In 9M 2022, BRD Group recorded an NII growth of 12.2% YoY, NFCI growth of 1.9%, a net banking income growth of 9.8%, and a net income to majority of RON 1.0bn, an increase of 10.4% YoY.
The net interest income for the period amounted to RON 1.72bn, an increase of 12.2% YoY. This growth was driven by an increase in interest revenues, building on the positive volume effect and higher rates (avg. ROBOR 3M at 5.63% in 9M 2022 vs. 1.59% in 9M 2021). This, however, was also affected by increasing funding costs related to corporate deposits, term deposits to individuals, and the usage of the Lombard facility within a tight liquidity environment.
Net fees and commissions income increased by 1.9% YoY to RON 575.3m, driven by the good performance of service fees, mainly due to the increase in revenue from card transactions and insurance fees. This compensated for the impact of lower commissions from e-banking given the migration of individual clients to the new free-of-charge mobile banking application. Other revenue categories increased by 13.4% YoY, mainly on the consistent increase in both trading and sales activities on all products. Because of the growth in these categories, net banking income increased by 9.8% YoY to RON 2.54bn.
Moving on, operating expenses increased by 6.5% YoY to RON 1.28bn. Of this, the biggest contribution came from personnel expenses and other operating expenses. Personnel expenses increased by 5.2% YoY to RON 648.9m, due to higher wages and other benefits. Other operating expenses increased by 9.9%, mainly due to higher expenses related to several external services and IT&C. Furthermore, the Contribution to Guarantee Scheme and Resolution Fund also increased, growing by 40% YoY to RON 69.2m.
The net cost of risk amounted to RON -37m (9M 2021: RON 41.7m), meaning that compared to last year when there was a release of provisions, BRD had to reserve a lot more this year. This was driven by charges on performing portfolios in response to macroeconomic trends. NPL ratio during the same period amounted to 2.6% (-0.6 p.p. YoY). The EBT for the period amounted to RON 1.23bn, an increase of 6.1% YoY, while the tax amounted to RON 212.6m, implying an effective tax rate of 17.3%, a decrease of 3.2 p.p. YoY. Following this, the net profit to majority amounted to RON 1.0bn during 9M 2022, an increase of 10.4% YoY.
BRD Group key financials (9M 2022 vs. 9M 2021, RONm)
Source: BRD Group, InterCapital Research
Moving on to the balance sheet, BRD Group’s total assets amounted to RON 71.2bn on 30 September 2022, which is an increase of 3.5% YoY. Of this, the largest growth was recorded in loans and advances to customers, which grew by 11.5% YoY to RON 36.2bn, and the loans and advances to credit institutions, which increased by 12.3% YoY to RON 7.2bn. On the other hand, total liabilities amounted to RON 64.9bn, an increase of 10.1% YoY. This was driven by an increase in deposits to other credit institutions, which increased by 130% to RON 7.65bn, and deposits from customers, which grew by 2.5% to RON 55.16bn. The increase in customer deposits was driven by retail (both individuals and small businesses) and non-retail (large corporates) with increases in term deposits and local currency resources.