BRD profit down 8.2% in real terms

The net profit of Banca Romana pentru Dezvoltare (Romanian Development Bank – BRD)-Groupe Societe Generale last year registered an 8.2% drop in real terms (excluding inflation), from the previous year.

In line with the preliminary financial results, the bank’s 2003 net profit was worth 2,358 billion ROL (57.3 million euros), down from the 2,251 billion ROL (64.5 million euros) logged in the previous year. In nominal terms, the bank’s net profit climbed 4.7%, against an inflation rate of 14.1% in 2003.

2003 was the first year when the banking system witnessed a drop in profitability, blamed by bankers on the shrinking margins, the new credit provisioning system, as well as a series of other norms imposed by the National Bank of Romania.

According to the bank’s management, the main reason behind the net profit drop in real terms was the enforcement of the new lending risks regulations issued by the National Bank. “New lending risks regulations by the National Bank eroded the bank’s profit for 2003 by at least 180 billion ROL,” said BRD president Bogdan Baltazar.

The net risk cost was 3.7 times higher in nominal terms last year as compared to the previous year, reaching 769 billion ROL, against a 63% rise in the volume of loans granted by the bank. At the same time, the share of the bank’s non-performing loans last year dropped from 2.9% to 2.2%. The total value of loans granted by BRD stood at 49,298 billion ROL (1.2 billion euros). According to Baltazar, the bank set lending provisions worth more than 500 billion ROL in 2003.

Net banking revenues rose 10.5% in real terms last year, to 7,910 billion ROL, while gross operating income amounted to 3,748 billion ROL, up 14.3% in real terms. vlad.nicolaescu@zf.ro