offering mentoring and financial support; we have a journalistic platform,
Mindcraft Stories in order to make science and technology popular and most of all, better understood.
Scoala9 is our editorial platform presenting ideas and solutions on how Romanian education can evolve.
We invest also in tech solutions for a better and more inclusive education for all children.
Culture & ideas
: Humanities are tremendous important in a more& more technologized word. We invest
in the new generation of creators, in art & music, hundreds of events and programs every year; we are the
only bank having a cultural foundation, Fundatia9, our own cultural centre and cultural magazine, one of
the most relevant pieces of journalism in today’s Romania. Our editorial platform Scena9 charts the cultural
scene in Romania. We bookmark cultural news, write about what is relevant, new, and yet to be discovered.
We watch the new generation of makers from the widest possible range of fields, follow their projects and
map their evolution. We seek to etch out the portrait of this new generation that makes our world go round.
Sport
: We love sports because they offer us a passionate journey, with beautiful moments, with heroes
who win, attract fans or, on the contrary, struggle with difficulties. We love sports because they teach us
every day how to start over when we encounter difficulties, how to work as a team, how to enjoy victories.
Whether it's confirmed athletes or young talents, BRD reaffirms its involvement in promoting sports in
Romania. Our brand ambassador is Cristina Neagu, the most important Romanian handball player of all
times, 4 times the best handball player in the world. She embodies the performance, the ambition of a
generation. But we also support the educational programs for young athletes and sport related projects for
disabled persons.
Nature capital, biodiversity & fight against Climate Change
: Climate Change is the most important
challenge of today world, and it will require creativity, innovation and resources in order to find solutions.
As a bank we want to be a leader in green financing, but we are aware that we all need to learn how to be
more sustainable. We initiated Climate Change Summit – with the ambition to become the most relevant
regional conference on solutions to climate change, bringing expertise from around the world and the
brightest minds from Romania.
Volunteering
: The 6000 people from BRD are a huge asset for the communities as well, and we are
embarking them in many causes, harvesting people’s skills and desire to contribute, create change and
value inside BRD and in the community. ZiuaV (V from volunteering but also from Value and from Future –
in Romanian) is probably one of the biggest corporate volunteering program. We have built a marketplace
for missions and our colleagues can choose where to contribute with time, skills, money or ideas and
energy.
IX. APPLICABLE LEGAL FRAMEWORK
BRD - Groupe Société Générale prepared this non-financial statement based on the specific provisions of
the Order of the Minister of Finance no. 1802/2014 (supplemented and amended) on requirements for the
Non-Financial Statement. The document also takes into consideration provision on Non-Financial
Statement from the NBR Order no. 7/2016 on amending and supplementing the Order of the National Bank
of Romania no. 27/2010 for the approval of the Accounting Regulations compliant with the International
Financial Reporting Standards, applicable to credit institutions, and of the Order of the National Bank of
Romania no. 6/2015 for the approval of the Accounting Regulations compliant with the European directives.
The information related to EU Regulation 852/2020 will be published in a separate report by 30
th
2024.
TRANSLATION
DECLARATION
Acting as directors of BRD - Groupe Société Générale SA, in accordance with
Article 30 of the
Accounting Law no. 82/1991 republished and with art 223, letter A,
paragraph 1 (c) of the ASF
Regulation no. 5/2018 on issuers of financial instruments and market operations,
responsibility for preparing the separate and consolidated financial statements for the year
ended December 31, 2023 and confirm , to the best of our knowledge, the following:
a) The accounting policies used in preparing the separate and consolidated financial
statements for the year ended December 31, 2023 are in accordance with accounting
regulations applicable to credit institutions , as per Order no. 27/2010 for approving the
Accounting Regulations in accordance with International Financial Reporting
Standards, applicable to credit institutions, issued by the National Bank of Romania,
with subsequent amendments;
b) The financial statements present a true and fair view of the financial position, financial
performance and other information related to the activity of BRD and its subsidiaries
included in the financial statements consolidation process;
c) BRD - Groupe Société Générale SA operates on a going concern basis;
d) The Board of Director’s Report on the financial statements mentioned above includes a
fair review of the development and performance of the Bank and Group, as well as a
description of the main specific risks and uncertainties.
Jean – Pierre Georges VIGROUX Maria ROUSSEVA
Chairman of the Board of Directors Chief Executive Officer