BRD GROUP RESULTS FOR 9M 2024

BRD GROUP RESULTS FOR 9M 2024:

SOLID COMMERCIAL DYNAMICS

DRIVING IMPACTFUL CONTRIBUTION

Press release

Bucharest, October 31st, 2024

Main commercial trends and financial indicators of BRD Groupe Société Générale at September 30, 2024 at consolidated level, according to the International Financial Reporting Standards (IFRS):
-    Broad-based business growth
•    significant corporate financing activity (+23.0% YoY), fueled by strong performance on both SMEs (+23.9% YoY) and large corporates (+22.4% YoY)
•    strong loan origination on individuals segment, reaching new record levels, RON 8.4 billion in 9M 2024, +48% YoY
•    steady increase in deposit base, +8% YoY 
•    BRD Asset Management, leader on UCITS market, marked significant growth of assets under management to RON 5.8 billion, +59.4% YoY and ~22.3% MS
•    further developed digital capabilities supporting increasing penetration of e-banking application, with YouBRD reaching 1.65 million users at September 2024 end, +24% YoY 
-    Financing sustainable projects
•    production of sustainable financing reached ~ RON 1bn in 9M 2024, while the cumulated production target envisaged for 2025 was well exceeded in advance  
-    Operating performance built on robust volume growth and rigorous cost discipline
-    Solid quality of loan book, low level of NPL ratio (2.37%) and comfortable NPL coverage (78.55%) at September 2024 end
-    Cost of risk evolution reflecting a closer to “through the cycle” level
-    Net profit of RON 1,094 million (vs. RON 1,227 million in 9M 2023), ROE 16% 
“During the first nine months of 2024, BRD materialized solid commercial performance across all its business segments, marking significant growth in net loans outstanding, of +15% compared to the same period in 2023. The corporate segment was particularly strong, expanding by +23% YoY, while the retail segment improved notably. Individuals’ loan origination reached record levels, totaling RON 8.4 billion, representing a remarkable +48% increase, benefitting from solid demand on both consumer and housing products.
BRD remains highly committed in building a sustainable economy and continues to finance projects and engage in initiatives with positive impact. For the first nine months of the year, BRD new sustainable financing reached almost RON 1 billion, leading the cumulative production over the last 3 years to over EUR 1.1 billion, well above the target initially set for end of 2025.  
The deposit base showed steady progress, reaching +8% YoY by September 2024, underpinned by both retail and corporate deposits growth.  
We also work on further developing our digital capabilities which supports and translates in increasing penetration of e-banking application, with YouBRD reaching 1.65 million users at September 2024 end, +24% YoY. In addition, BRD is among the first banks which very soon will roll-out in production, RoPay, an instant mobile, proximity and payments service, via QR code, which is simple, secured and free of charge.    
Financially, the growth in revenues, driven by higher volumes across all business segments, coupled with a disciplined costs and risks management, translated into high ROE and improved cost-to-income ratio, if we exclude the impact of the new tax on turnover. Asset quality indicators are at sound level, liquidity and capital remain strong, positioning BRD well for future growth. 
As the year progresses, BRD remains focused on balancing robust lending activity with sustainable practices and digital innovation to meet the evolving needs of its customers”, said Maria ROUSSEVA, CEO of BRD Groupe Société Générale.

Commercial performance keeps high on all business segments
Net loans outstanding, including leasing financing, reached RON 47.6 billion, marking a +15.1% YoY increase compared to September 30, 2023, driven by strong lending activity across all segments. The corporate segment continued to be a key driver of growth, advancing by +23.0% YoY, while the dynamic on retail segment saw a notable improvement, from +4.1% YoY growth pace at the end of September 2023 to +10.0% YoY at end of September 2024.

