BRD group results for first 9 months 2016: solid increase of net income, up +68% (press release):
The main financial ratios of BRD-Groupe Société Générale as at September 30, 2016 at consolidated level, according to the International Financial Reporting Standards (IFRS):
- Dynamic commercial activity: continued increase in the number of active individual clients (up by 54k versus September 30, 2015), higher stock of internet & mobile banking contracts, strong growth in loan production for individual customers (up by 17.3% versus 9 months 2015)
- Net banking income in the first 9 months of 2016 up +9.6% compared to the same period last year, on further improvement of net interest income, higher net fees and commissions and Visa Europe transaction gain registered in the second quarter
- Cost/Income ratio improved by 5.2 percentage points to 48.9% at September 30, 2016 as a result of higher revenues and strict cost control
- Non-performing loans ratio at 10.8% at September 30, 2016 against 15.3% at September 30, 2015 following further write-offs and sales operations
- Confirmed net cost of risk downward trend (RON 362 million, -20.3% compared to September 30, 2015)
- Strong increase of net profit to RON 606 million, up +67.9% compared to the same period of last year as a result of improved revenues, costs containment and lower cost of risk. Excluding non-recurring items (mostly the gain from VISA transaction) net profit was up +45.4%.
As of September 30, 2016 the dynamics of total gross loans granted by banks shows a positive trend for loans granted to individuals while corporate lending remains subdued. Individuals loan growth (+5.9%* versus September 30, 2015) was driven to a higher extent by housing loans (+15.5%*). On the other hand, consumer loans remained in negative territory (-2.6%* versus September 30, 2015) as growth of RON denominated loans (+9.3%*) didn’t offset the drop of FX component (-20.5%*) on an annual basis. Loans to corporate, despite the persistently low interest rate environment, still register negative dynamic (-3.2%* year on year) notably influenced by portfolio clean-up operations. Customer deposits maintained solid growth, on both segments: total deposits rose by 10.5%* against September 30, 2015.
The first 9 months of 2016 marked continued positive momentum on the retail segment, as BRD efforts to consistently improve and develop new services, close to its clients needs, are paying off. BRD’s number of individual customers was higher by 54k against September 30, 2015, using constant methodology. The stock of internet and mobile banking contracts (MyBRD Net and MyBRD Mobile) further increased reaching 1.04 million contracts by the end of September 2016, up by 28%, on an annual basis.
The net loans outstanding amount of BRD Group as of September 30, 2016 reached RON 28.4 billion (+2.4%* against September 30, 2015 and +3.8%* against December 31, 2015) thanks to the increase registered on individuals and large corporate segments.
Net loans to individuals were up by 6.5%* compared to September 30, 2015 driven by a particularly strong growth pace on unsecured consumer loans and housing loans. The production of loans to individuals reached RON 4.3 billion during January – September 2016 (up by +17.3% versus the same period of last year), pushed up by unsecured consumer loans (+26.1% year on year).
In spite of highly competitive environment, the large corporate net loans outstanding amount had a positive evolution when compared to both September 30, 2015 and December 31, 2015, increasing by 3.9%* and respectively, 8.4%*, reflecting BRD leading positions on the segment.
Outstanding customer deposits expanded by 5.7%* on a yearly basis pushed up by deposits on current accounts (+28%* rise against September 30, 2015). In addition, BRD Group marked a substantial increase in total assets under management, reaching RON 2.9 billion, up by 16.6% compared to September 30, 2015. Market share was 12.2%, up by 0.5 percentage points versus September 30, 2015, confirming BRD Group efforts towards diversifying saving solutions offered to its clients.
The ratio of net loans to deposits was 69.9% (-2.3 percentage points down versus September 30, 2015) on lower foreign currency loan to deposit ratio and wider deposit base.
BRD Group net banking income for the first 9 months of 2016 reached RON 2,111 million, up by 9.6% compared to the same period of 2015. Net interest income increased by 5.3% thanks to favorable volume and structure effects. The advance of 5.0% in net fees and commissions was supported by card activity, internet and mobile banking subscriptions and insurance. Other banking income booked in the first 9 months of 2016 was up by 39.2% versus same period of 2015, and includes the gains from VISA transaction and sales of Government bonds and investment fund units. Excluding non-recurring elements, net banking income increased by 4.2%, on a yearly basis.
Operating expenses were reduced by 0.9% to RON 1,032 million against the same period of last year, in line with BRD Group’s efforts to keep costs under strict control. The lower contributions to the Deposit Guarantee Fund and the Resolution Fund along with the reduced level of real estate and sundry costs contributed most to the reduction.
Improved net banking income combined with reduced OPEX generated sustained growth in gross operating income, +22.1% and +10.3% excluding non-recurring items, while cost/income ratio reached 48.9% as at September 30, 2016, down by 5.2 percentage points, on a yearly basis.
The ratio of non-performing loans further declined as of September 30, 2016 to 10.8%** from 15.3%** as of September 30, 2015 due to write-off operations and sales of portfolios. The coverage of non-performing loans was increased from 69.8%** at September 30, 2015 to 74.7%** at September, 2016. Net cost of risk amounted to RON 362 million as of September 30, 2016 (-20.3% year on year) confirming further the downward trend.
For the first 9 months of 2016, BRD Group net result stood at RON 606 million, up by 67.9% compared to the same period of last year. The net profit increase remained significant after excluding non-recurring income (up by 45.4% against the first 9 months of 2015). Return on equity reached 12.5% (10.3% excluding non –recurring items) compared to 8.2% in the first 9 months of 2015.
The bank capital adequacy ratio as of September 30, 2016 reached 19.1% (under Basel 3 regulations, with national discretions) versus 17.2% as of September 30, 2015, a comfortable capital position, allowing for future significant activity growth while complying with expected tighter regulatory requirements.
BRD financial results for the nine months ended September 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
(**) NPL ratio and NPL coverage ratio according to EBA methodology
(***) The financial statements as of September 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 September 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 812 units. BRD has a leading position on the card market with approx. 2.2m cards and a network acceptance close to 27,000 POS and more than1,500 ATMs. With factoring operations of EUR 921m in 2015, BRD is the leader of the factoring market. Total assets of the Bank at Steptember 30, 2016 end amounted to RON 49 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
