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BRD GROUP RESULTS FOR Q1 2023: INTENSE LENDING, SUPPORTING CUSTOMERS AND THE ROMANIAN ECONOMY FINANCIAL PERFORMANCE STANDING HIGH

12 May 2023

Press release
Bucharest, May 12th , 2023

Main commercial trends and financial indicators of BRD Groupe Société Générale at March 31, 2023 at consolidated level, according to the International Financial Reporting Standards (IFRS):
- Strong growth of financing projects of our individuals and business customers

impressive result on corporate outstanding loans (+28.8% YoY), underpinned by both SME (+30.4% YoY) and large corporate (+28.0% YoY)
active support for SMEs under IMM Invest Plus program, with the value of new loans granted reaching RON 825m in Q1 2023, four times higher vs Q1 2022
very robust performance in leasing financing (+15.8% YoY)
leading to a +11.2% YoY increase in the stock of loans at March 2023 end

- Solid and diversified savings base

large corporate deposits, +22.4% YoY at March 2023 end
retail deposits, +3.6% YoY at March 2023 end

- Enhanced digital journey and further increasing digital adoption

new features added to You BRD mobile application
1.16 m users of You BRD, as of March 2023 end, up by +42% YoY
65% of deposits and 90% of savings accounts, opened directly in YouBRD, in Q1 2023

- Strong financial performance

very dynamic revenues and below inflation costs’ increase
high quality of the loan book with limited risk costs and sound level of risk indicators
net profit RON 342 million, up +30% YoY and ROE at 19%, in Q1 2023

“During the first three months of the year, BRD continued to be an active partner for its customers and the Romanian economy. Lending activity maintained its upward trend, with outstanding growth of financing volumes on corporate segments, both on SMEs and top corporates, building on a strong sectorial expertise, being also underpinned by the participation in IMM Invest program. On retail, lending activity was resilient, in an overall slowing down market, with a still high amount of new loans granted to individuals. BRD is highly committed to contribute materially to a greener economy, with a total volume of new transactions supporting sustainability transitions of RON 1.16 billion in the first quarter of the year. Moreover, BRD plays efficiently its role in financial intermediation by achieving significant distribution of Fidelis program, which contributes to the funding of Romanian state budget while offering individual clients the opportunity to extend their investment universe.

This dynamic commercial performance was accompanied by growing maturity of digital app, offering enhanced features for increasing number of users, contributing to customer satisfaction, as recognized through an improved store rating reaching 4.5.

First quarter financial results reflected the strong momentum, with high growth of revenues while operating expenses evolution was contained visibly below inflation level. Cost of risk was very limited, while risk indicators remained at sound levels, reflecting the high quality of assets. All of these translated into high profitability, with net result increasing by 30% and ROE reaching 19% in the first quarter of the year.

With its forceful profile, BRD further continues its journey as a reliable and relevant partner for its customers and for the Romanian economy“, said François Bloch, CEO of BRD Groupe Société Générale.

Dynamic commercial momentum

Net loans outstanding (including leasing) reached RON 38.7 billion, strongly increasing by 11.2% versus March 31, 2022, sustained by an intense lending activity on corporate segment, while on retail segment, production remained resilient despite a softer market dynamic.

On retail, net loans outstanding was up 2.8% YoY, underpinned by both individuals and small business. Individuals’ loan production reached near RON 1.6 billion in Q1 2023, a resilient level despite reduced demand on housing amid elevated borrowing costs and uncertain environment, while consumer loans production was on an upward trend during the first three months of the year. Small business segment posted a strong growth of +19.8% YoY.

Lending activity to corporate segment delivered an impressive result (+28.8% YoY), building on an excellent momentum on both SME segment (+30.4% YoY) and large companies (+28.0% YoY). BRD continued to be actively engaged in governmental programs dedicated to SMEs and offered support for more than 750 SMEs under IMM Invest Plus program during the first quarter of the year, with the value of new loans granted reaching RON 825 million in Q1 2023, four times higher compared to the same period of last year.

Deposits to customers reached RON 55.6 billion, growing by 4.2% on an annual basis, mainly as a result of higher inflows in term deposits from individuals and increase of RON denominated resources from large corporates, in a context of elevated and competitive remuneration rates. Also, BRD continued to be a very active participant in the Fidelis government bonds issuance for individuals held in 2023, with a 42% average market share and a total value subscribed of around RON 1.3 billion.
The digital adoption further increased, as reflected by the higher number of users of the mobile application, You BRD, reaching 1.16 million as of March 31, 2023, up by 42% compared to the same period of last year. In addition, more and more clients choose the application for opening deposits or saving accounts, thus, 65% of deposits and 90% of saving accounts were opened directly in You BRD, during the first quarter. Regarding its functionalities, the mobile application is continuously enriched, with the in-app rating and simplified home screen being the latest features going live in the first quarter. Store ratings of the mobile application increased to 4.5 on average, as of March 2023 end, reflecting that our continued relentless efforts to enhance our customers’ digital journey fit clients’ needs and are highly appreciated.

