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BRD GROUP RESULTS FOR 9M 2022: A STRONG CREDIT ACTIVITY, SUPPORTING THE ROMANIAN ECONOMY
November 04, 2022
Main business trends and financial indicators of BRD Groupe Societe Generale as of September 30, 2022 at consolidated level, according to International Financial Reporting Standards (IFRS):
– Intense lending activity at all levels
the production of new housing loans continued to show double-digit growth (+21% year-on-year), while consumer loans reflected the slowdown in the market
a remarkable performance in corporate loans (+30.9% YoY) built on both excellent activity in the SME segment (+49.5% YoY) and on an acceleration in the growth of loans to large companies (+ 22.4% YoY)
government programs also supported lending momentum, with RON 1.4 billion in loans approved in the first half of 2022 (IMM Invest program ended in June 2022)
rental activity maintained at a high level, showing a +12% year-on-year increase in the portfolio
Leading to an increase of +11.5% year-on-year in the stock of loans at the end of September 2022
– Delivery of new products with high added value, milestones of the digital roadmap
100% online credit card issuance flow now available on BRD website and via You BRD
instant payments available for individuals, 24/7, in You BRD
– Strong performance across all revenue categories
continuation of the upward trend in the MNI (+12.2% over one year), based on both a positive volume effect and the rise in interest rates, while significantly increasing the remuneration of deposits collected , for the benefit of our customers
management fees show moderate growth in a context marked by inflation, thanks to rigorous spending discipline (+5% over one year, excluding contribution to the resolution and deposit guarantee funds)
credit risk indicators remain at healthy levels (NPL ratio 2.6%, NPL coverage ratio 78%, at the end of September 2022)
Net profit of RON 1,016 million (+10.3% YoY); ROE close to 17% over 9M 2022
“During the first nine months of 2022, BRD delivered robust performance across the board, despite the challenging macroeconomic backdrop.
Credit dynamics remained at high levels. The financing of real estate loans to individuals progressed further, with growth of 21% in new production. Market share in new consumer loans held up well in a slowing market after a record year in 2021. Business financing achieved a remarkable performance (+31% year-on-year) supported by its two pillars, with exceptional growth in loans to SMEs and large companies alike. BRD has been actively involved in government programs to support the economy, with approved loans of RON 1.4 billion for the first half of 2022 (the IMM Invest program was no longer operational after June). Support will continue under the new IMM Invest Plus program which started in October 2022.
Always guided by the desire to improve the experience of our customers, we have reinforced our digital offer, allowing access to the complete issuance of credit cards online and to instant payments.
BRD launched the Climate Change Summit, the first summit in Romania dedicated to climate change, a CEE forum bringing together climate leaders and experts to discuss solutions for a sustainable future and build the momentum needed to be part of the transformation. The summit recorded an audience of nearly one million people across all channels.
Based on a dynamic and diversified commercial activity, the BRD achieved a solid financial performance during the first nine months. Net banking income is higher than the overall dynamics of volumes and the rise in market rates, while integrating the significantly increased remuneration of our customers’ deposits. Despite significant inflationary pressure, the increase in operating expenses was tempered by tight spending discipline. The cost of risk is well controlled, confirming the solidity of the portfolio. The BRD thus achieved a high ROE close to 17%.
BRD reaffirms its commitment to be a trusted long-term partner for its customers and the Romanian economy, particularly necessary in an environment marked by uncertainties”said François Bloch, CEO of BRD Groupe Societe Generale.
Strong commercial momentum at all levels
The BRD Group’s net outstanding loans, including leasing receivables, increased by +11.5% over one year at the end of September 2022. In retail trade, growth of +3.2% over one year was supported by both individuals and small businesses. Housing loans remained the main driver, with a constant increase of +21% YoY over 9 months of new production, while consumer loans held up well, as evidenced by the almost stable market share in a slowing market. Corporate finance recorded a remarkable performance (+30.9% YoY) thanks to impressive activity in the SME segment (+49.5% YoY, with approved loans of RON 1.4 billion) under the IMM Invest program which was operational until the end of June 2022) and solid growth in loans granted to large companies (+22.4% over one year). Rental activity also posted a high level, +12.2% year-on-year.
