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BRD Group Q1-2015 results: Significant improvement in profitability

04 May 2015

The main financial ratios of BRD-Groupe Société Générale as at March 31, 2015 at consolidated level, unless otherwise stated, according to the International Financial Reporting Standards (IFRS):

As of March 2015, gross loans in the Romanian banking system continued their decline on an annual basis in spite of the accommodative monetary policy (-2.1%* against March 2014) but showed a timid increase of 0.8%* against December 2014 sustained by housing loans. Deposits declined by 2.2%* against December 2014 as a result of a decrease on the companies’ segment, and increased by 6.7%* against March 2014, with both households and companies displaying positive evolutions.

BRD Group’s outstanding net loans to the retail segment reached RON 17.2bn, quasi stable* against December 2014, with a slightly positive evolution on the individuals’ segment. Net loans to individuals amounted to RON 16.5bn, +0.3%* against December 2014 and +0.4%* against March 2014, pushed up by housing loans. The Prima Casa loan production advanced strongly, by 40% in Q1-2015 against Q1-2014. The volume of net non-retail loans was RON 9.2bn, -0.9%* against December 2014 as companies continued to restrict their investments. In spite of strong competition, net loans on the large corporate segment advanced by 1.3%* against December 2014.

Deposits grew by 3.8%* versus March 2014 and were relatively stable against December 2014 at RON 35.9bn, with a positive evolution on the households’ segment (+11.0%* against March 2014 and +4.4%* against December 2014) which continued to outperform the market growth rate. Given its large deposits base, BRD is well positioned for a meaningful recovery in credit activity. With a net loans to deposits ratio of 74% at March 2015 end (-7pts against March 2014 end and -1pt against December 2014 end), BRD further consolidated its degree of financial autonomy.

Net banking income declined by 4.3% compared to Q1-2014, negatively affected by pressure on interest income. This evolution was caused by negative interest rate effect and lower volumes of loans on the non-retail segment. Non-interest income increased, influenced by higher net gains from derivatives, custody, asset management and available-for-sale instruments.

Operating expenses increased slightly compared to Q1-2014, with further cost containment in real-estate and communication areas and lower depreciation & amortization expenses. The cost/income ratio stood at 53.5%.

BRD reduced its non-performing loans (NPLs) ratio from 25% at March 2014 to 20% at March 2015, reflecting write-offs and NPL sale transactions. After the write-off operation performed in December 2014, the NPL ratio remained stable versus the year-end. The coverage of NPLs with provisions was consolidated from 71% at March 2014 end to 73% at March 2015 end. Net cost of risk declined by 54.5% against Q1-2014, both the retail and non-retail segments registering significant improvements.

BRD continues to be well capitalized with a capital adequacy ratio of 17.6% on a standalone basis (under Basel III regulations) versus 17.2% in December 2014 and 15.6% in March 2014, well above the regulatory requirement.

“In 2014, BRD managed to significantly upgrade both its risk profile and its operational efficiency. In Q1-2015, our bank reaped the benefit of these efforts, and returned to a material level of profitability. Looking at the future, BRD Group will continue to progress in the implementation of its strategy focused on customer satisfaction enhancement and innovation, with the conviction that it will lead our activities to the path of lasting growth.” said Philippe Lhotte, BRD CEO.

BRD quarterly financial results as of Q1 -2015 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.

(*) Variations at constant foreign exchange rate
(**) The Retail segment includes Individuals, Professionals, Small Associations and Small Business (companies with turnover of less than EUR 1m and exposure of less than EUR 0.3m).

BRD-Groupe Société Générale is the second bank in Romania considering the total assets’ volume. BRD - Groupe Société Générale has 2.2 million customers and operates a network of 861 units. With around 2.2m valid cards and a network acceptance over 25,000 POS, and 1,500 ATMs, BRD is no. 1 on the Romanian card market. With factoring operations of EUR 960m in 2014, BRD is the leader of the factoring market. Total assets of the Bank as at March 2015 amounted to RON 45.8 bn.

BRD is part of the 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 and investment banking, private banking, asset management and securities services

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