Bloomberg News

BRD Nine-Month Profit Drops 19% on Loan Costs, Weak Demand

November 04, 2011

(Updates with comment from third paragraph.)

Nov. 4 (Bloomberg) -- BRD-Groupe Societe Generale SA, Romania’s second-largest lender by assets, said nine-month profit fell 19 percent on bad-loan costs and weak demand for credit.

Net income dropped to 382 million lei ($121 million) from 474.2 million lei a year earlier, the bank said in a statement to the Bucharest Stock Exchange today. Net banking income, the bank’s main source of revenue, fell 9 percent to 2.4 billion lei, the bank said.

“The third quarter was marked by the persistence of low demand for banking services, considering the country’s economic growth hasn’t picked up yet,” BRD Chief Executive Officer Guy Poupet said in the statement.

Romania’s banking industry posted a loss in 2010 for the first time in a decade and has struggled with bad loans for two years since the country plunged into its worst recession on record. Economic output will probably grow 1.5 percent this year and about 2 percent next year, less than a previous forecast of 3.5 percent, according to the International Monetary Fund.

BRD, majority owned by France’s Societe Generale SA, set aside 904 million lei for bad loans in the first nine months, 14 percent less than a year earlier. Net assets were 46 billion lei at the end of September, the bank said.

BRD shares rose 0.9 percent to 11 lei in Bucharest trading as of 10:01 a.m. today, valuing the bank at 7.66 billion lei.

--Editors: James Kraus, Alan Purkiss

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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