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BRD 9 months 2014 Financial Results: Enhanced Operational Efficiency And Reinforced Non-Performing Loans’ Coverage With Provisions

05 Nov 2014

Further enhanced operational efficiency: operating expenses’ decrease by 4.2% in the first 9 months 2014;
Comfortable capital adequacy ratio at 17%, under Basel III;
Reduced loans/deposits ratio: 80.4% as of September 30, 2014 (vs 87.7% as of September 30, 2013);
Reduced NPL ratio and improved non-performing loans’ coverage with provisions vs December 2013;
Net profit of RON 20 million

During the first 9 months of 2014 the gross loans in the Romanian banking system remained on a descending
slope (-3.7% yoy), mostly due to negative evolution of the corporate segment, while deposits continued to
grow (+5.1% yoy).

BRD outstanding amount of individuals’ gross loans reached RON 17.0 billion, slightly decreasing overall;
nevertheless the increasing consumer loans’ production in 2014 slowed down the contraction of the
outstanding amounts (-4.7% compared to December 31, 2013 vs -6.3% for the banking system), while the
housing loans’ outstanding increased by 3.8% over the same period. The corporate lending activity was
marked by a gross volume decline of 7.3% yoy to RON 15.1 billion, mostly due to material write-off operations
of non-performing loans, but also to low credit demand.

Deposits remained stable over the last 12 months with a positive evolution of individuals’ deposits’ (+7.1% vs
September 2013). In this context, the net loans to deposits ratio reached 80.4% as of September 2014 (vs
87.7% as of September 2013).

Net banking income decreased by 8.8% compared to similar period of 2013, mostly due to net margin
affected by adverse volume and structure effects. The net fees and commissions remained resilient compared
to 9 months 2013 (+0.3%), benefiting from BRD leadership position on custodian services and IPOs
intermediation. Over the last three quarters, the net banking income registered a stabilization.

The Bank continued to keep the operating expenses under a strict control with costs decreasing by 4.2% in
the first 9 months of 2014, compared with the similar period of 2013. The cost to income ratio for 9 months
2014 stood at 48.4%.

Non-performing loans (“NPLs”) ratio according to IFRS decreased to 21.1% as at September 2014 vs 24.8%
as at December 2013, while the NPLs ratio according to the central bank definition (loans more than 90 day
overdue and/or under legal procedures) was 18.2% as at September 2014 vs 21.8% as at December 2013.
The NPLs ratio evolution is due to the implementation of a new write-off policy and is in line with the trend
observed for the banking system.

The net cost of risk decreased by 8.6% in the first 9 months from 2014, while the bank concentrated in Q3-14
on additional provisioning related mainly to insolvency portfolio. Thus the IFRS NPLs coverage with provisions
has improved to 71.5% as at September 2014 (vs 68.9% as at December 2013).

The Bank capitalization stands at a very comfortable level with a capital adequacy ratio of 17.1%, under Basel
III regulations.

“The first nine months of 2014 marked an important step in the transformation process of BRD, which
continued its investments to the benefit of the quality of service, the reinforcement of its risk set-up, and the
enhancement of its operational efficiency. Our strengthened balance sheet structure gives us the capacity to
significantly increase our loan portflolio, as soon as demand will prove more vibrant”, said Philippe Lhotte,
BRD Chairman and CEO.

The interim report is available to 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.

Figures are at stand alone level, according to the International Financial Reporting Standards (IFRS).

BRD-Groupe Société Générale is the second bank in Romania in terms of assets and the no. 1 bank in the Romanian syndicated loans
market. BRD - Groupe Société Générale has around 2.2 million customers and operates a network of approximately 870 branches. With
approx 2.3 million valid cards and a network acceptance over 24,000 POS, and 1,500 ATMs, BRD is no. 1 on the Romanian card
market. With factoring operations of EUR 918 million in 2013, BRD is the leader of the Romanian factoring market.

BRD is part of Société Générale Group, one of the largest European financial services groups. The group has 148,000 employees in 76
countries and 32 million customers worldwide in its three key activities:
· Retail banking in France
· International retail banking, financial services and insurance
· Corporate & Investment banking, private banking, asset management and investor services

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BRD 9 months 2014 Financial Results: Enhanced Operational Efficiency And Reinforced Non-Performing Loans’ Coverage With Provisions