During 9M 2023, BRD recorded net interest income growth of 17% YoY, net fee and commission decrease of 2%, net banking income increase of 11%, and a net profit to majority of RON 1.23bn, a 21% increase YoY.
Last week, BRD Bank published its 9M 2023 results, and in this overview, we’re bringing you the main points. Starting off with the net interest income, during 9M 2023, it amounted to RON 2.01bn, a 17% increase YoY. BRD noted that this revenue stream built on a favorable volume effect of both retail and corporate loans, as well as higher interest rates on asset portfolio (average ROBOR 3M amounted to 6.72% during 9M 2023, a 1.09 p.p. increase YoY). On the other hand, the growth in NII was also adversely affected by the rising funding costs, primarily associated with commercial term deposits.
Moving on to net fee and commission income, it amounted to RON 563.2m, a 2% decline YoY. This primarily came as a result of lower service fees from card activity and reduced cash transactions, mainly due to a base effect. This base effect reflects the reaction to the war in Ukraine, which generated massive withdrawals from individual customers. On the flipside, this decline was partially compensated by higher revenues from packages on rising volumes, as well as insurance and brokerage activities. Other banking income remained roughly the same, increasing by 1.2% to RON 278m, mainly due to a gain on financial assets held for trading.
All taken together, this led to a net banking income of RON 2.83bn, an 11% increase YoY. Moving on to expenses, OPEX amounted to RON 1.39bn, a 9% increase YoY. The main drivers of this increase were personnel expenses, which increased by 9%, or RON 57m to RON 706m, as well as other op. expenses, which grew by 11% YoY, or RON 44.3m, to RON 431.5m. The personnel expenses increase was driven by the still tight labor market and elevated inflation, which led to salary growth and other benefits adjustments (following the new labour agreement signed in 2022). Other op. expenses meanwhile, increased due to higher expenses related to external services and IT&C to support the delivery of the digital transformation, while “run-the-bank” costs remain under control.
In terms of the cost of risk, it amounted to RON 35.5m (9M 2022: RON -36.9m), signaling better market conditions, as the NPL ratio stood at 2.1% by the end of September 2023, a 0.5 p.p. decrease YoY. BRD further notes that the release in the cost of risk came as a result of sustained recoveries on defaulted exposures and stable evolution of the performing portfolio. Due to these positive developments, the net profit to majority amounted to RON 1.23bn, a 21% increase YoY.
BRD Bank key financials (9M 2023 vs. 9M 2022, RONm)
Source: BRD Bank, InterCapital Research
Moving on to the balance sheet, total assets increased by 3.8%, or RON 2.67bn to RON 73.8bn. The main drivers of this growth were loans and advances to customers, which grew by 10% YoY to RON 39.7bn, treasury bills at amortised cost which increased by 274% YoY to RON 5.2bn, as well as cash and due from Central Bank (in other words, amounts held as deposits at the Central Bank), which increased by 40%, to RON 9.5bn.
On the other hand, total liabilities increased by 9.1%, or RON 5.9bn to RON 70.8bn. This came mainly as a result of higher deposits from customers, which increased by 10% YoY to RON 60.6bn. Total equity also increased, growing by 38% YoY to RON 8.72bn, mainly as a result of 2022’s net profit, and a lower negative revaluation of reserves of debt instruments accounted at FV through other comprehensive income, due to a slightly favorable development of bond yields curve YoY.
