BRD-Groupe Societe Generale yesterday announced a 4% increase in its first-half net profit in RON, to 315 million RON (89 million euros).
The increase in the bank's profit was slower than the inflationary rate between June 2005-June 2006, which stood at 7.1%. The bank, however, managed to gain some market share in the first six months. The profit of the bank in euros increased by 7% in the first half.
The slower than inflation growth of BRD's profit comes after the bank has accustomed investors on the Bucharest Stock Exchange with annual growth over 50% in the net profit over the last two years. BRD officials blame the slowdown in profit growth on the tightening of NBR's monetary policy and on the increasingly fiercer competition in the banking system.
The effects of the latest increase in NBR's monetary policy from 8.5% to 8.75% and the increase in the rate of mandatory minimum reserves by four percent to 20% did not affect the results of the bank, as the central bank took these steps at the end of June.
The profit of the entire group that also includes BRD Sogelease, BRD Finance IFN and BRD Securities, amounted to 335 million RON (95 million euros).
The bank's profitability, however, remained high compared with its equity capitals. BRD thus posted a return on equity (ROE) of nearly 36%.
The harshening of NBR's monetary policy that overlapped with a fiercer competition among banks for market share, has eaten into the profit margins for the entire banking system, with most banks cutting the spread between interests on loans granted and deposits attracted. The growth pace of the profit of all the other banks listed on the Bucharest Stock Exchange plunged in the first half.
"The activity in the first half was carried out at a steady pace, albeit greatly influenced by the NBR's regulatory measures whereby banks had to bear a
