BRD Groupe Société Generale group, which operates Romania's fourth-largest bank by assets, reported its net profit dropped by 4.6% y/y in Q1, but said that its profitability remains high — although not as high as last year and probably below the market average.

On the upside, the bank’s loan portfolio rose nearly three times faster than the banking system’s average, over the past year, and the growth differential was higher in Q1

“Our loan portfolio grew by +12% y/y [at group level], with a strong contribution from all business segments … Lending on corporates preserves a steady growth, +20% y/y, building on long-term relationships and sound market reputation,” said BRD CEO Maria Rousseva.

BRD group’s market capitalisation is RON14.5bn (€2.9bn) after its shares rose by 71.6% y/y, compared to +40.8% for the blue-chip index BET.

The quarter's RON326mn net earnings still reflect "a high level of profitability" corresponding to 14.5% return on equity (ROE) versus 18.8% in Q1 2023, the BRD group's press release reads.  

The banking system’s average ROE was 20.4% last year (21.3% in Q1 2023) peaking up from 16.4% in 2022.

Looking deeper into BRD group’s income statement, the gross profit rose by 6.5% y/y to RON455mn.

But the cost of risk rose more than fivefold to RON54mn (RON9mn in Q1, 2023).

However, the non-performing loan (NPL) ratio remained around the record low level, despite the slow advance to 2.1% at the end of March from  1.9% at the end of 2023 while NPL coverage remained comfortable.

As regards the balance sheet, the bank’s total assets rose by 15.6% y/y to RON81.7bn at the end of March while the stock of net loans rose by 13.2% y/y to RON41.2bn – leaping nearly three times faster than the banking system’s aggregated loans (+4.7% y/y).

During Q1 alone, BRD's loan portfolio continued to increase in line with the annual performance, by 2.6% ytd, but the system’s average neared a standstill (+0.23% ytd).