SocGen’s Romanian BRD Profit Falls on Higher ProvisioningIrina Savu
BRD-Groupe Societe Generale SA, Romania’s second-biggest bank by assets, said its first-quarter profit fell 84 percent on rising bad-loan costs and lower fees.
Net income dropped to 13 million lei ($4 million) from 83 million lei in the year-earlier period, the Bucharest-based lender said in a regulatory statement today. Bad-loan costs grew 4.2 percent in the first quarter from a year earlier, according to the statement.
BRD, majority-owned by France’s Societe Generale SA, posted its first loss last year since at least 2003, according to stock exchange data, mainly because of soaring bad-loan charges as a stagnating economy made it difficult for citizens to repay loans. The Romanian banking industry posted the third consecutive year of losses in 2012.
“In the first quarter of 2013, the bank had operated in a still difficult economic environment marked by low demand for banking products and services,” it said in the statement. “The risk cost continued to be strongly influenced by the adverse environment and remained close to the level recorded in the first quarter of 2012, but it dropped when compared with the previous two quarters.”
BRD’s first-quarter net banking income, its main source of revenue, dropped 11 percent to 687 million lei from 768 million lei a year earlier, according to the statement. Operating expenses declined 6.3 percent as BRD seeks to improve its cost-income ratio, a measure of profitability, this year, it said.