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06 May 2021

The main business trends and financial indicators of BRD Société Générale Group as of March 31, 2021 at the consolidated level, according to International Financial Reporting Standards (IFRS):

Dynamic activity:

  • sharp increase in the production of loans to individuals, + 9% year-on-year

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  • strong corporate financing activity (+ 7.8% year-on-year), driven by a sustained advance on SMEs (+ 25% year-on-year) granting the largest green loan to date in Romania, materializing the ambition of actively develop sustainable financing with a positive impact

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  • 53% market share in the third government bond issue for individuals, as part of the Fidelis program

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  • Growing adoption of digital channels, with unique active users of MyBRD Mobile and MyBRD Net up + 22% year-on-year

Resilient income despite a lower interest rate environment, RON 759 million of net banking income in the first quarter of 2021 (vs. RON 767 million in the first quarter of 2020)

Strong cost discipline, without compromising on investments in the strategic digital roadmap

Low NPL ratio, Net cost of risk at 55 bps

Net profit of RON 222 million (against 241 million RON in the first quarter of 2020)

“The Romanian economy exceeded expectations in the fourth quarter of 2020, causing annual GDP to decline less sharply than initially estimated.

In terms of health, the vaccination campaign is progressing, laying the foundations for a controlled health situation. If the direct effects of the pandemic diminish and, at the same time, a smooth transition to neutralized support measures is ensured, 2021 should be a better year for the Romanian economy.

Despite the restrictive measures still in place to contain a third wave of the pandemic, BRD has had a good start to the year.

The production of loans to individuals increased sharply and loans to businesses were fueled by very dynamic financing of SMEs. We also granted the largest green loan in Romania to date, demonstrating our ambition to contribute to the development of a more sustainable world.

At the same time, digital adoption continued to accelerate, with an increase of + 22% per year in the number of customers actively using remote channels.

As such, BRD delivered over the first three months of the year a performance proving the adaptability of its business model and the adequacy of the actions taken in response to the crisis. GNP held up despite a significant drop in market interest rates, while costs were tightly controlled without compromising on strategic investments.

On the strength of its solid fundamentals, the BRD is in full capacity to continue supporting its clients and the recovery of the Romanian economy ”, declared François Bloch, CEO of BRD Groupe Société Générale.

Dynamic business activity

The production of loans to individuals is up + 9% over one year, based both on the strong growth in consumer loans (+ 19%) and on new housing loans outside government programs ( the Noua Casa envelope having remained unavailable until the end of the quarter). The business loan portfolio grew by + 7.8% compared to the end of March 2020, driven by very dynamic SME financing activity (+ 19.4% over one year, including leasing). Concretizing its expertise and strong commitment to sustainable financing with a positive impact, the BRD structured the largest green loan granted to date in Romania, worth RON 1.25 billion.

The annual growth of personal deposits reached + 10.1% year-on-year, still benefiting from the strong propensity to save triggered by the prolonged pandemic. Business deposits progressed solidly (+ 8.1% yoy), mainly on a double-digit increase in resources for SMEs (+ 11.2% yoy). At the same time, a strong pace of recovery is visible in the asset management business, with assets under management reaching RON 4.61 billion at the end of March 2021, increasing by 27% year-on-year and bringing the market share at 19.4% * (+1.5 ppts a / a). In addition, the BRD intermediated 53% of the third Romanian government bond issue for individuals under the Fidelis program.

The accelerated digital adoption is reflected in the sharply increasing number of unique active users on the Internet and mobile banking services (to 763,000 at end-March 2021, up + 22% year-on-year), and the rapid growth in the number of transactions via electronic channels, + 45% year-on-year. in the first quarter of 2021. Digital penetration in the business segment has reached a very high level, with 99% of transactions by large companies and 96% of SMEs carried out through digital channels.

Resilient financial performance

BRD Group’s net banking income printed at RON 759 million in the first quarter of 2021, almost stable compared to the level of the first quarter of 2020 (-1.0% year-on-year compared to RON 767 million in the first quarter of 2020). Net interest income decreased by 7.4% year-on-year in Q1 2021, impacted by the fall in market rates in the first quarter of the year (average ROBOR 3M in Q1 2021 to 1.65% against 3, 03% in Q1 2020).

The pressure on net interest income was offset by a better performance from net commissions and other banking income. Net fees and commissions were up + 1.3% year-on-year compared to Q1 2020, supported by a higher contribution from capital markets activities and increased transaction activity. The normalization of the market context (compared to the very unfavorable one of March 2020) resulted in an improvement in trading income and positive revaluation effects, positively influencing the evolution of other income.

Operating expenses amounted to RON 438 million in the first quarter of 2021, + 1.9% excluding the higher contribution to the Deposit Guarantee and Resolution Fund (RON 49.4 million, fully recognized in the first quarter 2021, compared to RON 43.3 million in 2020). Personnel costs were reduced by -5.1% year-on-year in the first quarter of 2021, thanks to increased automation and productivity gains. Non-staff spending was driven by accelerating investments in digital transformation and one-off healthcare costs, while other spending remained under tight control.

The quality of the loan portfolio remained solid in the first quarter of 2021, as evidenced by the low ratio of NPL (Banking level, non-performing loans, according to the EBA definition), reaching 3.3% at the end of March 2021, stable compared to end of March 2020. The net cost of risk reached 55 bps in Q1 2021, mainly linked to retail portfolios, while the coverage of NPL provisions is maintained at a high level (73.3%, at end March 2021, Bank level).

Including all the above, the BRD group’s net profit reached 222 million RON in the first quarter of 2021 compared to 241 million RON in the first quarter of 2020 (the decrease being largely triggered by the increase in the capital base).

The solvency ratio is high, reaching 31.6% as of March 31, 2021 (autonomous BRD), against 22.6% as of March 31, 2020, due to the incorporation of the 2020 result (net of dividends according to the GSM resolution, strongly limited this year in compliance with the strict regulatory restriction), the increase in reserves resulting from the revaluation of debt instruments and the decrease in capital requirements mainly due to the temporary reduction in the risk weight for debt sovereign issued in the currency of another Member State (implemented by Regulation EU 2020/873 regarding certain adjustments in response to the COVID-19 pandemic).

The BRD’s financial results for the three months ended March 31, 2021 are available to the public and to investors on the bank’s website: from 9 a.m. Copies of documents can also be obtained on request, free of charge, at the registered office of BRD-Société Générale Group, located at 1-7, Ion Mihalache Bd., 1st district, Bucharest.

Market shares on the open UCITS market

Note: Unless otherwise indicated, all changes are compared to Q1 2020 (for items related to the income statement) or to the end of March 2020 (for items related to the balance sheet)

NCR in bps, NPL and coverage ratio, at Bank level

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