In Q1 2022, BRD Group’s net interest income increased by 9.8% YoY, net fee and commissions income increased by 3.4%, resulting in a net banking income increase of 7.5% YoY. Net profit to majority increased by 18.1% and amounted to RON 260m.
BRD Group’s net interest income increased by 9.8% YoY and amounted to RON 556.2m. This was due to the strong business momentum on the back of a dynamic lending activity across the board. Net fee and commission income grew by 3.4% and amounted to RON 180m, on the back of higher volumes of customers’ transactions. Combined, this increased the net banking income by 7.5% YoY, and it amounted to RON 809.5m.
Moving on to operating expenses, they increased by 6.4% and amounted to RON 459.8m. This was mainly driven by the cumulated contributions to Deposit Guarantee and Resolution funds, which were 40% higher compared to Q1 2021 (RON 69.2m vs. RON 49.4m). If we were to exclude this, OPEX increase would amount to 2.1% YoY. The main drivers of the remainder of the increase were the staff expenses, which grew by 2.6% YoY and amounted to RON 193m, as well as the non-staff expenses, which grew mainly due to the impact of the inflation on real estate expenses and subcontracting costs of IT services.
Meanwhile, the quality of the loan portfolio also improved, with an NPL ratio of 2.7%, a decrease of 0.4 p.p. YoY. Provision coverage also increased by 3.2 p.p. and amounted to 76.5%. Furthermore, the net cost of risk was reduced by 41.2% and amounted to RON 32m YoY, as a result of a recovery in performance, which was partially offset by the current geopolitical environment.
Because of all of these reasons, BRD Group recorded a net profit to the majority of RON 260m, an increase of 18.1% YoY. This would also mean that ROE (return on equity) amounted to 11.9%, an increase of 2.8 p.p. YoY.
BRD Group key financials (Q1 2021 vs. Q1 2022, RONm)
Looking over to the Group’s balance sheet, the total assets increased by 12.3% YoY and amounted to RON 69.1bn. The increase was driven by growth across all types of assets, which the main drivers being net loans and advances to customers, which grew by 8.9% and amounted to RON 33.5bn, followed by an increase in Other financial assets, which increased by 6.4% and amounted to RON 20bn, and finally, the cash and current accounts with the Central Bank, which grew by 27.6% and amounted to RON 8.5bn.
On the other hand, total liabilities increased by 18.5% and amounted to RON 63.6bn. The growth was experienced across all categories, with the Amounts owed to credit institutions increasing 18x, from RON 360m to RON 6.6bn. This increase was driven by the access to a Lombard facility in March, due to the tightened RON liquidity. Next up, we have an increase in Amounts owed to customers, which grew by 3.8% YoY and amounted to RON 53.5bn, and Other liabilities, which grew by 98.7% YoY and amounted to RON 3.5bn.