Loan origination on individuals segment achieved record-breaking volumes in each of the three quarters and also on a nine-month period, reaching RON 8.4 billion during 9M 2024, +48.4% YoY vs 9M 2023, with very good performance in both consumer and housing loans. Consumer loans production totaled RON 5.4 billion, up +40.4% YoY, while new housing loans surged by +65.7% YoY, nearing RON 3 billion in 9M 2024. These results highlight the continuous customer focus to be the first-choice financing partner. At end of September 2024, individuals’ loans outstanding increased by +8.5% YoY. Additionally, small businesses brought a consistent contribution, with net loans outstanding rising by +40.0% YoY, supported by improved lending processes and effective participation in government programs.

Corporate financing showed robust growth, with net loans outstanding increasing by +23.0% YoY as of September 2024 end. Large corporates led in volumes growth (+22.4% YoY vs September 2023 end), followed by SMEs (+23.9% YoY vs September 2023 end), propelled also by governmental supporting programs. Throughout the first nine months of 2024, BRD actively supported Romanian businesses by engaging in various SMEs and mid-market capitalization financing initiatives, including programs like IMM Plus, Rural Plus, Farmer's Credit, APIA, Construct Plus or Prod Plus programs, being present in sectors like agriculture, construction or manufacturing. Additionally, over 600 companies from the State Aid scheme under the National Recovery and Resilience Plan “Digitization of SMEs” have selected BRD as their banking partner for investment projects. BRD also provides specialized services to these SMEs, ensuring compliance with program requirements alongside with competitive offer in terms of daily banking and lending. 

Leasing activity continued its strong growth trend, with net outstanding of leasing financing up by +18.5% YoY as of September 2024. 

BRD further demonstrated its strong dedication to support sustainability transitions. During 9M 2024, BRD sustainable financing reached almost RON 1 billion, emphasizing support for renewable energy and socially responsible projects, leading the cumulative production over the last 3 years, to over EUR 1.1 billion, well above the target initially set for end of 2025. To further promote and support green investments, BRD established a new partnership with European Investment Fund (EIF) in August 2024 to implement a sustainability financial instrument with the purpose to provide support for SMEs and business processes in adapting to climate change, and facilitating the green transition.
Additionally, the women entrepreneurship remains one of the Bank’s areas of interest in 2024 thanks to the collaboration with the Ministry of Economy, Entrepreneurship and Tourism in the implementation of the "Women Entrepreneur" program 2024 edition, and the recent partnership with the International Finance Corporation (SRT transaction concluded in Q1 2024).

The deposit base continued to grow steadily, +7.9% YoY as of September 2024 end. Retail deposits, a key funding source, increased by +9.9% YoY, still driven by growing inflows of individuals’ term deposits (+28% YoY). Corporate deposits saw a moderate growth, +4.5% YoY, mainly supported by net inflows from SMEs (+10.2% YoY).

BRD saving offer is diverse, incorporating also an extensive range of investment solutions through the 12 investment funds managed by its subsidiary BRD Asset Management, which marked a solid increase of +59.4% YoY in AuM (to RON 5.8 billion), maintaining its first position on the UCITS market and reaching 22.3% market share as of September 2024 end.

Combining on-site and remote approach

BRD ensures the distribution of its products and services through a combination of on-site and remote presence. As at September 30, 2024, the Bank’s network reached 388 branches (vs. 432 as of September 30, 2023) and an increasing number of 24/7 self service areas, covering almost 60% of its network (222 vs. 172 as of September 30, 2023).

BRD is further developing its digital capabilities and continues the advancement on its digital roadmap with the implementation of a new credential setup process to enhance customer security. Another important facility, soon to be launched, is RoPay - an instant mobile proximity and secured payment service via QR code, available 24/7/365 days p.a. This service, simple and easy to use and free of charge, is a national alternative to cash and other existing payment methods, BRD being among the first banks in Romania to roll-out this service.

Clients’ digital activity is further increasing, as evidenced by the growing number of YouBRD mobile application users to 1.65 million (+24% YoY as of September 2024 end), higher number of transactions done through the application (+29% YoY) and 500k clients enrolled into the cashback loyalty program. 

