BRD - BRD Q1 Results Marked By Provisioning Ahead Crisis
BRD – Instant Earnings Comment
Recommendation: Buy (unch.)
Target price (12M): RON 16.1 (unch.)
- BRD reported Q1 net income came to RON 7 mln, down by 11.7% q-o-q and 20.0% y-o-y due to higher risk provisioning.
- Net interest income was down by 1.1% q-o-q and NIM also declined to 3.75% vs. 3.9% in Q4, showing the first signs of the crisis while net F&C was also down due to seasonality and y-o-y 4% decline was attributed to SEPA regulation impact. Net trading was low on volatile markets related to fixed-income and revaluation income.
- Deposit guarantee fund payment declined to RON 43 mln from RON 72 mln a year ago, this partially offset the decline in revenues.
- NPL ratio remained low at 3.3% (vs. 3.1% a quarter ago) with coverage at 73.3%. Net loan book remained stable due to the increase in large corporates (+1.5%), compensating for weaker retail (-0.2%) on a quarterly basis. Deposit inflow was strong in the first quarter, up by 2.3% driven by retail and SMEs, thus loan-to-deposit ratio remained low at 64.5%.
- Capital ratio stays very high at 22.6%, prepared for the crisis. BRD offers debt moratorium for over 44ths borrower since the end of March and is involved in SME program guaranteed by the State.
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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