Romanian lender BRD posts record profit but greed tax will drag down 2019 result

BRD-Groupe Societe Generale, the third-biggest financial group in Romania by assets, recorded a net profit of RON 1.56 billion (EUR 336 million) in 2018, up by 10.6% compared to the 2017 result. Excluding non-recurring items, the net profit was up 23.6%. This was the biggest profit in the group’s history and was supported by higher operating revenues and higher lending activity. The group’s operating income went up 11.8% in 2018, to RON 3.12 billion (EUR 670 million) while risk costs declined by 36%, to RON 230 million (EUR 49.4 million), the group reported. The total assets went up 1.4% (December 2018 versus December 2017), to RON 55.72 billion (close to EUR 12 billion). “In 2018, BRD Group achieved strong financial results, reflecting robust commercial dynamics and very solid operational performance. Growth was driven by higher retail loans and savings, increasing corporate financing and larger number of transactions,” said BRD CEO François Bloch, in a press release. “However, going forward, if the fiscal measures introduced through the Ordinance 114/2018 were to be confirmed, the consequences for the Romanian economy would be clearly negative,” he added. The BRD representative believes that the tax on financial assets, also known as the “greed tax”, will be changed because its negative impact is too high. The current impact on BRD’s results is some RON 600 million (EUR 128 million), Bloch said in a press conference, according to Profit.ro. “We believe that only a handful of banks would remain profitable in 2019 if the tax applied in the current form, BRD being one of them,” he added. BRD’s shares, which are traded on the Bucharest Stock Exchange, gained another 3.6% on Thursday, after the group announced its results, adding to a 15% rally since the end of January. However, the current price of RON 11.92 per share is still 12% lower than the price recorded in mid-December, before the Government announced the greed tax. editor@romania-insider.com (Photo source: Inquam Photos / George Calin)