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BRD GROUP RESULTS FOR H1 2024

01 Aug 2024

BRD GROUP RESULTS FOR H1 2024:

Remarkable COMMERCIAL DYNAMICS

DELIVERING POSITiVE financial IMPACT

Press release

Bucharest, August 1st, 2024

Main commercial trends and financial indicators of BRD Groupe Société Générale at June 30, 2024 at consolidated level, according to the International Financial Reporting Standards (IFRS):

- Business growth all over the board
•   significant corporate financing activity (+22.3% YoY), driven by robust performance in both SMEs (+14.3% YoY) and large corporates (+26.9% YoY)
•   record level of loans granted to individuals, RON 5.2 billion in H1 2024, +51% YoY
•   substantially increasing deposit base, +12.0% YoY at June 2024 end
•   BRD AM reached 1st position on UCITS market, for the first time in its history, with RON 5.1 bn assets under management, +46% YoY and ~21% MS, at June 2024 end
•   increased adoption of e-banking application, with YouBRD reaching ~1.6 million users at June 2024 end, +20% YoY

- Growing momentum in positive impact financing
•   cumulated production of sustainable financing over the last 3 years, exceeding the EUR 1 bn ambitious target with 18 months advance versus initial schedule

- Operating performance led by volume expansion and rigorous cost monitoring
- NPL ratio around record low (2.2%) and comfortable NPL coverage (77%)
- Cost of risk evolution reflecting a closer to “through the cycle” level
- Net profit of RON 694 million (vs. RON 768 million in H1 2023), ROE 16%

“During the 1st half of the year, BRD achieved a strong commercial performance across all business segments. Our loan portfolio grew by +14% on a yearly basis, building on a strong contribution from both corporate and retail segments. We remained an active supporter of SMEs, accompanying our clients to fulfill their diverse projects, including engaging in various governmental supporting programs. New financing under IMM Plus reached RON 3bn during H1 2024, significantly above the same period of last year. Lending on large corporate segment also maintained impressive growth, increasing by 27% YoY, given strong partnership and value recognition on the market.

Loan origination for individuals was very solid, reaching record breaking volumes, RON 5.2 bn (+51% YoY in H1 2024), with higher production on both consumer and housing lending, demonstrating BRD’s strong customer focus.

Moreover, BRD has continued to demonstrate its commitment to support sustainability transitions. By the end of June 2024, BRD cumulative sustainable financing production over the last 3 years reached almost EUR 1.1 billion, already surpassing the ambitious EUR 1 billion target initially set for end of 2025.
Besides a substantially increasing deposit base, of +12.0% YoY, BRD enjoys superior performance of BRD AM reaching the 1st place in UCITS with +46% growth YoY in AuM.

Last but not least, we continue to stay focused on enhancing our customers experience also on remote channels by bringing in new functionalities, both on the mobile application, as well as on the web platform. For example, a loyalty program, Cashback, has been recently added into YOU BRD mobile banking application and has already exceeded 300k users in just one month from launch. Thus, the application is constantly growing in terms of both enabled functionalities but also in the number of users, that reached 1.6 m at June 2024 end.
All the above translated into a solid financial performance for H1 2024, with RON 694m in net result and ROE of 16%, including the impact of the new levy tax on turnover, amounting to RON 62m for the first half-year.

Further on, we reiterate our strong dedication in financing the Romanian economy, continuing to be a reliable partner for all our clients, and fulfilling with high responsibility our key role as a leading universal bank in Romania”, said Maria Rousseva, CEO of BRD Groupe Société Générale.

Strong commercial performance across the board

BRD Group net loans outstanding, including leasing receivables, reached RON 45 billion at end of June 2024, reflecting a double-digit increase, of +14% YoY, outperforming the market, mainly driven by excellent dynamic activity on the corporate segment, while retail lending growth continued to accelerate.

On the retail segment, net loans outstanding grew by +8.5% YoY at June 2024 end, with a solid contribution from both individuals and small business customers, demonstrating BRD’s strong customer focus. Individuals’ loan origination volumes marked record breaking growth, reaching RON 5.2 billion (+51% YoY in H1 2024), propelled by solid numbers for both consumer (+38% YoY in H1 2024) and housing loans (+68% YoY in H1 2024). Small businesses contributed also to the segment growth, with net loans outstanding reaching an increase of +46.1% YoY at June 2024 end, following improved lending processes and product offering, but also good performance in governmental programs.

Lending on corporate segment continued to deliver a strong performance (net loans outstanding +22.3% YoY at June 2024 end), driven by both SMEs (+14.3% YoY) and large companies (+26.9% YoY). BRD further supports the Romanian businesses by actively engaging in governmental programs and granting new financing to companies meeting specific eligibility criteria. As of June 2024 end, new loans approved through the IMM Plus program reached RON 3.1 billion, +90% YoY vs H1 2023. Additionally, leasing activity maintained a substantial growth pace (+20.3% YoY at June 2024 end).

BRD has continued to demonstrate its strong dedication to support sustainability transitions. As of June 2024 end, BRD cumulated originated volumes of sustainable financing over the last 3 years, reached almost EUR 1.1 billion, already surpassing the ambitious EUR 1 billion target initially set for end of 2025. Moreover, the Q1 2024 landmark SRT transaction closed between BRD and IFC (member of the World Bank Group) will enable BRD to boost the financing of impactful sustainability-related projects in Romania by lending more than EUR 300 million to climate-related initiatives and women-owned small businesses.

