Business Strategy - The Business Strategy of The Romanian Bank of Development BRD - Groupe Societe Generale

Profile of BRD – Groupe Société Générale

BRD – Groupe Société Générale is the second Romanian bank in terms of banking assets, having the second capitalization at the Bucharest Stock Exchange (EUR 5.5 billion at September 2008).

The main shareholder of BRD is Société Générale, one of the leading financial services groups in the Euro zone and one of the largest French company by market capitalization.

It employs over 151,000 people worldwide, his services are used by 27 millions customers all over the world, its net banking income rises to 21.8 billion euro and its net profit up to 2 billion euro.

BRD - Groupe Société Générale ranks first of the financial entities listed at the Bucharest Stock Exchange and second of all the listed companies.

BRD - Groupe Société Générale is deeply anchored in the Romanian economy and the global community through more than 930 agencies and more than 1300 ATM. In December 2008, BRD counts 2,6 million active individuals and corporate customers and more than 2,3 million banking cards.

The quality of their services is guarantied by more than 9500 professionals who form the BRD team.

Part I : BRD – Groupe Société Générale – The external medium

The Competition from the bank system - Top 10 Romanian Banks by profit

BCR –1st position

BCR and BRD-SocGen remain the leaders of the Romanian banking landscape by net profits reported for last year.

The sale of participations in Asiban, Italo-Romena Bank and the insurance activities drove the profit after tax and payment of minority interests of the group to 2.03 bln lei (541 mln euros) in 2008 and excluding these revenues, the after tax profit stood at 1.3 bln lei.

“The performance at the level of activities has improved significantly, as a result of the program of development and integration into Erste Group. Now, BCR has thus a very positive situation that enables is to respond appropriately to challenges stemming from the crippled operational climate”, said the CEO of BCR, Dominic Bruynseels.

BRD – 2nd position

BRD SocGen, the second largest bank in Romania by assets reported 1.353 bln lei profit for last year, up by roughly 48% from a year earlier. Counting down the incomes from the sale of Asiban, the increase of profit stood at 23%.

BRD-SocGen’s chairman, Patrick Gelin said the bank would continue to return profit in 2009. Yet, he didn’t state any projection for this year’s profit.

BRD’s operating profit was 1.841 bln lei in 2008, 31% up from a year earlier.

Raiffeisen Bank – 3rd position

Raiffeisen Bank reported after-tax profit of 165 mln euro for last year, 75.6% more than 2007, when the bank had posted 94 mln euro, data based on International Accounting Standards, audited, unconsolidated. Profit before-tax was 196 mln euro versus 116 mln euros a year earlier.

Total assets hiked to 4.65 bln euros, at slight increase from 4.4 bln euros in December 2007. Raiffeisen Bank said its operations would return profit this year as well, but lower than last year, resulted from the increase of provisions and narrower banking activity, said the CEO of the bank, Steven van Groningen.

Transilvania Bank – 4th position

Transilvania Bank reported a net profit of 398.23 mln lei last year, up 17% from a year earlier, 56% of the earnings being driven by the sale of 25% ownership in Asiban, reads the preliminary report released by the lender.

In 2007, the bank marked 339.97 mln lei net profit.

In 2008, the operating profit stood at 175.73 mln lei, while 222.50 million lei resulted from the sale of stake in Asiban.

CEC – 5th position

CEC Bank, the local market’s veteran, recorded 366 mln lei (roughly 100 mln euros) in net profit for last year.

The financial result is nearly five-fold higher than a year ago, the lion’s share of the growth being triggered by the sale of 25% ownership in Asiban insurer.

UniCredit Tiriac – 6th position

UniCredit Tiriac posted for 2008 an after-tax profit of 358.3 mln lei (97.29 mln euros), up 37% from a year earlier, as in the same timeframe, the lender’s total assets advanced at a similar pace, of 36%, according to own statements.

According to UniCredit estimates, the profit marked last year, based on International Financial Reporting Standards accounts for nearly 10% of the Romanian banking system’s consolidated profit. Net profit audited by Romanian Accounting Standards stands at 213.6 mln lei.

Alpha Bank – 7th position

Alpha Bank Romania reported a 20.8% increase in profit before taxes, up to 45.8 mln euros, as the bank set up risk provision of 33.2 mln euros, reads the report remitted by the parent bank.

In 2007, the profit before taxes registered by the Romanian subsidiary neared 37.9 mln euros. The bank’s risk provisions of last year increased nine-fold from prior year, when the bank had provisioned a mere 3.7 mln euro.

The operating revenues increased last year by 65.5% last year, up to 184.6 mln euros, due to 51.1% increase in operating costs versus a year earlier.

The last three banks that come to complete the Top 10 banks in Romania by profit are Alpha Bank, Bancpost and Volksbank.

Citibank, the local subsidiary of US-based giant has not yet released the financial results for 2008.

ING Bank Romania reported a 66% increase in pre-tax profit in 2008, up to 106 mln lei (29 mln euros), with total assets jumping to 11.09 bln lei, up 36% from a year earlier. ING Bank increased net revenues by 55% versus 2007, up to 537 mln lei.

EFG Eurobank, the majority stockholder of Bancpost said the bank would record a 6% decline in net profit for Romania for 2008, down to 27.3 million euros.

Volksbank Romania posted a pre-tax profit for 2008 up 54% from prior year, to 37.8 million euros, as the total assets of the lender rose at a roughly similar pace. In 2007, the bank reported a pre-tax profit of 24.5 million euros.