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06 May 2021

The main commercial trends and financial indicators of BRD Groupe Société Générale at March 31, 2021 at consolidated level, according to the International Financial Reporting Standards (IFRS):

- Dynamic activity:

- Resilient revenues despite lower interest rate environment, RON 759 million net banking income in Q1 2021 (vs. RON 767 million in Q1 2020)

- Strong cost discipline, without compromising on investments in strategic digital roadmap

- Low NPL ratio, Net cost of risk at 55 bps

- Net profit of RON 222 million (vs. RON 241 million in Q1 2020)

“ The Romanian economy performed above expectations in the fourth quarter of 2020, driving the annual GDP to a less pronounced decrease than initially estimated.

On the sanitary front, the vaccination campaign is progressing, laying out the premises for a controlled health situation. If the direct effects of the pandemic diminish and, at the same time, a smooth transition to neutralized support measures is ensured, 2021 is likely to be a better year for the Romanian economy.

Despite the restrictive measures still in place to contain a third wave of the pandemic, BRD had a strong start of the year.

The individuals’ loan production was significantly up and corporate lending was fueled by very dynamic SME financing. We also granted the largest green loan in Romania to date, a testament to our ambition to contribute to the development of a more sustainable world.

In parallel, digital adoption continued to accelerate, with a +22% yearly increase in the number of customers actively using remote channels.

As such, BRD delivered in the first three months of the year a performance proving the adaptability of its business model and the adequacy of the actions taken in response to the crisis. The NBI was resilient despite significantly decreasing market interest rates, while costs were strictly controlled without compromising on strategic investments.

With its strong fundamentals, BRD is in full capacity to continue to support its customers and the recovery of the Romanian economy”, said François Bloch, CEO of BRD Groupe Société Générale.


Dynamic commercial activity

The individuals’ loans production was up by +9% YoY, building on both consumer loans’ steep increase (+19%) and new housing loans outside governmental programs (as Noua Casa envelope remained unavailable until quarter end). Corporate loan portfolio advanced by a robust +7.8% versus March 2020 end, driven by a very dynamic SME financing activity (+19.4% YoY, including leasing). Materializing its expertise and strong commitment for sustainable and positive impact financing, BRD structured the most important green loan granted so far in Romania, worth RON 1.25 billion.

Retail deposits’ annual growth reached +10.1% YoY, still benefiting from the strong savings’ propensity triggered by the prolonged pandemic. Corporate deposits solidly advanced (+ 8.1% YoY), mainly on a double digit increase of SMEs resources (+11.2% YoY). In parallel, a strong recovery pace is visible in asset management activity, with assets under management reaching RON 4.61 billion at March 2021 end, increasing by 27% YoY and driving the market share to 19.4%* (+1.5 ppts y/y). Moreover, BRD intermediated 53% of the third Romanian government bond issuance for individuals under Fidelis program.

The accelerated digital adoption is reflected by the strongly increasing number of internet and mobile banking unique active users (to 763k at March 2021 end, up by +22% YoY), and the fast growing number of transactions via electronic channels, +45% YoY in Q1 2021. Digital penetration on corporate clients’ segment reached a very high level, with 99% of large corporate and 96% of SMEs transactions performed via digital channels.


Resilient financial performance

BRD Group net banking income printed at RON 759 million in Q1 2021, quasi-stable compared to Q1 2020 level (-1.0% YoY from RON 767 million in Q1 2020). Net interest income decreased by 7.4% YoY in Q1 2021, impacted by the lower market rates in the first quarter of the year (average ROBOR 3M in Q1 2021 at 1.65% vs. 3.03% in Q1 2020).

The pressure on net interest income was compensated by a better performance of net fees and commissions and other banking revenues. Net fees and commissions registered a +1.3% YoY advance compared to Q1 2020, supported by a higher contribution from capital market activities and increased transactional activity. The normalization of the market context (as compared to the very adverse one in March 2020) translated into improved trading revenues and positive revaluation effects, positively influencing the evolution of other income.

Operating expenses totaled RON 438 million in Q1 2021, +1.9% excluding the higher contribution to Deposit Guarantee and Resolution Fund (RON 49.4 million, recognized in full in Q1 2021, compared to RON 43.3 million in 2020). Staff expenses were reduced by -5.1% YoY in Q1 2021, as a result of increased automation and productivity gains. Non staff expenses were driven by the acceleration of investments in digital transformation and the extraordinary sanitary costs, while other expenditures remained under strict control.

The quality of the loan book remained solid in Q1 2021, as reflected by the low NPL ratio (Bank level, non-performing loans, according to EBA definition), reaching 3.3% at March 2021 end, stable compared to March 2020 end. The net cost of risk reached 55 bps in Q1 2021, mainly relating to retail portfolios, while the NPL provision coverage was maintained at a high level (73.3%, at March 2021 end, at Bank level).

Embedding all the above, BRD Group net profit reached RON 222 million in Q1 2021 vs. RON 241 million in Q1 2020. Return on equity stood at a high single digit level (9% in Q1 2021 end vs 11.8% in Q1 2020 end, the decrease being largely triggered by the higher capital base).

The solvency ratio is elevated, reaching 31.6% at March 31, 2021 (BRD standalone), compared to 22.6% at March 31, 2020, as a result of incorporation of 2020 profit (net of dividends according to GSM resolution, strongly limited this year in compliance with the strict regulatory restriction), increased reserves from revaluation of debt instruments and decrease of capital requirements mainly driven by the temporary risk weight relief for sovereign debt issued in the currency of another Member State (implemented through Regulation EU 2020/873 as regards certain adjustments in response to the COVID-19 pandemic).

BRD financial results for three months ended March 31, 2021 are available to the public and investors on the website of the bank: beginning with 09h00. Copies of the documents can also be obtained upon request, free of charge, at the head office of BRD-Groupe Société Générale, located at 1-7, Ion Mihalache Bd., 1st district, Bucharest.

(*) Market share on open-end mutual funds market

Note: If not stated otherwise, all variations are vs. Q1 2020 (for income statement related items) or March 2020 end (for balance sheet related items)

NCR in bps, NPL and coverage ratio, at Bank level

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