Good financial performance and solid balance sheet
During the first nine months of the year, BRD Group net banking income increased by +5.4% YoY compared to the same period in 2023, amounting to RON 2,984 million. 
Net interest income, the key contributor to growth, marked an advance of +7.1% YoY during 9M 2024, given a dynamic commercial activity across all business segments, somewhat tempered by higher cost of funding. Net fees and commissions were up +6.4% YoY, mainly driven by increasing clients’ activity on transfers and cards, combined with higher penetration of package of services.  Lending and insurance activities also brought a positive contribution to the yearly dynamic. Other banking income (-9.9% YoY) was mainly impacted by a one-off limited provision booked in Q1 2024, and the sale of BRD Finance loan portfolio, partially compensated by a positive contribution of trading activity. 
Operating expenses were up by 8.8% YoY in 9M 2024, mainly driven by the new tax on turnover and staff costs. In a persistently competitive labour market, staff costs increased by +6.9% YoY compared to 9M 2023, driven by higher fixed salaries and other compensation package adjustments, under the new labour agreement signed in June 2024. The evolution of non-staff expenses (+0.5%, excl. contribution to the Deposit Guarantee Fund and Resolution Fund and the new tax on turnover) reflects mainly the combined effect of increased IT expenditures to support our digital initiatives, gains from sale of real estate and cost savings linked to the closure of BRD Finance activity. For 2024, the cumulated contribution to Deposit Guarantee Fund and Resolution Fund was reduced to RON 43.5 million, from RON 68.1 million in 2023. However, the positive impact of this cost reduction was offset by far by the new 2% tax on turnover, in amount of RON 94.8 million for 9M 2024. 

BRD Group gross operating income reached RON 1,472 million in 9M 2024 (+2.2% YoY and +8.8% YoY, excluding the tax on turnover, compared to 9M 2023) and cost to income ratio increased fully as a result of the new revenue tax (50.7% in 9M 2024 vs 49.1% in 9M 2023).  Excluding the impact of the tax, C/I improved to 47.5% in 9M 2024 from 49.1% in 9M 2023.

The quality of the loan book remained solid during the first nine months of the year, with NPL ratio* around record low level, reaching 2.37% at September 2024 end (increase from the historical low of 1.9% at 2023 end, mostly from the retail portfolio and still below the banking system average), while NPL coverage stands at a comfortable level (78.55% at September 2024 end vs 75.96% at 2023 end). Net cost of risk registered RON 136m net provision allocation during 9M 2024, compared to RON 35m net provision release in 9M 2023, reflecting a closer to “through the cycle” level.

BRD Group net result amounted to RON 1,094 million (vs RON 1,227 million in 9M 2023), while ROE reached 16.1% in 9M 2024.

BRD standalone capital adequacy ratio, reached 27.6% as of September 2024 end. Excluding the impact of the new regulatory temporary treatments (implemented through art 468 and art 500a of CRR3 in July 2024), BRD standalone capital adequacy ratio stands just below 23%. 

BRD financial results for three months ended September 30, 2024 are available to the public and investors on the website of the bank, www.brd.ro, beginning with 9h00. Copies of the documents can also be obtained upon request, free of charge, at the head office of BRD-Groupe Société Générale, located at 1-7, Ion Mihalache Bd., 1st district, Bucharest.
Notes: 
1 NPL ratio, NPL coverage ratio (acc to EBA), at Bank level
If not stated otherwise, all variations are vs. 9M 2023 (for income statement related items) or September 2023 end (for balance sheet related items). 

BRD - Groupe Société Générale operates a network of 388 units. Total assets of the Bank at September 2024 end amounted to RON 84.0 billion.
BRD is part of the Société Générale Group, one of Europe's leading financial services groups and a major player in the economy for over 160 years. The group has 126,000 employees in 65 countries and 25 million customers worldwide and is built on three complementary business lines:
•    French Retail Banking
•    Global Banking and Investor Solutions
•    International Retail, Mobility & Leasing Services
www.brd.ro; facebook    Contact media: Traian Traicu_021 301 61 50_traian.traicu@brd.ro