BRD - Groupe Société Générale (BRD) Q3 2024 earnings summary

Executive summary

• Net profit for 9M 2024 was RON 1,094m, down 10.9% year-on-year, with strong 15% loan portfolio growth driven by 23% corporate and 48% individual lending, but impacted by a new turnover tax and higher risk costs.

• Deposits increased 8% year-on-year, maintaining a strong liquidity position and a net loan-to-deposit ratio of 72.7%.

• Digital engagement advanced, with 1.65 million active mobile app users (+24% y/y) and 21 million transactions (+29% y/y).

• Asset quality remained robust, with an NPL ratio of 2.4% and coverage at 78.6% at September 2024 end.

• ROE stood at 16.1%, down from 20.9% YoY, as profitability was affected by new taxes and higher costs.

Financial highlights

• Net banking income grew 5.4% year-on-year to RON 2,984m, with net interest income up 7.1% and net fees/commissions up 6.4%.

• Operating expenses increased 8.8% year-on-year, mainly due to the new turnover tax and higher staff costs.

• Cost/income ratio rose to 50.7% (up 1.6 pts YoY), but improved to 47.5% excluding the turnover tax.

• Net cost of risk was RON 136m in 9M 2024, compared to a net release of RON 35m in 9M 2023.

• Net profit declined to RON 1,094m from RON 1,227m in 9M 2023.

Outlook and guidance

• Lending growth expected to remain dynamic, with NPL ratio projected to stay below 2.5% by year-end.

• Asset quality ratios anticipated to remain sound, with risk costs at normalized levels.

• Full-year cost of risk guidance maintained at less than 40 basis points.

• Comfortable capital and liquidity positions support continued business growth.

• Expectation of GDP growth close to but below 2% for 2024, with inflation declining but still highest in the EU.