Romania’s No. 2 bank BRD posted a 19% fall in Q1 net profit on Tuesday, reflecting rising loan-loss provisions and the effects of the economic downturn.
Net profit at BRD, controlled by France’s Societe Generale, dropped to RON 210 million ($67 million) compared with a forecast of RON 158 million in a Reuters poll.
Risk costs or loan-loss provisions reached RON 201 million compared with 62 million in January through March 2008. Net banking revenue rose 18% to RON 815 million, while the total loan book rose by 19.5% on the year to 33 billion.
“We noticed a powerful drop of lending demand and a significant increase in risk costs ... because of a reduction in economic activity and a very high level of interest rates,” BRD CEO Patrick Gelin said in a statement.
In a Reuters interview last week, Gelin said loan-loss provisions could more than double to up to 1% of the total loan book this year. He said the bank would remain profitable, but this year’s earnings could be anywhere from down 10 to 15% to roughly flat, depending on economic growth. (Reuters)