The bank reported a net result of RON405 million in January-June 2020, compared with RON802 million in the same interval in 2019, BRD Groupe Societe Generale said in its earnings report.
“In Q1 2020, Romania and the entire world entered in an unprecedented sanitary crisis, with strong, complex and difficult to quantify economic implications. In order to ensure the business continuity, BRD quickly and successfully adapted its organization, swiftly implementing efficient internal measures to address the effects of the crisis. Adequate prevention and security measures were applied in all of the business outlets, flexible working schedule was organized, teams were split and a significant part of BRD’s employees quickly switched to telework,” stated Francois Bloch, CEO of BRD Groupe Societe Generale.
BRD Group’s net loans, including leasing receivables, grew 1.2% on the year to RON31 billion in the first half of 2020. The evolution of loans on the retail segment saw a 0.4% decrease year-over-year and was due to a 3.6% decrease in consumer loans triggered by an abrupt decline in the volume of loans newly granted during the lockdown period and by quasi-stable net loans in the portfolio of BRD Finance, which saw a 0.4% increase, but with a visible trend of recovery starting May, and reaching in July a level similar with the pre-crisis level.
Per the report, financing for companies grew 5.4% on the year in the first half of 2020, due a 7.2% increase in loans for small and medium-sized enterprises (SMEs) and a 4.6% increase in loans granted to large companies. Also, the leasing portfolio advanced 16.6% on the year, backed by financing for commercial vehicles and equipment for agriculture and industry.
“Deposits to customers reached RON47.6 billion, higher by 4.8% on an annual basis and by 3.6% compared to December 31, 2019. Still benefiting from dynamic real wage growth in Q1 2020 (quasi-stable in April-May 2020) and a strong savings’ propensity triggered by the pandemic, deposits’ inflows from individuals continued to grow YoY, +7.5% (o/w current accounts were up by 32% YoY), with a higher contribution of foreign currency resources (+10.4% YoY). The non-retail deposits’ YOY decrease was driven by a double-digit compression of large corporate deposits mainly linked to the reduction of EUR non transactional accounts driven by an assumed balance sheet management choice, while SMEs resources strongly increased (+18.6% YoY),” the report reads.
The net loans to deposits ratio reached 61.2% at June 30, 2020 (from 64.0% at December 31, 2019 and 63.8% at June 30, 2019) for the Bank and 65.2% for the Group, including financial leasing receivables (68.2% at December 31, 2019 and 67.5% at June 30, 2019).
“BRD Group’s net banking income stepped back with 6.0% to RON1.51 billion in the first half of 2020 versus the same period of the last year, mainly due to lower fees and commissions and other revenues categories, despite a quite resilient net interest income. The net interest income slight decrease of -0.3% YoY was due to the drop in private individuals loan production (especially consumer loans) within the lockdown context, unfavorable structure shifts and lower interest rates (average ROBOR 3M at 2.72% in H1 2020, -48 bps YoY). Net fees and commissions decreased with -14%, mainly due to the contraction of commissions on transfers as effect of price alignment for EUR denominated payments to domestic ones (starting with 15th of December 2019, according to SEPA rules), the cancellation from March 15th 2020 (for 3 months) of commissions on transfers and subscription fees for individual clients using digital solutions, free withdrawals under the new individual packages and cease of the Western Union business in August 2019. Other non-interest revenues were mainly influenced by a base effect generated by significant revaluation gains in H1 2019,” per the report.
End-June 2020, the Group’s total assets reached RON60.3 billion, up 4.3% versus December 31, 2019.
The quality of the loan portfolio kept being solid with a NPL ratio* (non-performing loans, according to EBA definition) of 4.0% at June 2020 end vs. 3.8% at June 2019 end and a high level of coverage of non-performing exposures (coverage ratio* of 74.5% at June 2020 end vs. 75.7% at June 2019 end). Risk costs turned negative to RON 225 million versus a release of RON 144 million in H1-2019, mainly reflecting probability of default recalibration and update of macro scenario, within the worsened economic landscape.
“Considering the significantly deteriorated context, BRD delivered an overall resilient financial performance and continued to build on solid fundamentals with strong capital, high liquidity and elevated asset quality,” Francois Bloch also said.
Between January and June 2020, the use of digital channels kept strengthening, taking the number of active sole users of internet and mobile banking services to 651,000 end-June 2020, 19% more than in the same period in 2019, while the volume of transactions via digital channels grew 32%.