BRD, one of Romania’s top three financial groups, increased its profit almost threefold in the first quarter of 2015 compared to the same period of last year, as it reduced its non-performing loans portfolio and the associated risk costs.

“In 2014, BRD managed to significantly upgrade both its risk profile and its operational efficiency. In Q1-2015, our bank reaped the benefit of these efforts and returned to a material level of profitability,” said Philippe Lhotte, BRD CEO.

BRD posted a net profit of EUR 31.4 million for the whole group, which includes the bank BRD Groupe Societe Generale, two non-banking financial institutions (IFN) BRD Sogelease and BRD Finance, and an investment management firm BRD Asset Management. The group had a net profit of EUR 10.8 million in the first quarter of 2014.

The operational revenues went down by 4.3%, to EUR 136 million, but the 55% drop in net risk costs related to bad loans offset the revenue decline and the 1% increase in operational costs. Net risk costs were EUR 25.6 million, down from EUR 56.6 million in the first three months of 2014.

The groups net loan portfolio was just under EUR 6 billion, at the end of March 2015, down by 1.5% (in local currency) compared to end-December 2014, as loans for individuals increased slightly while loans for companies continued to decline.

BRD reduced its non-performing loans (NPLs) ratio from 25% at March 2014 to 20% at March 2015, reflecting write-offs and NPL sale transactions. After the write-off operation performed in December 2014, the NPL ratio remained stable versus the year-end.

Deposits from customers remained stable in the first quarter, at some EUR 8.1 billion. Given its large deposits base, BRD is well positioned for a meaningful recovery in credit activity, according to the group’s financial report. The net loans to deposits ratio was 74% at the end of March.

The group’s improved results have been anticipated by the investors on the Bucharest Stock Exchange, where BRD’s shares went up by 19% in the past month and by 25% since the beginning of this year. BRD has been one of the local market’s top performers in the last four months as the group’s share price reached a three-year high.

BRD currently has a market capitalization of EUR 1.75 billion, as of May 6, 2015. French group Societe Generale controls 60% of its shares, with the remaining 40% held by other local and foreign investors.

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Andrei Chirileasa, andrei@romania-insider.com