BRD Groupe Societe Generale, the second largest bank in Romania by assets, posted a net profit of EUR 27.6 million for the first half of 2014, double compared to the same period of last year, the bank announced on Friday, August 1.

BRD reduced its net banking revenues by 8.6 percent in the first six months of the year, to EUR 280 million, as its net loan portfolio continued to decline and net interest margins were under pressure.

BRD’s operational profit fell by 15 percent, to some EUR 143 million, but this was compensated by a 25 percent decline in net risk costs, which reflect the bank’s losses due to non-performing loans (NPL), which were EUR 110 million in the first half of 2014.

In 2012 and 2013, BRD ended the first half of each year with net profit but had losses at the end of each year, due to NPLs. Last year, the bank’s losses amounted to EUR 87 million.

This year, BRD could also face further challenges in the second half of the year as Romania’s National Bank (BNR) asked local banks to clean up their portfolios by removing a part of the non-performing loans, in order to reduce the overall NPL rate for the banking system from 20 percent to about 13 percent. BRD had an NPL rate (according to BNR’s specifications) of 20.4 percent at the end of June.

BCR, the largest bank in Romania, already posted an EUR 62 million loss in the first half as it accelerated the resolution of the NPL stock.

BRD’s net loan portfolio was EUR 6.13 billion at the end of June 2014, down 2 percent compared to December 2013 and more than 10 percent compared to June 2013. This was mainly due to the removal of non-performing loans for companies from the bank’s balance sheet. Loans to retail remained stable, the bank announced.

The volume of the deposits from clients also declined by more than 5 percent in the first half of the year, to EUR 7.74 billion, but was slightly up compared to June 2013.

The bank’s total assets were down 4 percent compared to December 2013, to EUR 10.2 billion.
BRD is the fourth largest Romanian company listed on the Bucharest Stock Exchange (BVB), with a market capitalization of EUR 1.42 billion. The bank’s shares are trading under the ticker BRD and saw no growth since the beginning of the year (January 1 to July 31).

French group Societe Generale holds 60 percent of BRD, with the remaining 40 percent held by investors on the Bucharest Stock Exchange.

Andrei Chirileasa, andrei@romania-insider.com