In 2011, the bank reported a net profit of RON469 million.
“Our performance was negatively impacted last year by the rising cost of risk in a deteriorated macroeconomic environment,” said Philippe Lhotte, BRD’s chairman and chief executive officer.
“Our business model remains sound and we have clear strategic orientations for 2013 and beyond. We will strengthen risk procedures and policies, reinforce operational efficiency, while continuing selective investments in the commercial development, so that we will be able to deliver an adequate level of profitability,” Lhotte said in a bank press release.
BRD said its net banking income fell 6.1% on the year to RON2.9 billion, mainly due to a decline in the net interest margin.
The bank’s operating costs were down 2.4% to RON1.35 billion, supported by a 5% reduction in staff expenses. Headcount was reduced by 261 employees in 2012 to 7,545 at the end of the year.
The cost to income ratio was 46.5%, which the bank says is 11 percentage points below the Romanian banking system average.
But the provisioning costs had the main impact on the net result. The net cost of risk rose a whopping 61.6% to RON1.94 billion at the end of 2012, as non-performing loans ratio reached 21.3% from 16.7% a year before.
The bank said its results were affected by a sluggish credit market in a difficult business environment. In the Romanian banking system, gross loans volume contracted by 0.1%, as gross loans to individuals shrank by 1.5% following a decline in consumer lending.
BRD’s credit activity was supported by housing loans and financing of large corporations, which led to a 2.5% increase in gross loans to RON34.8 billion in 2012. Deposits grew at a higher rate, of 4.1%, to RON31.7 billion. Therefore, the bank’s loans to deposits ratio improved to 98.7% at the end of 2012, from 103.6% in the previous year.
BRD, in which French group Societe Generale owns 60.1%, had assets of RON47.9 billion at the end of 2012.
The results are calculated according to the International Financial Reporting Standards (IFRS) and are unaudited.
The bank’s shares closed down 1% in Bucharest Tuesday.