BRD's net profit down 19% in Q1

The BRD, the second-largest bank on the Romanian market, posted a 19% net profit decline in the first quarter of the year against the same time in 2008, to 210 million RON, equivalent to 49 million euros. The decline is half of what some analysts of brokerage firms expected. Patrick Gelin, chairman of the BRD, says activity in the first three months of the year was marked by a significant decline in credit demand and by a significant increase in the cost of risk. Compared with the end of 2008, the value of credits granted to individuals rose by just 1%, compared with a 6% rise in the first quarter of last year. On the corporate segment, the rise in the volume of credits was of 4%, i.e. three times lower than in the first three months of 2008. The cost of provisions reflected by the net cost of risk climbed over three times against the first quarter of 2008, to 201 million RON (47 million euros). Gelin sees the reduction in economic activity and the very high level of interest rates, mainly for RON, as reasons for the decline. “The BRD, which anticipated this situation several months ago, has adapted via commercial actions in which it relied on the flexibility and diversity of its product range,” says the head of the BRD. He says that, although significantly higher than last year, “the net cost of risk should continue to be significantly lower than the average cost in the banking system”.