BRD Groupe Société Générale ended 2017 with a net profit of RON 1.41 billion (EUR 309 million), up 85.3% year-on-year, on strong core revenue and positive cost of risk.

“In 2017, BRD produced a very strong financial and commercial performance and obtained promising results in its customer experience optimization process, through upgraded digital channels and a better quality of service. On the medium term, we shall put all our efforts in increasing customer experience quality and satisfaction by accelerating investments in digitalization and further refining our business model,” said Francois Bloch, CEO of BRD Groupe Société Générale.

The group’s net banking income amounted to RON 2.78 billion (EUR 609 million), up by 4.9% year-on-year when excluding non-recurring items. Net interest income registered a growth of 8.4% in 2017 vs. 2016, largely generated by solid volume advance, while rising interest rates brought an additional positive contribution in the last quarter of the year. Net fees and commissions income (down 1.2% year-on-year) was adversely impacted by price pressures on transactional banking services, but benefitted from higher revenues from asset management and capital market activities.

Meanwhile, the operating expenses reached RON 1.47 billion (EUR 322 million) last year.

The NPL ratio was reduced to 6.6% at the end of 2017, from 10.5% at end-2016, while the coverage ratio remained at 74.2%, compared to 76.6% at end-2016 (all ratios according to EBA methodology). The net cost of risk registered a RON 360 million (EUR 79 million) net release due to recoveries on non-retail customers, recognition of insurance indemnities, and gain on sale of NPL portfolio.

BRD also increased its commercial activity last year, with the number of active customers increasing by 41,000 year-on-year, of which over 38,000 individuals and more than 3,000 small business customers.

Net loans increased to RON 30.3 billion (EUR 6.64 billion), up by 5.3% compared to end-2016, sustained by robust growth on both individual and large corporate segments. Individuals’ loan production continued to be dynamic, amounting to RON 6.4 billion (EUR 1.4 billion) - up 13.8% over 2016, and BRD reconfirmed its leadership position on credits to households with a market share of 16.9% at the end of 2017.

Deposits expanded to RON 44.2 billion, up 3.8% over 2016, pushed up by retail savings (up 5.8% year-on-year), while non-retail deposits remained quasi stable (up 0.5%) in a context of comfortable liquidity position.

Considering the results of the year as well as the expected capital adequacy trajectory, the Board of Directors has decided to propose a dividend corresponding to a payout ratio of 80% of the bank 2017 core net result and 100% of non-recurring items net of tax, resulting in an overall payout ratio of 83%. The decision is subject to a favourable vote by the Annual General Meeting of Shareholders on April 19.

Irina Marica, irina.marica@romania-insider.com