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BRD GROUP RESULTS FOR Q1 2022: STRONG LENDING, ACTIVE SUPPORT FOR THE ROMANIAN ECONOMY

05 May 2022

Main commercial trends and financial indicators of BRD Groupe Société Générale at March 31, 2022 at consolidated level, according to the International Financial Reporting Standards (IFRS):

- Intense financing of projects for individuals and businesses

best ever Q1 production of loans to individuals (+27% YoY), driven by an outstanding performance on housing loans (+139% YoY)
strong advance on corporate outstanding loans (+18% YoY), underpinned by both SME (+30% YoY) and large corporate (+13% YoY)
solid performance in leasing financing (+17% YoY)
leading to a +9% YoY increase in the stock of loans as at end of March 2022

- Further consolidated savings base

Intermediated almost 1 billion RON within Q1 government bonds issue for individuals

- Maintained focus on digital roadmap

Kept the pace in digital deliveries with enlarged online offer, saving accounts and term deposits opening being now also available in You BRD
Intensified digital channels’ usage with +24% in number of online transactions

- Strong financial performance

positive momentum in volumes supporting NII advance (+10% YoY)
contained increase in operating expenses
high quality of the loan book with NPL ratio below 3%
net profit up by +18% (RON 263 million vs RON 222 million in Q1 2021)
back to a double digit ROE, 12% in Q1 2022 (vs 9% in Q1 2021)

In the first months of 2022, the bank continued to bring its contribution to supporting the society. In the context of the current crisis in Ukraine, BRD contributes in various ways to support Ukrainian citizens, refugees on the territory of Romania. As such, the bank:
- launched SolidUArity, a package of services for Ukrainian refugees
- supports the efforts of the Red Cross with the involvement of BRD employees, volunteers in the organization's projects
- supports Unicef fundraising projects
- made available to refugees, for accommodation, BRD's training center in Agapia
- set up a donation mechanism whose amount is doubled by the bank's participation
- made available its cultural center, the BRD Scena9 Residence, to Ukrainian artists for the exhibition "Now and here. Artists are present".

“Romanian economy showed a solid rebound in 2021. In Q1 2022, inflation and the war in Ukraine took their toll on perspectives, both IMF and World Bank softening their Romania’s GDP growth estimates for 2022 to around 2%. Positive expectations are represented by the National Recovery and Resilience Plan.

Within again a challenging context, BRD remains fully committed in playing its essential role of financing the economy in a responsible way.

In the first quarter of 2022, lending was strong all over the board. Corporate financing advance on an annual basis showed solid double digit figures for both SME (+30%) and large corporates (+13%). BRD continued to actively support IMM Invest Program reaching 2.5 billion RON approved loans. New granted loans to individuals hit a Q1 record in 2022, with housing loans posting the best quarterly production ever, a remarkable +139% versus the same quarter last year.

Building on a dynamic lending and transactional activity, BRD Group delivered in the first three months of the year a solid financial performance. The net banking income was higher by 7.5% versus the same period of 2021, while costs’ increase was controlled despite already impacting inflation.

With its forceful profile, BRD can firmly support its clients and be a reliable partner for the Romanian economy“, said François Bloch, CEO of BRD Groupe Société Générale.

Strong momentum for commercial activity

BRD Group net loans, including leasing receivables, recorded a high growth pace, being up +9.2% YoY at March 2022 end. Net loans outstanding on retail increased by +5.1% YoY, underpinned by both individuals and small business segments. Loan production for individuals posted a consistent growth of +27% in Q1 2022 versus the same period of last year, marking the best ever Q1 production, driven by strong dynamic of new housing loans (+139%). Corporate lending posted a very robust performance (+18% YoY) built on both a dynamic activity on SME segment (+30% YoY) and a solid growth of loans to large companies (+13% YoY). BRD continued its active participation in IMM Invest Program, with RON 289 million approved loans in Q1 2022, out of which 23% within Agro IMM Invest sub-program. Leasing activity reconfirmed the solid performance posting an overall portfolio increase of +17% YoY.

Deposits to customers reached RON 53.3 billion, higher by 3.8% on an annual basis. Retail deposits’ advance (3.4% YoY) benefitted from higher inflows on individuals’ sight accounts and important contribution of small businesses’ resources (+16.5% YoY). Corporate deposits’ increase (+4.8% YoY) built on a double-digit growth of SMEs deposits (+14.2% YoY).

BRD continued to be a very active participant also in the first issue of Fidelis government bonds for retail investors held in 2022, an amount of approximately RON 1bn equivalent being subscribed through bank’s network.

BRD continued to foster digitalization development, through constant deployment of new functionalities for YouBRD, the remote banking application. In addition to the recently launched remote onboarding and online lending, savings account and term deposits opening is also available now directly from YouBRD.

Dynamic revenues’ performance

BRD Group total revenues reached RON 810 million, higher by +7.5% compared to Q1 2021. Net interest income registered a material growth (+9.8% y/y) supported by a very good momentum in loans volumes, while the positive effect of rising interest rates starts to progressively reflect on revenues. Benefitting from higher volumes of customers’ transactions, compensating the pressure on daily and transactional banking services’ prices, net fees and commissions increased by 3.4% year on year.

Operating expenses totaled RON 460 million in Q1 2022. Their increase was contained to +2.1% excluding the 40% higher contribution to Deposit Guarantee and Resolution Fund (RON 69.2 million, recognized in full in Q1 2022, compared to RON 49.4 million in 2021). Staff expenses were up by 2.5% on the impact of price effect induced by wages’ increase, only partially compensated by the continuation of structural headcount reduction. Other expenses registered only a moderate increase (+1.5% y/y) mainly on already visible inflation impact on utilities, and communication costs. Overall operating performance printed high in the first three months of the year, with gross operating income increasing by 9.0% to RON 350 million compared to RON 321 million in Q1 2021 (+13.2% y/y excluding the cumulated contributions to Deposit Guarantee and Resolution Fund).

The solid financial results were accompanied by the maintenance of a very good quality of the loan book, as reflected by the further decrease of NPL ratio (2.7% as of March 2021 end) and the increase in coverage with provisions of non-performing exposures (76.5%). Cost of risk registered reduced charges as compared to Q1 2021 combining the effects of a good recovery performance but deteriorated perspectives given the current geopolitical context (RON 32 million charges vs RON 54 million charges in Q1 2021).

Given all the above, net profit was up by 18% compared to Q1 2021 and ROE reached a high 12% for a first quarter of the year. BRD total capital ratio stood at 21.4% and Tier 1 capital ratio at 19.8% as of March 2022 end (after capitalization of 2021 profit net of approved dividends) reflecting a solid capital position.

_{BRD financial results for three months ended March 31, 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. Q1 2021 (for income statement related items) or March 2021 end (for balance sheet related items) NPL and coverage ratio, at bank level}

_{BRD - Groupe Société Générale operates a network of 499 units. Total assets of the bank reached RON 71bn at Mar 2022 end.}

_{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 in its three key activities:

• French retail banking

• International Retail Banking, Insurance and Financial Services to Corporates

• Global banking and Investor Solutions}

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BRD GROUP RESULTS FOR Q1 2022: STRONG LENDING, ACTIVE SUPPORT FOR THE ROMANIAN ECONOMY