BRD Q3 Results: Positive evolution of business activity, net result influenced by Net Cost of Risk

he main financial ratios of BRD-Groupe Société Générale as of September 30, 2012, according to the International Financial Reporting Standards (IFRS):

• Significant increase in loan portfolio (+8.1% against September 30, 2011) and deposit base (+5.4% against September 30, 2011)
• Enhancement of operational efficiency and optimisation measures leading to a reduction in operating expenses (-4% against 9 months 2011)
• Net Banking Income of 2 181 million RON (-6% against 9 months 2011)
• Gross Operating Income of 1 177 million RON (- 7% against 9 months 2011)
• Net profit of 10 million RON

The third quarter of 2012 confirmed the positive orientation of the lending activity observed in the first half, with a significant increase in loan portfolio (+8.1%) compared to the September 30, 2011, higher than the growth in the banking sector (+5%), which generated an increase in market share to 14.7% as at September 30, 2012.

BRD total outstanding gross loans reached 36.25 billion RON as of September 30, 2012. The good performance was driven by loans to corporate customers, mainly large corporates, and by commercial campaigns to promote the sales of mortgage loans ("Prima Casa" governmental programme mostly) and consumer loans.

Customer deposits were at the end of the third quarter, of 31.66 billion RON, up 5.4% against the same period in 2011 and 4.5% compared to December 31, 2011.

he Net Banking Income decreased at the end of the third quarter, by approximately 6% compared to the same period of 2011. The main reason for the decrease in NBI is the decline in net interest margin (-9%) against first nine months in 2011, although it entered on an upward trend in Q3 2012, registering a significant increase (+13%) compared to Q2 2012. The Net fees and commissions for services continued to prove their resilience, remaining stable versus the same period of 2011.

Operating expenses were reduced by 4% in the first nine months of 2012, compared to the same period of 2011. Cost to Income ratio was of 46.1% at the end of the first nine months of 2012.

Net profit at the end of the third quarter is of 10 million RON, influenced by a Net Cost of Risk of 1 162 million RON, up 58% compared to the same period last year, mainly driven by lower collaterals value associated to non performing loans.

The report is available to the public and investors on the website of the bank: www.brd.ro. 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 Boulevard, 1st district, Bucharest.

BRD-Groupe Société Générale is the second largest Romanian bank in terms of total assets and has the fourth market capitalization on the Bucharest Stock Exchange. BRD is part of the Société Générale Group, one of the largest groups of financial services in the Euro zone.