BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Prepared in Accordance with
International Financial Reporting Standards as adopted by the European Union
December 31, 2022
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE STATEMENT OF FINANCIAL POSITION
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
2
Group
Bank
Note
December 31,
2022
December 31,
2021
December 31,
2022
December 31,
2021
ASSETS
Cash and due from Central Bank
5, 36
7,624,933
6,206,323
Due from banks
6
7,204,987
4,521,357
Derivatives and other financial instruments held for trading
7
2,337,311
2,274,924
Financial assets at fair value through profit and loss
8
8,132
6,947
Financial assets at fair value through other comprehensive income
9
13,439,596
19,863,825
Financial assets at amortised cost
10
38,272,985
32,183,856
10.1
35,542,279
32,183,856
10.2
2,730,706
-
Finance lease receivables
11
-
-
Investments in subsidiaries, associates and joint ventures
12
129,964
158,916
Property, plant and equipment
13
1,046,443
1,051,254
Investment property
13
15,503
16,312
Goodwill
14
50,130
50,130
Intangible assets
15
405,667
319,656
Current tax assets
24
23,563
7,484
Deferred tax asset
24
478,893
166,173
Other assets
16
473,958
176,910
Non-current assets held for sale
10,912
11,196
Total assets
71,522,977
67,015,263
LIABILITIES AND SHAREHOLDERS' EQUITY
Due to banks
17
636,888
156,810
Derivatives and other financial instruments held for trading
7
1,443,546
498,651
Due to customers
18
56,915,740
52,917,886
Borrowed funds
19
3,567,262
2,230,572
Subordinated debts
20
1,238,651
495,022
Current tax liability
24
-
79,979
Provisions
21
380,172
374,745
Other liabilities
22
763,682
722,260
Total liabilities
64,945,941
57,475,925
Share capital
23
2,515,622
2,515,622
Other reserves
(2,054,109 )
(385,380 )
(2,054,109)
(385,380)
Retained earnings and capital reserves
6,115,523
7,409,096
Non-controlling interest
-
-
Total equity
6,577,036
9,539,338
Total liabilities and equity
71,522,977
67,015,263
The financial statements have been authorized by the Group’s management on March 15, 2023 and are
signed on the Group’s behalf by:
Giovanni Luca Soma
Chairman of the Board of
Directors
François Bloch
Chief Executive Officer
Etienne Loulergue
Deputy Chief Executive Officer
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE PROFIT OR LOSS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
3
Group
Bank
Note
2022
2021
2022
2021
Interest and similar income
25
2,790,043
2,085,527
Interest and similar expense
26
(570,852 )
(150,042 )
(550,845)
(132,419)
Net interest income
2,239,198
1,953,108
Fees and commission income
27
1,079,100
1,018,273
Fees and commission expense
27
(368,727 )
(320,760 )
(359,906)
(312,230)
Fees and commissions, net
719,194
706,043
Gain on derivative, other financial instruments held for
trading and foreign exchange
28
313,165
244,316
Gain from financial instruments at fair value through
other comprehensive income
2,415
11,960
Gain from financial instruments at fair value through
profit and loss
2,554
7,411
Net (loss)/Income from associates and joint ventures
(30,075)
3,349
Other income/(expense) from banking activities
29
(7,723 )
42,412
3,700
Net banking income
3,288,863
2,929,887
Personnel expenses
31
(898,901 )
(828,692 )
(839,169)
(765,270)
Depreciation, amortisation and impairment on tangible
and intangible assets
32
(228,889 )
(238,946 )
(223,599)
(230,458)
Contribution to Guarantee Scheme and Resolution Fund
30
(69,171 )
(49,384 )
(69,171)
(49,384)
Other operating expenses
33
(547,641 )
(480,008 )
(508,946)
(448,944)
Total operating expenses
(1,744,602 )
(1,597,030 )
(1,640,885)
(1,494,056)
Gross operating profit
1,647,978
1,435,831
Cost of risk
34
(95,106 )
(92,699)
159,233
Operating profit
1,555,279
1,595,064
Profit before income tax
1,555,279
1,595,064
Current tax expense
24
(280,610 )
(313,574 )
(264,300)
(298,892)
Deferred tax income/(expense)
(1,817 )
(13,286 )
(5,041)
(16,916)
Total income tax
(282,427 )
(326,860 )
(269,341)
(315,808)
Profit for the period
1,285,938
1,279,256
Profit attributable to equity holders of the parent
-
