It is the second consecutive year of negative results for the Romanian unit of France’s Societe Generale, after a loss of RON332 million in 2012.
“In a context of decreasing loan collateral values and growing share of exposures under insolvency regime, the bank consolidated its level of [non-performing loans] coverage with provisions (from 51.9% at 2012 to 68.9% at 2013), an effort translating into a high cost of risk on SMEs portfolio,” the bank said in a statement Wednesday.
The bank’s pretax loss widened to RON648 million, from RON378 million in 2012, largely due to higher provisions for bad loans. The decline was partly offset by the income from deferred tax, which rose to RON263 million in 2013, from around RON47.2 million in the previous year.
Net risk costs rose to RON2.08 billion, from RON1.94 billion at the end of 2012.
BRD said the net banking income was down 6.9% compared to 2012, mostly affected by net interest margin decline. “This evolution was triggered mainly by the contraction of net loans’ volumes on the corporate segment. The net fees and commissions decreased by 4.7%, mostly due to the overall lower lending activity.”
It said the operational expenses fell 5.6%, keeping the cost/income ratio at 47.1%, below market average.
“In 2013, the Romanian banking sector continued to go through a consolidation phase,” BRD said in its statement. It noted the local banking system witnessed an overall decrease in loans’ volume (down 4.2% at constant foreign exchange rate) over the last 12 months, pushed down by the corporate segment evolution, while deposits grew dynamically (7.4% year-on-year), especially on the corporate customers’ side (10.1%).
BRD outstanding gross loans to individuals reached RON17.2 billion, up 1% on the year, thanks to a government-supported housing loans program. However, demand for corporate loans faltered, triggering a 12.5% decline of gross volume to RON16.3 billion.
The bank said deposits registered a significant increase (12.8%, versus 7.4% for the market), so that the net loans to deposits ratio improved to 76.8% at the end of 2013.
The bank’s capital adequacy ratio stands at 14.3%, above the minimum regulatory requirement.
“2013 was for BRD a year of transition, largely devoted to the enhancement of its organization and risk management and to the reinforcement of its core competitive advantages – powerful network, strong capacity of innovation, high operational efficiency. In substance, 2013 was a useful year, of which BRD is coming out stronger”, said Philippe Lhotte, BRD Chairman and CEO.
“BRD is looking to 2014 with serenity, ready to accompany Romanian economy growth. Guided by a long term vision, BRD continued to invest in order to maintain or strengthen its leadership on several business lines which are now offering us real development prospects,” Lhotte concluded.