Very good start of the year with a record Q1 revenues’ performance
BRD Group total revenues reached RON 935 million compared to RON 810 million, increasing by +15.5% compared to Q1 2022. The performance was sustained by the higher net interest income and continued excellent momentum on financial markets. Building on growing volumes, with +11.2% YoY expansion in outstanding loans, magnified also by elevated interest rates, net interest income recorded a strong increase, of +20.6% YoY. Net fees and commissions stepped back (-4.3% YoY), on lower fees from cards activity as a result of increasing penetration of packages (embedding more services for free) and Q1 2022 base effect linked to increased cash withdrawals for private individuals customers induced by concerns given the outbreak of the war in Ukraine. Other revenues marked +26% YoY advance with a large contribution from a favorable trading activity.

Operating expenses totaled RON 508 million compared to RON 460 million in Q1 2022. The pressure of double-digit inflation is high, but costs’ increase (+10.5% YoY) was contained below inflation level, amid rigorous costs’ management. Staff expenses’ increase, of +9.1% YoY, reflects the price effect of higher wage and other benefits adjustments, in a competitive and tight labor market. Other expenses’ advance incorporates a higher cumulated contribution to Deposit Guarantee and Resolution Funds (RON 75.8 million, booked in Q1 2023, compared to RON 69.2 million in 2022), higher expenses with external services providers and increase of IT&C related costs, supporting strategic projects delivery.

Overall operating performance printed high in the first three months of the year, with gross operating income increasing by +22.2% YoY to RON 427 million compared to RON 350 million in Q1 2022. The positive jaws effect translated into reduced cost to income ratio, to 46.2% in Q1 2023 from 48.3% in Q1 2022, if excluding the cumulated contributions to Deposit Guarantee and Resolution Funds.

Cost of risk was limited to a net charge of RON 9m vs. RON 32m in Q1 2022, on the back of stable portfolio evolution and good recovery performance. The NPL ratio shows a marginal increase compared with previous quarter reaching 2.6%, remaining below the March 2022 level of 2.7%. Coverage ratio continues to stand high (77.4% at March 2023 vs 76.5% at March 2022). These sound indicators’ levels reflect a very good quality of the loan book.

All the above translated into a high level of profitability, with BRD Group net profit amounted RON 342 million in Q1 2023 compared to RON 263 million in Q1 2022, up by +30% on a yearly basis and ROE reached 19% during the first quarter of the year.

BRD total capital ratio stood at 21.9% (compared to 21.5% as of March 2022 end) and Tier 1 capital ratio at 18% as of March 2023 end, reflecting a strong capital position.

BRD financial results for three months ended March 31, 2023 are available to the public and investors on the website of the bank: www.brd.ro 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.

Note: If not stated otherwise, all variations are vs. Q1 2022 (for income statement related items) or March 2022 end (for balance sheet related items)
NPL and coverage ratio are at bank level
Total capital ratio is preliminary. Own funds include 2022 net profit and the full impact of negative OCI reserve (without the OCI quick fix adjustment). Starting 1st of Jan 2023 the quick-fix adjustment applied for the recognition of OCI reserve in own funds ceased its validity.

BRD - Groupe Société Générale operates a network of 451 units. Total assets of the bank reached RON 70.5bn at Mar 2023 end.
BRD is part of the Société Générale Group, one of the largest European financial services groups. The group has 117,000 employees in 66 countries and 25 million customers worldwide in its three key activities:
•   French retail banking
•   International Retail Banking, Insurance and Financial Services to Corporates
•   Global Banking and Investor Solutions

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BRD GROUP RESULTS FOR Q1 2023: INTENSE LENDING, SUPPORTING CUSTOMERS AND THE ROMANIAN ECONOMY FINANCIAL PERFORMANCE STANDING HIGH

Press release Bucharest, May 12th , 2023

Main commercial trends and financial indicators of BRD Groupe Société Générale at March 31, 2023 at consolidated level, according to the International Financial Reporting Standards (IFRS): - Strong growth of financing projects of our individuals and business customers

impressive result on corporate outstanding loans (+28.8% YoY), underpinned by both SME (+30.4% YoY) and large corporate (+28.0% YoY)

active support for SMEs under IMM Invest Plus program, with the value of new loans granted reaching RON 825m in Q1 2023, four times higher vs Q1 2022

very robust performance in leasing financing (+15.8% YoY)

leading to a +11.2% YoY increase in the stock of loans at March 2023 end

- Solid and diversified savings base

large corporate deposits, +22.4% YoY at March 2023 end

retail deposits, +3.6% YoY at March 2023 end

- Enhanced digital journey and further increasing digital adoption

new features added to You BRD mobile application

1.16 m users of You BRD, as of March 2023 end, up by +42% YoY

65% of deposits and 90% of savings accounts, opened directly in YouBRD, in Q1 2023

- Strong financial performance

very dynamic revenues and below inflation costs’ increase

high quality of the loan book with limited risk costs and sound level of risk indicators

net profit RON 342 million, up +30% YoY and ROE at 19%, in Q1 2023

Press release
Bucharest, May 12th , 2023

Main commercial trends and financial indicators of BRD Groupe Société Générale at March 31, 2023 at consolidated level, according to the International Financial Reporting Standards (IFRS):
- Strong growth of financing projects of our individuals and business customers