In Q1, the Group recorded a decrease in net banking income of 2.2% YoY and a decrease in net profit of 20%.
In the first 3 months of 2020, BRD Group recorded a strong increase in net interest income by +6.6% YoY to RON 547.3m. Such an increase came on the back of expanding loan volume and favorable structure shifts. Meanwhile, the bank recorded RON 177.1m in net fee and commissions, which represents a decrease of 4% YoY. The decrease could be attributed mainly to the price alignment of EUR denominated payments to domestic ones, following the recently enforced SEPA regulation, and by ceasing of the Western Union activity starting August 2019. Other banking income was impacted by the volatile March context driven by pandemic, which brought a decrease of trading and revaluation results.
As a result, BRD Group’s net banking income reached RON 766.7m in Q1 2020, lower by -2.2% YoY
Operating expenses amounted to RON 425m, which is a decrease of 3.8% YoY. The decrease came from reduced regulatory costs (Deposit Guarantee and Resolution Fund cumulated contribution, RON 43m, recognized in full in Q1 2020, compared to RON 72m in 2019) and good control of sundry expenses. Staff costs increased by +4.4% YoY. As a result, CIR stood at 55.5% (-0.9 p.p. YoY).
The loan book quality o remained solid throughout the period as represented by the further decrease in NPL ratio to 3.3% (-0.7 p.p. YoY). The bank states that they built a high coverage with provisions of NPLs, standing at 73.3% at March 2020 end. Cost of risk stood at RON -60m (compared to RON 26m release in Q1 2019) as a result of the recognition of a provision overlay related to COVID-19 economic context.
In Q1, net profit amounted to RON 241m, representing a decrease of 19.9%. The result was mostly influenced by the above mentioned by cost of risk charge after the recognition of a specific COVID-19 crisis provision overlay.
Turning our attention to the balance sheet, total assets amounted to RON 58.93bn, an increase of 2% YoY. BRD operates with a strong balance sheet, with a capital adequacy ratio of 22.6% after decision to entirely retain the 2019 net profit.
The bank’s net loans, including leasing receivables, increased by +2.4% YoY.
Deposits from customers, founded on a solid retail base, saw strong growth (+4.2% YoY) which was driven by larger inflows in individuals’ savings, with current accounts up by +30% YoY. As a result, L/D ratio stood at 66.7% (-2.3 p.p. YoY).
