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BRD group results for 2015: net profit of ron 467 million, intensified commercial activity

10 Feb 2016

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

Net profit of RON 467 million in 2015, compared to RON 68 million in 2014, thanks to further decline of risk cost (-45.8%) and reduction of operating expenses (-2.3%)
Confirmed increase in quarterly revenues throughout 2015: net banking income up by approximately 2% quarter-to-quarter since Q1-2015 thanks to improving net interest margin
Net banking income for 2015 affected by low interest rate environment (-4.4% versus 2014)
Lower non-performing loans ratio, at 17.1% versus 20.3% at December 31, 2014 following write-off operations
Intensified commercial activity on individuals’ segment: growing number of active customers (+14k to 2.1 million), higher loan production (+22% year-on-year), increase in deposit market share (by +0.6 pts to 13.8%) and larger stock of internet & mobile banking contracts (+40% year-on-year)

On the Romanian market, lending activity showed first signs of recovery in 2015 in a favorable economic environment. The increase of individuals’ outstanding loans was supported by RON-denominated housing credit and consumer loans. Gross loans to companies started to stabilize in a context of improving investments. Individuals and companies continue to show a prudent savings behavior, as total deposits were up by 8.1%* since December 31, 2014.

BRD Group’s net loans outstanding were quasi stable (-0.6%* as of December 31, 2015 since December 31, 2014) with positive evolution on retail and large corporate clients. Housing loans were the main growth driver on retail, increasing by 12.7%* in terms of net outstanding and by 49.7% in terms of loan production.

Individuals’ 2015 total loan production reached RON 5.0bn, up by 21.8% versus 2014. BRD also achieved an increase in the number of active individual customers by 14k to 2.1 million (+40k clients at constant methodology) thanks to dynamic commercial activity. The stock of individual internet and mobile banking contracts (MyBRD Net and MyBRD Mobile, respectively) increased by 40.1% to almost 0.9 million contracts.

The large clients’ net loans outstanding increased by 9.2%*. In a context of increased competition especially taking into account the ample liquidity in the banking sector, BRD reinforced its leading position on sectors such as energy, retail and Information Technology and Communications.

Deposits continued to increase faster than the market, by 13.9%* versus December 31, 2014 with an important rise in deposits on current accounts (+52.0%* year-on-year). Total deposit market share increased by 0.5 percentage points to 14.8% (13.8% on individuals’ segment and 15.9% on companies’ segment), according to the Bank’s internal calculations. In addition, BRD AM’s assets under management increased by 30.9% reaching RON 2.9 billion at December 31, 2015.

The ratio of net loans to deposits was 66.4% (-9.6 pts versus December 31, 2014).

The shift to growth of revenues was confirmed by the sequential increase of net banking income in the last three quarters (by circa 2% each quarter) thanks to reduction in cost of funding and growth of retail portfolio. Net banking income decreased in 2015 by 4.4% compared to 2014 to RON 2,507 million, as a result of historically low interest rates and suppression or reduction of some fees and commissions for individual customers.

Operating costs were reduced by 2.3% to RON 1,297 million compared to 2014, primarily as a result of savings on real estate costs, consultancy expenses and staff expenses. The cost/income ratio stood at 51.7%.

BRD Group reduced the non-performing loans ratio (including net financial lease receivables) from 20.3% as of December 31, 2014 to 17.1% as of December 31, 2015, mainly as a result of write-off transactions. The coverage of non-performing loans with IFRS provisions increased from 71.1% at December 31, 2014 to 76.6% at December 31, 2015. The decline of net cost of risk (- 45.8% versus the previous year) led to the rise in net profit in 2015 versus 2014.

In this context, BRD Group registered a net profit of RON 467 million in 2015, 6.9 times above the 2014 amount, resulting into ROE at 7.8%.

BRD’s capital adequacy ratio of 17.3% at individual level (under Basel 3 regulations, with national discretions) at December 31, 2015 is well above the regulatory requirement and compares to 17.2% at December 31, 2014.

“The year 2015 was marked by a positive trend on two important business lines - retail and large corporate clients and the shift to sequential growth of quarterly revenues. Going forward, BRD will continue to capture lending growth opportunities and to help finance the economy by leveraging on its universal bank model, diversified customer base and solid financing sources”, said Philippe Lhotte, BRD CEO.

BRD Group preliminary financial results for the year ended December 31, 2015 are available to the public and investors on the website of the bank: www.brd.ro from 09h00 onwards. 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
Note: Banking system information as of December 31, 2015 is preliminary.

BRD-Groupe Société Générale is the second bank in Romania considering the total assets’ volume. BRD - Groupe Société Générale has 2.2 million active customers and operates a network of 829 units. BRD has a leading position on the card market with approx. 2.2m cards and a network acceptance of approx. 26,000 POS and 1,500 ATMs. With factoring operations of EUR 960m in 2014, BRD is the leader of the factoring market. Total assets of the bank at December 2015 end amounted to RON 49.2 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 30 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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BRD group results for 2015: net profit of ron 467 million, intensified commercial activity