BRD Groupe Societe Generale S A : For info – 2022 Revised perspectives considering the new macroeconomic context

REVISED

2022BRD GROUP PERSPECTIVES

REVISED 2022 PERSPECTIVES

General Shareholders Assembly

C O N S O L I D A T E D D A T A , A C C O R D I N G T O I F R S

A P R I L 2 0 2 2

INTRODUCTION

• The budget validated by BRD Board of Directors on March 14th was built in September 2021 (based on a macroeconomic scenario prepared in August 2021)
• The assumptions of this budget are obviously largely outdated
• Taking into account the new macroeconomic and geopolitical context, revised projections were prepared in March 2022
• At this stage, the indirect economic consequences induced by the conflict between Russia and Ukraine remain highly uncertain
• Nonetheless they accentuate pre-existing trends on inflation and interest rates
• The following projections aim at giving a first, high level estimate of the impact of the current crisis on BRD activity, based on certain assumptions

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NEW MACROECONOMIC CONTEXT

M a c r o S c e n a r i o

• Conflict between Russia and Ukraine affecting the global economy through three main channels: financial sanctions, commodities prices and supply-chain disruptions
• Commodities prices should remain elevated for a prolonged period
• Global inflation will materially increase
• Double digit inflation expected in Romania in 2022
• Deteriorated confidence weighing on both investment and consumer demand
• 2022 Romanian GDP growth assumption revised downwards from 3.5% (September 2021 forecast) to 2.7%
• Interest rate assumptions revised significantly upwards :
• • Average Robor 3m : 4% in 2022 (vs 1.8% in 2021)
  • Average 10y government bond yield : 6% in 2022 (vs 3.7% in 2021)
• Anticipation of relatively stable RON/EUR exchange rate (NBR ready to react to prevent excessive fluctuations)
• Lower credit demand

K e y a s s u m p t i o n s

• Deteriorated investment climate, high inflation and interest rates, lower purchasing power affecting loan demand on both retail and corporate segments
• Expected drop of production for both consumer loans (-10%) and housing loans (-3%) compared to 2021
• Flattish corporate loan volume compared to 2021 end
• Growing preference of private individuals for foreign currency savings

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REVISED 2022 KEY INDICATORS, CONSIDERING NEW MACROECONOMIC CONTEXT

Net loans outstanding EOP | RON bn		Deposits outstanding EOP | RON bn

43. 0
41. 0
39. 0									+10.6%	34.4	+0.7%
						34.1
37. 0
		30.7
33. 0
35. 0
31. 0													11.1	+0.7%
Corporate			11.0		+25.7%
27. 0
29. 0
25. 0			8.7
23. 0
21. 0
19. 0
17. 0
Retail 13. 0												+0.7%
15. 0
11. 0			22.0		23.1		+4.6%		23.3
9. 0
7. 0
5. 0
3. 0
1. 0
			2020 A			2021 A					2022 B

57.0												55.5
												+5.4%
					52.7
							+4.8%
55.0			50.0
53.0
51.0
49.0
47.0												17.5
45.0					16.9							+3.6%
43.0			16.4				+2.9%
41.0
Corporate39.0
37.0
35.0
33.0
31.0
29.0
27.0
25.0
23.0									+5.8%			+6.3%
21.0										38.0
19.0
Retail	33.6		35.7
17.0
15.0
13.0
11.0
9.0
7.0
5.0
3.0
1.0			2020 A		2021 A				2022 B

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REVISED 2022 FINANCIAL PROJECTIONS, CONSIDERING NEW MACROECONOMIC CONTEXT

A 2020		A 2021	Evolution	Revised perspectives for 2022
			21/20

RON m

FINANCIAL RESULTS

RATIOS

NET BANKING INCOME	3,068		3,097	+0.9%
OPERATING EXPENSES	(1,568)		(1,597)	+1.8%
GROSS OPERATING INCOME	1,500		1,500	0.0%
NET COST OF RISK	(353)		146	na
NET RESULT	963		1,319	+37%
COST/INCOME RATIO	51.1%		51.6%	+0.5 pts
ROE	10.5%		13.3%	+2.8 pts

NBI increase >+5% vs 2021, sustained by a solid Net Interest Income growth

• positive interest rate effect (significant increase of RON interest rates )
• relatively stable volumes anticipated on both retail and corporate loans
• fee income under structural price pressure

Operating expenses

• impact of accelerating inflation mostly on salary mass, energy, external services
• increase of contributions to deposit guarantee and resolution funds

Cost of risk

• no direct exposure on Russia and Ukraine
• but cost of risk to be impacted by the indirect economic consequences of the crisis

Low double digit ROE

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