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October 22, 2021

BRD Groupe Societe Generale reports RON 763 M profit in 2016

BRD Group announced its 2016 full-year financial results at a press conference. Net profit reached RON 763 million, up by 63.4% compared to 2015, driven by higher net banking income, disciplined cost control and lower risk costs. The bank had reported a net profit of RON 467 million in 2015.

BRD Group net banking income reached 2,778 million RON in 2016, up by +7.0% versus 2015. Despite persistent low interest rate environment, net interest income increased by +4.6%, driven by volume growth on the retail segment and positive structure shifts. Net fees and commissions were up by +3.1%, thanks mostly to higher revenues from cards, insurance and internet and mobile banking subscriptions. Other banking income rose by 27.0% year on year, with a substantial contribution from VISA Europe transaction (RON 103 million, recorded in the second quarter). Excluding non-recurring items, the growth in net banking income amounted to 3.0%

Operating expenses remained quasi stable year on year (+0.2% versus 2015) as the increase in staff expenses was offset by savings realised on other costs categories. The cost/income ratio improved by 3.4 percentage points, to 50.0% at December 31, 2016 compared to 53.4% at December 31, 2015.

Risks costs were substantially lower versus 2015 (-26.5%, to RON 484 million from RON 658 million in 2015) reflecting the continued improvement in the asset quality. The ratio of non-performing loans was reduced by 2.8 percentage points to 10.5% as of December 31, 2016 from 13.3% as of December 31, 2015, supported by balance sheet cleaning operations through write-offs and sales of non-performing loans. The coverage of non-performing loans was increased from 69.3% at December 31, 2015 to 76.6% at December 31, 2016.

BRD activity continued to be marked in 2016 by a strong commercial momentum on retail segment, as the bank’s efforts to enhance quality, as well as consistently improve and develop new services, are paying off.  The number of active individual customers reached 2.15 million, increasing by 37k as compared to December 2015 end. Customers are also better equipped (the average number of products per active customer increased from 3.95 at December 31, 2015 to 4.07 at December 31, 2016). In particular, clients’ interest for digital banking solutions is constantly rising. The stock of internet and mobile contracts reached 1.15 million contracts as of December 31, 2016, +29.6% compared to December 31, 2015, with a particularly strong growth of mobile banking subscriptions (+62.8% versus December 31, 2015).

Loans granted to individuals inched up by 4.5%*, with their growth driven by RON-denominated housing and consumer loans. Governmental programme “Prima Casa” continued in 2016 and was a key contributor for the housing loans advance. Last year, BRD had a market share of 25 percent in the “Prima Casa” programme and hopes to maintain the same share this year too. Corporate lending activity remained modest despite the favourable economic environment, the stock of gross loans was down -1.7%*, markedly influenced by portfolio clean up operations. Dynamic of customers’ deposits was positive in 2016 (+7.3%* against December 31, 2015), mostly driven by household savings.

“2016 was marked by a solid performance of BRD Group, with net income substantially higher than in 2015, benefiting from a strong commercial momentum on retail segment, a better operating performance and a significantly improved risk profile. Looking ahead, we are confident of our universal bank business model which will further enable us to satisfy the most various needs of our customers and grow healthily on all segments while creating value for our shareholders”, said  François Bloch, BRD CEO.

Considering the results of the year as well as the comfortable capital adequacy level, the Board of Directors has decided to propose a dividend corresponding to a pay-out ratio of 70% of the bank 2016 net income, subject to a favourable vote by the Annual General Meeting of Shareholders on April 20, 2017.

At the press conference, Mr. Bloch was asked about the current political climate and the impact that political instability, the ongoing protests, might have on the bank’s business. The BRD CEO stated: “I am not sure I can speak at this point about political instability. What we see today is the exercise of democracy. It has nothing to do with political instability. Stability is important for business. Stability in terms of the regulatory framework, stability before our clients, stability of our teams, visibility as well, transparency, predictability, all these elements are very important for us, for clients, and again we have highly varied types of clients, from the medium to the largest corporations operating in Romania. All of them need visibility, predictability, stability, to prepare themselves for the future, to plan the investments, and therefore, our business as a bank is to help them, as I was saying, when it comes to savings, to transactions, to lending, to help them attain their objectives as individuals or their investments as corporations. So, stability is important.”

François Bloch has been working in the banking industry for almost 25 years, in different countries, such as France, Germany, U.S.A., Russia. He arrived in Romania 5 months ago.


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