BRD GROUP RESULTS FOR 9M 2021: EXCELLENT COMMERCIAL ACTIVITY ACROSS THE BOARD

The main commercial trends and financial indicators of BRD Groupe Société Générale at September 30, 2021 at consolidated level, according to the International Financial Reporting Standards (IFRS):

- Accelerated commercial activity

• exceptional loan production for individuals with best 9M ever, +48% YoY and +21% vs 9M 2019
• excellent performance on corporate financing (+18.8% YoY and +19.5% vs September 2019 end), driven by both SMEs (+28% YoY) and large corporate clients (+17% YoY)
• very active involvement in IMM Invest Program with over RON 1 billion approved loans for more than 1,000 companies
• dynamic leasing activity, with overall portfolio increasing by +13% YoY
• growing adoption of digital channels, with the number of customers actively using remote banking up by +13% YoY
• assets under management increased by +29% YoY and +21% vs September 2019

- Strategic milestone on digital roadmap reached with the launch of 100% online private individual customers onboarding and consumer lending

- Net banking income higher by 1.2%, at RON 2,335 million in 9M 2021, underpinned by the rising volumes, compensating the impact of the lower market interest rates

- OPEX evolution mainly reflecting investments in tangible digital deliveries, while staff costs were maintained under strict control

- Sound credit risk indicators reflecting the strong quality of asset base and the efficient collection activity: low level of NPL ratio, at 3.2% and high NPL coverage ratio, at 75.3%, both as of September 2021 end

- 9 months net profit, +25% vs the same period of last year, at RON 920 million (vs. RON 738 million in 9M 2020) given the dynamic commercial activity and net release in cost of risk.

“The Romanian economy showed a very dynamic rebound in the second quarter of 2021 amid better business conditions and sentiment, laying the foundation for a solid 2021 GDP growth. Still, risks arise from the pandemic resurgence and the turbulence on the energy market. On the other hand, the approval of National Recovery and Resilience Plan in September by European Commission may be one of Romania's great chances to boost its growth, along with other national development programs. Over the first nine months of 2021, within an improving, but still volatile macroeconomic context, our activity gained pace.
The individuals’ loan production was exceptional, with growth printing at almost 50% year on year and above 20% versus 2019. Corporate lending strong increase (+19%) was fueled by a sharp growth both on SME and large companies segments.
We also saw an intensive use of our large range of saving solutions, with further consolidation of our broad deposit base, double digit growth for assets under management and almost doubled gross written premiums for unit linked life insurance.
We stepped up the pace on digital adoption, the number of customers actively using remote channels being close to 800,000. 100% online onboarding and consumer lending are now available. We also launched further functionalities on BRD YOU, our mobile banking application, constantly guided by the desire to improve our customers’ experience.
Building on an expanding commercial activity, BRD delivered in the first nine months of 2021 a solid financial performance. The NBI increased, driven by the revenues from fees and commissions, while thanks to very dynamic commercial activity the NII exhibited a solid resilience to the important decrease of market rates. Costs remained in focus, while we continued to invest and deliver on digital transformation. The joint effects of economic rebound and continuous recoveries on non-performing portfolio translated into net reversal in the cost of risk.
BRD reaffirms its commitment towards a long term partnership with its customers and remains a trustworthy actor of the Romanian economy”, said François Bloch, CEO of BRD Groupe Société Générale.

Dynamic all over the board commercial activity

DLoans’ outstanding, including leasing, continued to show a solid performance, being up by almost +8% YoY, sustained by dynamic all over the board lending activity. Loan production for individuals marked an outstanding recovery versus the same period of last year (+48% YoY), while also registering a steep increase versus 2019 levels, notably on housing loans (+40% YoY). Corporate lending shows a very robust performance, +19% YoY, with SMEs dynamic activity translated in +28% YoY increase, benefitting notably from an active participation in IMM Invest program with over RON 1 billion approved loans for more than 1,000 companies, out of which 33% to agricultural sector through AGRO IMM Invest sub-program. The strong growth of large companies loans (+17% YoY) re-confirms BRD as a top player on this segment.

