BRD-SocGen derived net profit worth 917 million RON (274.7 million euros) last year, up 40%(48% in euros), double the increase posted in the previous year. Assets increased 45% last year, to 40.7 billion RON. Calculated in euros, growth stood at 40% and reached 11.27 billion euros. BRD therefore remains the second-largest player in the system in terms of assets, after BCR and ahead of Raiffeisen Bank.
"Expenses were kept well under control, although significant investments were made," Patrick Gelin, chairman and chief executive of BRD-SocGen explained yesterday at a press conference organised to present last year's financial results.
The bank opened 206 branches last year and in December its network reached 806 units, the second largest in the entire banking system after CEC, whilst BCR, the largest bank in terms of assets, reached 570 branches. The bank invested 69 million euros last year, almost the same volume as in 2006, and directed most of the money towards the development of buildings and IT systems. BRD, which is controlled by French Societe Generale group, generated one third of last year's total profit in the entire banking system (825 million euros). The profitability of the French thus increased at a slightly faster rate than the market average of 35%.
After the first nine months of 2007, BRD surpassed BCR in terms of profit. BCR will reveal its financial results on February 29, at the same time as its majority shareholder Austrian Erste Bank does.
Patrick Gelin says he "sees no reason" why 2008 should not be as good for BRD as last year was, although he points out that the deterioration of macroeconomic indicators lately and the persistent turmoil on the international financial markets do spell a great deal of uncertainty. BRD's top man would not specify growth targets, but explained that investment programmes would be carried out as usual, unless shocks emerge on the market.
"The business model implemented in 2004 works very well. Our sales units usually become profitable after only one year in business," Gelin commented.
The bank introduced a new office concept almost four years ago, a smaller office, staffed by only 4 or 5 employees (BRD Express), which allowed for rapid network expansion, at an affordable price. As a result, the bank has increased its network by more than four times over the last four years.
Analysts of the main brokerage firms deem BRD's results as extremely positive and believe they will have a constructive impact on its stock.
"BRD's results were very good, because the bank operated very tight cost controls, cutting the weight of expenses from 49% in 2006, to 44% last year. This is even more remarkable considering it was done at the same time as the expansion of the branch network," commented Adriana Marin, head of CA IB Securities' research department.
Florin Ilie, head of the capital markets of ING Bank, believes BRD is the most profitable bank in the region, which Erste Bank's analysts also confirm.
"The IFRS results set to be published in April could indicate an even higher profit, because of the accounting differences in terms of reserves, which the bank's management suggested," added Ilie.
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