BRD-SocGen, the second-largest bank on the market, made net profit of 168 million RON (around 51 million euros) in the first quarter, up 12% on the same time last year. However, the return on equity (ROE) fell, from 35% in the first quarter of 2006, (and for the entire of last year) to 30% in Q1, 2007. "It was a satisfactory start to the year," Patrick Gelin, chairman and chief executive of BRD-SocGen told ZF.
He believes all indicators are following "a positive trend", in line with this year's plan. The only exception is the exchange rate, which is already lower than the budgeted rate.
The volume of loans increased by 78% against March 31, 2006 totalling 19 billion RON (5.75 billion euros), whereas the retail lending almost doubled, and corporate lending increased by 64%.
The deposits attracted continue to exceed the volume of loans, totalling 20 billion RON, an increase of 36% on the same period in 2006. Gelin says that the BRD remains relatively aggressive in its policy of attracting deposits, in order to sustain sound growth of lending, especially on the segment of small and medium-sized enterprises.
With all the attempts to stimulate customers to deposit money for longer terms (at least one year), around 85% of the deposits attracted by the BRD are made on terms of one to three months.
"We have to continue to attract resources," says Gelin, highlighting the recent shortage of cash on the monetary market.
He adds that the BRD, like the entire banking market, has continued to bear the effect of narrowing interest margins. "The margin has continued to decrease, although not as fast as last year's rate, nearing four percentage points. It may go down even further, but no less than a 3-3.5 percent minimum," Gelin stated.
He says that the first quarter witnessed a slowdown in consumer lending, compared with last year, which he views as completely natural. Patrick Gelin stated that BRD Finance, the specialist company part the BRD group "is posting very good sales," based on the partnerships in place with various stores, yet it does not intend to be number one on this market, nor does BRD target the overall number one position.
The second-leading bank on the market expects to be granted approval by the NBR for its lending conditions for individual customers in about two weeks, Patrick Gelin states.
He adds that the BRD will come up with an offer that is "segmented and tailored to the customer," As for real estate lending, Gelin explains dropping the down payment requirement is out of the question.
BRD's top man believes the bank could become "a little more aggressive" on the real estate lending market, where its presence remains less significant, with a mere 12-13% market share, compared with an average of 19% for the majority of its other products.
"This is a sector on which we want to experience more growth in the future, but the market is limited for the time being. The potential will come as salaries for middle class persons living in residential apartment buildings begin to increase."
Gelin finalises by adding that the preparations for the establishment of the domestic branch of Sogeprom, Societe Generale's real estate funding division are almost completed.
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