BRD - Strong Start To 2023 On Net Interest Income, Lower Provisioning

BRD’s reported income came ahead our estimate of RON 291 mln by 16% and
implies a profit growth of 30% y-o-y and 6% q-o-q. Better than expected
results stemmed from stronger operating results (higher NII and lower than
anticipated OPEX growth) while provisioning was extremely low, 10 bps in the
quarter.
 Net interest income hiked by 4% q-o-q thanks to the higher loan book and
improving margins (+10 bps q-o-q). Net F&C came in line with our
expectations and 4% lower q-o-q and y-o-y on lower fees from cards activity
as a result of increasing penetration of packages and higher base in Q1 22.
 OPEX was up by “only” 10% y-o-y within expenses, PEREX increased 9% y-oy. On a quarterly comparison, costs went up by 8% but adjusted for the
Deposit Guarantee payment, expenses declined by 7% q-o-q in the seasonally
lower Q1. As a result of strong revenues and strict cost control, cost-toincome ratio declined to 46%. 

Volumes continued to expand 2% q-o-q mainly driven by working capital
loans. Deposits eroded 2% q-o-q due to lower demand deposits partially
offset by the move to term structures. On a segment breakdown, the decline
was mostly attributed to the corporate segment as individuals’ deposit base
remained stable.
 NPL ratio increased somewhat to 2.6% with coverage staying at 77.4%. Tier 1
ratio was at 18.2% with the impact of OCI quick fix.
 We consider BRD’s earnings as very strong and the shares should react to this
positively. We will update our estimates for this year and thus put our TP to
Under Revision.
 Conference call is set on Monday at 15:00 pm, Romanian time.