Customer deposits reached RON 55.2 billion at the end of September 2022, up 2.5% year on year, in a tight liquidity market. The increase in deposits from individuals benefited mainly from the increase in inflows on current accounts in foreign currencies from individuals and term deposits in RON in a context of rising interest rates. Large corporate deposits grew 6% year-on-year, with solid growth in RON deposits.
BRD actively participated (40% average market share) in the distribution of the three Fidelis government bond issues for retail investors held in the 9 months of 2022, with an amount of RON 1.8 billion being subscribed through the bank’s network.
BRD has marked important milestones on the road to a fully digitized customer journey, with the credit card issuance flow 100% online, accessible on the BRD website and via the e-banking application , You BRD, and the instant payment solution offered to You BRD retail customers. Digital adoption has increased further, as revealed by the significantly higher number of users of the You BRD mobile application, which is approaching one million as of September 30, 2022.
Consolidation of the upward trend in income
Reflecting the general commercial dynamic, the BRD group’s net banking income amounted to RON 2,541 million, up +9.8% year-on-year. The +12.2% year-on-year increase in net interest income was driven by solid volume growth and rising interest rates. The change includes the effect of the increase in interest charges on resources, both individual and non-individual customers having benefited from a higher return on their deposits. Net fees and commissions were up +1.9% YoY in 9M 2022, driven by increased card activity and growing penetration of insurance products, partially offset by lower online banking revenue given the migration of retail customers to the new free mobile app, You BRD. Other income also showed solid growth (+13.4% year-on-year) thanks to a steady increase in trading and sales activities across all products.
Operating expenses totaled RON 1,276 million in 9M 2022 (vs. RON 1,198 million in 9M 2021), up +5.0% year-on-year, excluding contributions paid to deposit guarantee funds and resolution (69.2 million RON compared to 49.4 million RON in 2021). Spending discipline remained tight. Under the pressure of inflation and a still tight labor market, payroll expenses increased slightly by +5.2% year-on-year, driven by salary increases and other staff adjustments. benefits (particularly restaurant vouchers), partially offset by the downward trend in the number of employees entrusted with the optimization of the network footprint. The advance of other costs reached +4.9% year-on-year, mainly related to several external services and IT&C.
Overall, BRD Group recorded growth in its gross operating income of +13.4% year-on-year. As a result, the cost/income ratio improved by 2.2 percentage points, to 47.5% in 9M-2022, compared to 49.6% in the same period last year (excluding cumulative contributions to funds deposit guarantee and resolution).
As for the credit risk indicators, their levels reflect the very good quality of the loan portfolio. The NPL ratio remained at the historically low level of 2.6% (vs. 3.2% at the end of September 2021) and the coverage rate increased further to 78% (vs. 75% at the end of September 2021). 9M 2022 net cost of risk recorded a net charge to provisions of RON 37m (compared to RON 42m net income in 9M 2021) due to charges on the performing portfolio in response to macroeconomic trends, while the non-performing portfolio remained a driver of steady recoveries throughout the year. year.
Considering all the above, BRD Group’s net profit reached RON 1,016 million (vs. RON 920 million in 9M 2021), up +10.3% YoY, leading to an ROE of nearly 17% compared to 13% in the corresponding period last year.
BRD’s total capital ratio stood at 22% at the end of September 2022.
BRD’s financial results for the nine months ended September 30, 2022 are made available to the public and investors on the bank’s website: www.brd.ro from 09:00. Copies of the documents may also be obtained upon request, free of charge, at the registered office of BRD-Groupe Société Générale, located at 1-7, Ion Mihalache Bd., 1st district, Bucharest.
Note: Unless otherwise stated, all changes are relative to 9M 2021 (for P&L related items) or end of September 2021 (for balance sheet related items) NPL, coverage ratio and capital ratio, at the level form the bank
BRD – Société Générale Group operates a network of 470 units. The bank’s total assets reached RON 69 billion at the end of September 2022.
BRD is part of the Societe Generale 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:
• Retail banking in France
• International Retail Banking, Insurance and Corporate Financial Services
• Global Banking and Investor Solutions