In 2021, BRD bank’s net interest income remained flat, net banking income increased by 1%, while net profit increased by 37%. BRD Board also proposed a dividend out of 2021 result (dividend distribution rate 70%), which would amount to a dividend of RON 1.285 per share, and a DY of 6.12% at the current price.

As BRD Bank published their preliminary FY 2021 results, we decided to bring you an overview of the Company’s performance in the year. At the end of the year, the Company’s net interest income amounted to RON 2.08bn. It should be noted that the Company managed to increase its volume while the market rates were lower (compared to previous years) counteracting this expansion, with the net interest income roughly the same YoY as a result.

At the same time, net fees and commissions increased by 7.5% YoY, on the back of higher customer activity, ending the year on RON 764.8m. This resulted in the net banking income of RON 3.12bn, an increase of 1% YoY. Operating expenses increased by 1.86% YoY, amounting to RON 1.62bn, driven by the increased investments in the digital transformation of the Company, while simultaneously, the Company managed to decreased personnel costs (the largest part of the operating expenses) by -0.6%.

Going further down the P&L, the gross operating profit remained the same YoY, amounting to RON 1.5bn. The quality of the loan book was confirmed throughout 2021 as shown by the low NPL ratio (3.1% at year-end), the high coverage with provisions of non-performing exposures (75%), and the cost of risk net write-backs. So the cost of risk was positive and it supported the result with RON 146m (EUT 29.5m) vs. last year’s negative costs of risk of EUR 71.4m. Because of all of the things mentioned above, the Company’s net profit amounted to RON 1.32bn, an increase of 37% YoY. At that level, the Company’s ROE amounted to 15.6%.

Balance Sheet

In 2021, the Company’s assets increased by 8.7% YoY, reaching RON 69.1bn. This increase was on the back of loans and advances to customers (+11% YoY) and an increase of financial assets at fair value through other comprehensive income (+25%) to RON 15.9bn. On the liabilities side, deposits from customers increased by 5.5% YoY, amounting to RON 52.7bn. With the loans increasing faster than deposits, the loan to deposit ratio increased as well, increasing by 3.14 p.p. to 62.5%, which shows that the Company still had more room for loan growth. It should also be noted that the Company managed a low 3.1% of NPLs during the year.

BRD’s capital position is solid with the total capital ratio reaching 22.9% (individual level) at December 2021, excluding the 2021 net result, and deducting the exceptional dividend distribution from 2019 and 2020 retained profits proposed for AGM approval on February 24, 2022 (RON 1.68 bn). The BRD Board of Directors also proposed a dividend distribution rate of 70%, which would amount to a dividend of RON 1.285/share, and a DY of 6.12% at the current price. The vote for the distribution of the dividend will be held at the Annual General Meeting of Shareholders on April 28, 2022.

As a reminder, the already announced special dividend payment, in the amount of RON 2.4164 will be paid out of the retained profits of 2019 and 2020. At the current share price, the DY for this payment is 11.5%. Combined with this new proposed dividend, this would yield a dividend of RON 3.7014/share, and a DY of 17.63% in 2022 at the current share price. To read more about this news, click here.

Dividend per Share (RON) and Dividend Yield (%), 2016-2022

*2022 includes both the special dividend payment of RON 2.4164 and the new proposed dividend of RON 1.285

We bring you an overview of how often did current BET constituents outperform and underperform compared to the BET index as a whole.

For this, we calculated the percentage of times (out of 252 trading days in 2021) in which an individual share recorded a higher yield than the index. As visible on the chart, only 3 out of 10 shares outperformed BET by more than 50% of the time. OMV Petrom outperformed the index 52% of the time, followed by Nuclearelectrica and Medlife which both outperformed the index 51% of the time. Other sixteen constituents individually underperformed the index by more than 50% of the time. Out of them, two constituents of the Index, Groupe Societe Generale and Teraplast, outperformed the index 49% of days and underperformed it other 51% of days, while other constituents recorded slightly worse performance compared to the BET index as a whole.

We also present you P/E multiples at which selected Romanian companies currently trade. We can clearly notice that BVB, Electrica and Alro at the moment trade at the highest prices with P/E ratio of 55, 54.2 and 38.1, respectively. It is important to notice that these companies have a very high P/E due to low reported earnings. Nuclearelectrica, Medlife, Conpet, OMV Petrom, BRD Bank and Transelectrica are to follow, and all of them currently trade at P/E higher of 10. Finally, we have Romgaz, Digi, and Purcari that trade with P/E slightly below 10.

P/E of Romanian companies