BRD-Groupe Societe Generale net profit up 33% to 367 million euros

Autor: Claudia Medrega 12.02.2009

BRD-Groupe Societe Generale, the second-largest local bank, posted 367 million euros in net profit last year, an increase of about 33% on the 2007 figures, including the 61 million-euro proceeds from the sale of the Asiban stake.

"The crisis hit Romania as late as the fourth quarter and consequences were marginal. We had anticipated a slowdown of the economic growth since as early as the first quarter and took steps to contain overall spending," stated Patrick Gelin, BRD chairman.

In the fourth quarter, the bank posted 314 million RON (88.3 million euros) net profit, an increase of 33.6% on the same time in 2007.
Full-year spending went up by 23%, while revenues went up 27%.
Fees are a significant part of the 2008 revenue, 41% (1.3 billion RON), with the net interest margin accounting for the bulk of revenue, namely 1.4 billion RON.
The bulk of the net banking revenue, that is 46% was generated by corporate clients, while individual clients generated 38%
Return on equity reached 32.8%, down from the 35.4% in 2007, while the cost/revenue ratio continued to improve and reached 42%, even though BRD made investments worth 64 million euros. At the same time, the number of employees rose by almost 1,000 to 9,443, and the network expanded by 124 offices to a total of 930.
BRD officials expect the bank to post profit in 2009, as well, ruling out losses regardless of the more difficult situation of the economy.
"BRD-GSG has not had any problem at all. We had a very good base. We will have a tidy profit in 2009. Losses are out of the question," Sorin Popa, deputy chief executive officer of BRD said.
Gelin in turn stated that the bank had taken steps as early as the beginning of the year in order to cut costs and offset the credit risk increase by operating a slight increase in interest rates for loans.
He added that the bank did not have to cover any special maturities for financing in 2009, with most of its foreign financing coming from its parent bank.
"The parent-bank will continue its support. We are not worried in this regard. Moreover, the loan/deposit ratio is evening out."
"The results are a little higher than my net profit expectations. They did a little better both in terms of revenues and in terms of costs, but reserves set aside were higher so that overall estimates were close to the result. The increase in the loan/deposit ratio is a bit worrying, as it went up to 120% last year from less than 100% in 2007, the preferred level by the sector. Still, no special issues are apparent yet," commented Adriana Marin, head of the research department of UniCredit CA IB Securities.
Net risk cost is one of the lowest in the banking system, bank officials say, standing at 3.86% compared with 6.52% across the entire system.
BRD-GSG's lending business posted 27% increase to 34.3 billion RON, of which loans to companies account for the biggest share, 52%.
On the other hand, the deposit increase was more moderate than in 2007, 6%, given the volatility of the market in the last quarter of 2008, while the volume of deposits reached 28.5 billion RON.