Deposits from customers registered an overall advance of +12% YoY. The growth was mainly driven by corporate segment (+21% YoY), both SME and large corporate clients marking double digit increase. The strong savings’ propensity triggered by the prolonged pandemic stabilized around previous quarter yearly growth rate, driving deposits from individuals up by +5.3% YoY. Small business segment continued to also be a contributor to deposits’ expansion, with a consistent +18.7% YoY growth. In parallel, asset management activity saw a substantial rise to RON 5.1 billion at September 2021 end, increasing by +29% YoY and +21% vs September 2019. BRD achieved an important strategic milestone in its digital transformation roadmap with the launch of 100% online private individual customers onboarding and consumer lending. This launch to the market enriches the panel of recent digital deliveries meant to improve our customers’ experience: YOU BRD, mobile banking application whose functionalities are continuously and rapidly expanded and payments’ facilitation through Apple Pay and Google Pay for Mastercard and Visa cards. The increased focus on the acceleration of digitalization is also visible in the +13% yearly growth in number of customers actively using remote channels as at September 2021 end. In addition, the number of transactions via electronic channels is fast growing, +32% in 9M 2021.

Significantly increased profitability

In the first nine months of 2021, BRD Group net banking income reached RON 2,335 million, higher by +1.2% compared to the same period of last year. This positive dynamic was driven by the strong increase of net fees and commission, up by near 10% y/y in 9M 2021, on growing clients’ transactions volumes. On the other side, the net interest income remained resilient (-1.5% y/y in 9M 2021) as the lower market interest rates’ effect (average ROBOR 3M, -90 bps YoY) was tempered by broad based volume growth.

Operating expenses totaled RON 1,220 million in 9M 2021 compared to RON 1,188 million in 9M 2020, up by 2.2% y/y, if excluding the higher cumulated contribution to Deposit Guarantee and Resolution Funds. Staff expenses were contained at the same level as last year, as the volume effect (-374 FTE versus September 2020 end) offset the price impact amid labor market tightness. The increase in other expenses (+5% y/y vs 9M 2020) was mainly related to IT investments supporting the visible acceleration of Bank’s digital roadmap.

Based on the above evolutions, Cost-to-Income ratio registered a mild increase of 0.5 points, reaching 50.1% in 9M 2021 versus 49.6% in 9M 2020, if excluding cumulated contributions to Deposit Guarantee and Resolution Funds.

The loan portfolio quality continues to be strong, with NPL ratio at 3.2% as at September 2021, decreasing from the 3.4% level as at September 2020. The coverage ratio remained solid at 75.3% at September 2021 end (76.4% at September 2020 end). In terms of cost of risk, the first 9 months of 2021 were positively influenced by the economic rebound and continuous recoveries on NPL portfolio, resulting in an overall release of RON 42 million compared to a net RON 253 million charge in 9M 2020.

Solvency ratio reached 26.9% at September 2021 end (BRD standalone), compared to 28.2% at September 2020.

BRD financial results for six months ended September 30, 2021 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.

_{(*) On open-end mutual funds market
Note: If not stated otherwise, all variations are vs. 9M 2020 (for income statement related items) or September 2020 end (for balance sheet related items)
NPL and NPL coverage ratio, at Bank level
BRD - Groupe Société Générale operates a network of 525 units. BRD has a leading position on the card market with approx. 2.3 million cards and a network acceptance of over 31,000 POS and almost 1,400 ATMs. Total assets of the Bank at September 2021 end amounted to RON 66.6 bn.}

_{BRD is part of the Société Générale Group, one of the largest European financial services groups. The group has 133,000 employees in 61 countries and 30 million customers worldwide, including individuals, businesses and institutional investors, in its three key activities:
• French retail banking
• International Retail Banking, Insurance and Financial Services to Corporates
• Global banking and investor solutions.}