BRD Group relies on a solid and diversified deposit base, steadily increasing, by +12.0% YoY as of June 2024 end, ensuring the stable fuel of lending growth. Retail deposits demonstrated solid advance of +10.8% YoY, given continued strong dynamic of term deposits, in a “higher for longer” environment. Corporate deposits increased by +14.3% YoY, benefitting from high net inflows from SME clients (+15.2% YoY as of June 2024 end), followed by a solid growth from large corporate clients (+13.8% YoY as of June 2024 end).

BRD saving products portfolio also incorporates a diverse offer of investment solutions through the 12 investment funds managed by its subsidiary BRD Asset Management, which marked a solid increase of +45.7% YoY in AuM, as of June 2024 end, reaching the first position on the UCITS market for the first time in its existence.

Combining physical and remote presence

BRD is accompanying its customers through a combination of physical and remote presence, ensuring the distribution of its products and services throughout the whole country. As at June 30, 2024, the Bank’s network reached 389 branches (vs June 30, 2023: 441 branches as of June 30, 2023) and an enriched number of 24/7 self service areas (212 vs. 169 as of June 30, 2023, within more than half of its branches).

Regarding the digital offer, BRD continues to advance on its roadmap, with new functionalities added to its mobile application and/or web platform. The most recently launched include the cashback loyalty program addressed to BRD card customers, and the intrabank foreign exchange between own accounts, available 24/7/365. You BRD application continues to grow also in the number of users, reaching nearly 1.6 million milestone, up by +20% YoY as of June 2024 end.

BRD continues to innovate to respond to clients’ needs and to support, at the same time, key economic sectors. As such, in June 2024, BRD launched a digital channel for small farmers to access APIA (“Agency for Payments and Intervention in Agriculture”) loans directly on its website. The new online distribution channel addresses the need for speed and flexibility of farmers, who can thus devote more time to their core business and better capitalize on opportunities in an extremely intense agricultural season.

Good financial performance and solid balance sheet

During the first half of the year, BRD Group net banking income increased by 5.7% YoY compared to the same period in 2023, amounting to RON 1,968 million. Net interest income, the key contributing factor to growth, marked an advance of 7.3% YoY during H1 2024, given a dynamic commercial activity across all business segments, somewhat tempered by higher cost of funding. Net fees and commissions were up 6.5% YoY, mainly given an intensified card activity, increased no of transfers and higher contribution from custody and brokerage services resulting from the active participation in Fidelis campaigns. While the usage of digital channels is constantly rising, revenues from cash transactions continued to trend lower. Other banking income (-7.9% YoY) was mainly impacted by a one-off limited provision booked in Q1 2024 and change to fair value accounting of BRD Finance loan portfolio during Q2 2024, while trading activity maintained a positive contribution to revenues.

Operating expenses were up by 8.9% YoY in H1 2024, evolution mainly driven by the new levy tax on turnover, staff costs and base effect linked to the downward adjustment of deposit guarantee and resolution funds cumulated contributions during Q2 2023. In a persistently competitive talent market, staff costs increased by +7.0% YoY compared to H1 2023, driven by higher fixed salaries and other compensation package adjustments. 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 levy tax of 2% on turnover, in amount of RON 61.8 million for H1 2024 (calculated and paid quarterly based on actual results). The increase in other costs category reflects in principle increased IT expenditures to continue the advancement on our digital roadmap.

BRD Group gross operating income reached RON 940 million in H1 2024 (+2.4% compared to H1 2023) and cost to income ratio increased fully as a result of the new levy tax (52.2% in H1 2024 vs 50.7% in H1 2023). Excluding the tax impact, cost to income ratio improved from 50.7% in H1 2023 to 49.1% in H1 2024.

The quality of the loan book remained solid during the first half of the year, with NPL ratio* around record low level, reaching 2.2% at June 2024 end (slightly increasing from the historical low of 1.9% at 2023 end), while NPL coverage stands at a comfortable level (77.3% at June 2024 vs 75.9% at 2023 end). Net cost of risk accounted for a RON 90.8m net provision allocation during H1 2024, compared to RON 5.2m net provision release in H1 2023, reflecting a closer to “through the cycle” level.

BRD Group net result amounted to RON 694 million (vs RON 768 million in H1 2023), while ROE reached 16% in H1 2024.

Reflecting a strong capital position, BRD total capital ratio stood at 23.1% as of June 2024 end (own funds including 50% of 2023 net profit, as voted by GSM), compared to 22.3% as of June 2023 end.

BRD financial results for three months ended June 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:

¹NPL ratio, Coverage ratio, at Bank level

If not stated otherwise, all variations are vs. H1 2023 (for income statement related items) or June 2023 end (for balance sheet related items).

BRD - Groupe Société Générale operates a network of 389 units. Total assets of the Bank at June 2024 end amounted to RON 83.6 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

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BRD GROUP RESULTS FOR H1 2024

Strong commercial performance across the board

Combining physical and remote presence

Good financial performance and solid balance sheet