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BRD GROUP RESULTS FOR H1 2022:

05 May 2022

STRONG FINANCIAL PERFORMANCE BUILDING ON OVERALL DYNAMIC COMMERCIAL ACTIVITY

Press release
Bucharest, August 3rd, 2022

Main commercial trends and financial indicators of BRD Groupe Société Générale at June 30, 2022 at consolidated level, according to the International Financial Reporting Standards (IFRS):

- Very dynamic lending activity across the board

a new record H1 production of loans to individuals (+13% YoY), driven by a remarkable performance on housing loans (+77% YoY)
corporate lending growth printing high (+15.8% YoY), underpinned by both SME (+36.8% YoY) and large corporates (+7.5% YoY)
active SMEs financing under governmental programs, with RON 1.4 billion approved loans in H1 2022
reconfirmed solid performance in leasing financing (+16.3% YoY)
leading to a +9% YoY increase in the stock of loans as at end of June 2022

- Maintained focus on customers’ offer enrichment

fully remote registration now available in YouBRD
green consumer and housing loans were launched in April

- Robust financial performance

double digit growth in NII (+11% YoY), given strong commercial activity and rising interest rates
evolution of operating expenses (+2.5% YoY excluding Resolution and deposit guarantee funds contribution) reflecting disciplined management of cost base
sound asset quality (NPL ratio 2.6%, NPL coverage ratio 77%, as of Jun 2022 end)
high profitability: RON 617 million net result; ROE, 15.6% in H1 2022

“In H1 2022, BRD showed a very good commercial momentum across the board, despite the challenging macroeconomic context induced by the prolonged war in Ukraine.

In the first half of 2022, lending continued to be intense. Individuals lending was marked by an outstanding performance of housing loan production (+77% YoY). Corporate financing posted a very solid performance (+16% YoY) built on broad based growth. BRD continued to be actively involved in all the governmental programs supporting the economy, with approved loans of RON 1.4 billion for H1 2022.
Committed to support sustainability transition, we launched in April green consumer and housing loans, while continuing to offer sustainable financing solutions to our corporate clients.

Building on a solid commercial activity, BRD Group posted in the first half of the year a robust financial performance. Best ever H1 NBI was registered, higher by 7.6% versus the same period of 2021, mainly on the substantial growth in interest income, driven by both upward volumes and market rates while very significantly increasing the remuneration for collected deposits, to the benefit of retail and corporate clients. Cost of risk was contained. As a result, BRD delivered a high ROE of almost 16%.

Within an environment under tensions, BRD remains committed to provide financial and expertize support for its customers and the economy“, said François Bloch, CEO of BRD Groupe Société Générale.

Very good commercial momentum across the board

BRD Group net loans, including leasing receivables, recorded a high annual growth pace, being up +9% YoY at June 2022 end.

Net loans outstanding on retail increased by +5.3% YoY, underpinned by both individuals and small business segments. Loan production for individuals continued to show a double-digit advance of +13% in H1 2022 versus the same period of last year, marking a new record H1 level, driven by a remarkable dynamic of new housing loans (+77% YoY). Corporate lending posted a strong performance (+15.8% YoY) built on both a dynamic activity on SME segment (+36.8% YoY) and a solid growth of loans to large companies (+7.5% YoY). BRD continued to actively support SMEs eligible under governmental programs, with RON 1.4 billion approved loans in H1 2022, out of which 33% for the agricultural sector. Leasing activity reconfirmed the solid performance posting an overall portfolio increase of +16.3% YoY.

Deposits to customers reached RON 54.1 billion on average in H1 2022, higher by 4% on an annual basis. Retail deposits’ advance (+4.2% YoY on average) benefitted from higher inflows on individuals’ sight accounts and important contribution of small businesses’ resources (+15.1% YoY on average). Corporate deposits’ increase (+3.6% YoY on average) was driven by a resilient growth of SMEs deposits (+4.8% YoY on average).

BRD is one of the most active participant in the distribution of the two issues of Fidelis government bonds for retail investors held in H1 2022, an amount of RON 1.4 bn equivalent being subscribed through bank’s network.

