BRD Groupe Societe Generale (BVB ticker: BRD), the second largest bank in Romania, recorded an 8.8% decrease in net banking revenues, in the first nine months of this year, to EUR 423 million, due to the decline in its loan portfolio.

“Net banking income decreased by 8.8% compared to similar period of 2013, mostly due to net margin affected by adverse volume and structure effects. The net fees and commissions remained resilient compared to 9 months 2013 (+0.3%), benefiting from BRD leadership position on custodian services and IPOs intermediation,” according to the bank’s representatives.

Lower revenues also dragged down the bank’s operating profit, which stood at EUR 218 million, 12.7% lower than in the first nine months of 2013, according to BRD’s nine months financial report.

Risk costs, which include provision expenses related to non-performing loans, also declined, by 8.6%, to EUR 214 million.

The net profit stood at EUR 4.5 million, in the first nine months, two and a half time lower than in the same period of 2013, when the bank posted a net profit of some EUR 11.5 million. However, BRD ended last year with losses of EUR 87 million, due to large provisions made in the last quarter, which may not be the case this year, as the bank cleaned some of the bad loans from its balance sheet.

“Non-performing loans (NPLs) ratio according to IFRS decreased to 21.1% as at September 2014 versus 24.8% as at December 2013, while the NPLs ratio according to the central bank definition (loans more than 90 day overdue and/or under legal procedures) was 18.2% as at September 2014 compared to 21.8% as at December 2013. The NPLs ratio evolution is due to the implementation of a new write-off policy and is in line with the trend observed for the banking system,” according to BRD’s statement.

The bank’s net loan portfolio, which reflect the total value of the bank’s performing loans, was down by 1.8% compared to the end of December 2013 and by 6,2% compared to September 2013, to EUR 6.18 billion. Deposits were slightly up compared to September 2013, to EUR 7.69 billion. The net loans to deposits ratio was 80.4%.

BRD’s shares are listed on the Bucharest Stock Exchange. The share price has declined by 12% so far this year (as of November 6, 2014) and the bank’s market capitalization is currently EUR 1.25 billion.

 Andrei Chirileasa, andrei@romania-insider.com