SocGen’s BRD Posts Surging Profit on Visa Deal, Replaces CEO

  • Romanian lender gains $26 million from Visa Europe stake sale
  • CEO Lhotte to be replaced with Rosbank’s Bloch from Nov. 1

BRD-Groupe Societe Generale SA reported a more than 60 percent increase in first-half earnings due to the sale of its stake in Visa Europe and lower costs. It also announced a change of leadership.

Net income increased to 378 million lei ($95 million) from 231 million lei a year earlier. The sale of its stake in Visa Europe to Visa Inc. resulted in a gross one-time gain of 103 million lei in the second quarter, the Bucharest-based lender said in a statement on Wednesday. The transaction also boosted the earnings of other members of Visa’s network, such as Bank Millennium SA in Poland and Austria’s Erste Group Bank AG.

Romania’s second-biggest lender by assets has been focusing on profitability and cleaning up its balance sheet rather than on boosting market share, which contributed to a 13 percent increase in net banking income in the first half. BRD also said that Philippe Lhotte, who has served as chief executive officer since 2012, will be replaced by Francois Bloch, first deputy chairman at Societe Generale’s Russian unit Rosbank PJSC, from Nov. 1, pending approval from the central bank.

“Net banking revenues continued to progress markedly, allowing
us to look with confidence to the future,” Lhotte said in the statement. BRD didn’t elaborate on the reasons for Lhotte’s departure.

BRD’s non-performing loan ratio dropped to 14.4 percent at the end of June from 18.6 percent at the end of June 2015, while the cost-to-income ratio dropped by 8 percentage points to 49.2 percent thanks to the "marked increase in revenues and additional cost savings,” it said. Net income including profit attributable to non-controlling interests increased 64 percent to 381 million lei.

The bank’s net cost of risk increased 5 percent in the first half "influenced by the recognition of a general provision of 90 million lei” triggered by Romania’s mortgage walkaway law, BRD said.

Before it's here, it's on the Bloomberg Terminal.