The enhancement of digital experience through the new fully remote registration process allowed the accelerated growth of the number of clients using our new mobile application “YOU BRD”, to 890 thousands as of June 30, 2022, up by 164% compared to the same period last year.

Consolidation of revenues upward trend

The very dynamic commercial performance registered by BRD Group in the first half of the year, generated a good set of financial results, with total revenues reaching RON 1,642 million, higher by +7.6% compared to H1 2021. Net interest income increased at a double digit rate, with a material growth in interest income building on both volumes and higher market rates (average ROBOR 3M at 4.55% in H1 2022 versus 1.60% in H1 2021). Within a rising rates environment, interest income increase was tempered by higher funding costs. Net fees and commissions advanced by +1.7% YoY in H1 2022 driven by intensified cards and capital markets activities, compensating lower revenues from e-banking given the migration of retail clients to the new free of charge mobile banking application, YOU BRD.

Operating expenses totalled RON 853 million in H1 2022 (vs RON 814 million in H1 2021), increasing moderately by +2.5% YoY, excluding the contributions paid to Deposit Guarantee and Resolution Funds (69.2m RON vs 49.4m RON in H1 2021). Staff expenses (+1.9% YoY) remained contained, as the impact of price effect induced by a persistently tight labor market amplified by the pressure of inflation, was partially offset by continued structural headcount reduction (-562 FTE vs June 21 end). For the other costs categories the dynamic is explained to a large extent by higher expenses related to several external services and utilities.

Overall operating performance was very solid, with gross operating income increasing by +10.7% to RON 789 million compared to RON 712 million in H1 2021. BRD Group cost to income ratio improved by 2.4 ppt (if we exclude the cumulated contributions to Deposit Guarantee and Resolution Funds), to 47.7% in H1 2022, from 50.1% in the same period of the previous year.

Credit risk indicators at comfortable levels and well contained cost of risk reflect the very good quality of the loan portfolio. As of June 2022, the NPL ratio* (non-performing loans, according to EBA definition) reached 2.6% decreasing from June 2021 level of 3.3%, and provision coverage increased to 77% (+3 ppt YoY). The net cost of risk represented RON 46 million provision charge (vs. RON 39 million release in H1 2021) driven by an overall uncertain environment, partially offset by important recoveries from non-performing and written-off portfolio.

Given all the above, BRD Group net profit amounted to RON 617 million (vs. RON 626 million in H1 2021) and ROE printed higher at 15.6% for the first half of the year (vs 12.6% in H1 2021).

BRD total capital ratio stood at 21% as of June 2022 end reflecting a solid capital position.

Statement regarding BRD - Societate de Administrare a Fondurilor de Pensii Private SAFPP (BRD Pension Funds)

As already communicated by the SAFPP, some irregularities were discovered concerning a number of accounting entries related to their general expense accounts. The issue is specific only to the pension funds administrator, with no contamination to other BRD Group entities.

The holdings of participants in the Pillar 2 and 3 pension funds, as well as their assets, which are held, according to the law, with a custodian bank and are segregated by law from the administrator's (SAFPP’s) own funds, are not affected in any way by this situation.

BRD Groupe Societe Generale, as minority shareholder with 49%, has covered the amount at stake, by adjusting the net asset value of BRD-SAFPP in H1 financial statements to reflect the share of BRD-GSG in the loss (app RON 10 million).

BRD financial results for six months ended June 30, 2022 are available to the public and investors on the website of the bank: www.brd.ro beginning with 09h00. 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.

Note: If not stated otherwise, all variations are vs. H1 2021 (for income statement related items) or June 2021 end (for balance sheet related items)
NPL and coverage ratio, at bank level

BRD - Groupe Société Générale operates a network of 481 units. Total assets of the bank reached RON 69bn at June 2022 end.
BRD is part of the Société Générale Group, one of the largest European financial services groups. The group has 131,000 employees in 66 countries and 26 million customers worldwide in its three key activities:
•   French retail banking
•   International Retail Banking, Insurance and Financial Services to Corporates
•   Global banking and Investor Solutions

www.brd.ro; facebook

Contact media: Traian Traicu_021 301 61 50_traian.traicu@brd.ro

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BRD GROUP RESULTS FOR H1 2022: