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02 Aug 2016

The main financial ratios of BRD-Groupe Société Générale as at June 30, 2016 at consolidated level, according to the International Financial Reporting Standards (IFRS):

The domestic loan market continues to grow moderately but unevenly across customer segments. Credit growth is still fuelled by demand from individuals while loans granted to companies have yet to return to consistent growth, in a macroeconomic environment marked by ongoing rise of private demand and negative inflation. The annual dynamics of deposits remains positive on both customer segments.

BRD Group’s net loan outstanding expanded by 1.7%* as compared to June 30, 2015 and by 3.1%* versus December 31, 2015 predominantly driven by housing loans and unsecured consumer loans on the retail segment, and ongoing growth on the large corporate clients segment.

Individuals’ net loans increased by 5.5%* compared to June 30, 2015 following the 19% rise in loan production, to RON 2.9bn. New loan volumes came especially from unsecured consumer loans (+25% versus H1-2015). In this context, market share on loans increased to 17.0% at May 31, 2016, by 0.3 percentage points up on an annual basis, according to the Bank’s internal calculations. The number of individual customers rose by 2.6% versus June 30, 2015, at constant methodology. Digital banking remained in focus: the stock of internet and mobile banking contracts (MyBRD Net and MyBRD Mobile) increased by 29% to 985,000 contracts at the end of June 2016.

The large clients’ net loan outstanding was up by 6.8%* versus June 30, 2015 and by 10.5%* versus December 31, 2015, reflecting BRD’s deep customer relationships on this segment in an environment marked by intense competitive pressure.

The deposit base expanded further on an annual basis (6.1%* higher versus June 30, 2015), sustained by the 29%* increase in deposits on current accounts. On the individuals’ segment, market share was 13.9% at May 31, 2016, up by 0.3 percentage points versus May 31, 2015, according to the Bank’s internal calculations.

The ratio of net loans to deposits was 70.7% (-3.0 percentage points versus June 30, 2015 and +3.6 percentage points up versus December 31, 2015).

BRD Group’s net banking income amounted to RON 1,434 million, up by 12.9% compared to H1-2015 thanks to increases across all the main categories. Net interest income was higher by 6.8% thanks to positive volume, structure and interest rate effects. Net fees and commissions were up by 3.4% due to revenue growth on card activity, internet and mobile banking and insurance. Other banking income included non-recurring items of RON 121 million in connection to the sale of the VISA Europe participation and gains on the sale of Government bonds and fund units. Excluding these elements, net banking income increased by 5.1%.

Sustained cost discipline remained in focus: operating costs** were reduced by 2.1% to RON 705 million, as a result of lower contributions to the Deposit Guarantee Fund and the Resolution Fund and savings on real estate costs and sundry expenses.

Consequently, gross operating income marked a significant increase of 32.7% and 15.0% excluding non-recurring items, while the cost/income ratio declined to 49.2%, by 7.6 pts on a yearly basis.

Non-performing loans ratio declined following write-off transactions, to 14.4% from 18.6% as of June 30, 2015. The coverage of non-performing loans with IFRS provisions increased from 72.8% at June 30, 2015 to 85.1% at June 30, 2016.

In this context, BRD Group generated a substantial increase in profitability in the first half of the year: the net result stood at RON 381 million in H1-2016, up by 63.5% compared to H1-2015, leading to a return on equity of 12.1% compared to 8.0% in H1-2015. Excluding non-recurring elements, net profit rose significantly, by 29.6%.

BRD maintained a robust solvency ratio, comfortably exceeding regulatory requirements. The capital adequacy ratio was 19.1% at individual level (under Basel 3 regulations, with national discretions) at June 30, 2016, versus 16.3% at June 30, 2015.

“Thanks to the successful roll out of its universal bank development strategy, the bank delivered a solid operational and financial performance in the first half of the year. Individual customers and large clients segments provided further confirmation of their growth potential, and in spite of the low interest rates, net banking revenues continued to progress markedly, allowing us to look with confidence to the future”, said Philippe Lhotte, BRD CEO.

BRD financial results for the six months ended June 30, 2016 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 financial statements as of June 30, 2016 include the impact of IFRIC 21 - Levies, whereby the annual contributions to the Bank Deposit Guarantee Fund and to the Resolution Fund were booked in one tranche in the first quarter. The financial statements as of June 30, 2015 were restated accordingly, for comparison purposes.

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 818 units. BRD has a leading position on the card market with approx. 2.2m cards and a network acceptance of more than 26,000 POS and 1,500 ATMs. With factoring operations of EUR 921m in 2015, BRD is the leader of the factoring market. Total assets of the Bank at June 30, 2016 end amounted to RON 48.4 bn.

BRD is part of the Société Générale Group, one of the largest European financial services groups. The group has 145,000 employees in 66 countries and 31 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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