-
Profit attributable to non-controlling interests
-
-
Basic earnings per share (in RON)
35
1.8452
1.8356
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE STATEMENT OF COMPREHENSIVE INCOME
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
4
Group
Bank
Note
December 31,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Profit for the period
1,285,938
1,279,256
Other comprehensive income
Net comprehensive income that may be reclassified
to profit and loss in subsequent periods
(1,682,642 )
(1,190,632 )
(1,682,643)
(1,190,632)
Net gain/(loss) on financial assets at fair value through
other comprehensive income
(1,682,642 )
(1,190,632 )
(1,682,643)
(1,190,632)
Reclassifications to profit and loss during the period
2,884
11,596
Revaluation differences
(2,005,937 )
(1,429,085 )
(2,005,937)
(1,429,085)
Income tax
320,411
226,856
Net comprehensive income not to be reclassified to
profit and loss in subsequent periods
13,913
810
Gain / (Loss) on defined pension plan
22
16,563
965
Income tax relating to defined pension plan
18
(2,650 )
(154 )
(2,650)
(154)
Other comprehensive income for the period, net of
tax
(1,668,729 )
(1,189,822 )
(1,668,729)
(1,189,822)
Total comprehensive income for the period, net of
tax
(331,641 )
(382,791)
89,434
Attributable to:
Equity holders of the parent
(340,721 )
-
-
Non-controlling interest
-
-
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
Group
Attributable to equity holders of the parent
Non-controlling
interest
Total equity
Other reserves
Issued capital
Reserves from
financial assets at
fair value through
other
comprehensive
income
Reserves from
defined pension plan
Retained earnings
and capital reserves
December 31, 2020
Total comprehensive income
(1,190,632 )
(1,190,632 )
(1,189,822 )
Adjustment
Equity dividends
(52,198 )
(52,198 )
December 31, 2021
(401,602 )
Attributable to equity holders of the parent
Non-controlling
interest
Other reserves
Issued capital
Reserves from
financial assets at
fair value through
other
comprehensive
income
Reserves from
defined pension plan
Retained earnings
and capital reserves
Total equity
December 31, 2021
(401,602 )
Total comprehensive income
(1,682,642 )
(331,641 )
(1,682,642 )
(1,668,729 )
Equity dividends
(2,579,510 )
(7,977 )
(2,587,487 )
December 31, 2022
(2,084,244 )
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
Bank
Issued capital
Other reserves
Retained earnings
and capital reserves
Total equity
Reserves from
financial assets at
fair value through
other
comprehensive
income
Reserves from
defined pension plan
December 31, 2020
2,515,622
789,030
15,412
6,152,079
9,472,142
Total comprehensive income
-
(1,190,632)
810
1,279,256
89,434
-
-
-
1,279,256
1,279,256
-
(1,190,632)
810
-
(1,189,822)
Adjustment
-
-
-
29,959
29,959
Equity dividends
-
-
-
(52,198)
(52,198)
December 31, 2021
2,515,622
(401,602)
16,222
7,409,096
9,539,338
Other reserves
Issued capital
Reserves from
financial assets at
fair value through
other
comprehensive
income
Reserves from
defined pension plan
Retained earnings
and capital reserves
Total equity
December 31, 2021
2,515,622
(401,602)
16,222
7,409,095
9,539,338
Total comprehensive income
-
(1,682,642)
13,913
1,285,938
(382,791)
-
-
-
1,285,938
1,285,938
-
(1,682,642)
13,913
-
(1,668,729)
Equity dividends
-
-
-
(2,579,510)
(2,579,510)
December 31, 2022
2,515,622
(2,084,244)
30,135
6,115,523
6,577,036
BRD – Groupe Société Générale S.A.
CONSOLIDATED AND SEPARATE STATEMENT OF CASH FLOWS
as of and for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
Group
Bank
Note
2022
2021
2022
2021
Cash flows from operating activities
Profit before tax
1,555,278
1,595,064
Adjustments for:
Depreciation and amortization expense
32
223,599
230,458
Loss from investment in associates and joint ventures
(8,092 )
38,752
-
Loss/ (Gain) from revaluation of assets at fair value
through profit and loss
8
(1,172 )
(7,255 )
(1,184)
(6,919)
Impairment adjustments and provisions
36
277,466
78,404
Adjusted profit
2,093,911
1,897,007
Changes in operating assets and liabilities
Due from Central Bank
(781,782 )
(781,746)
911,925
Deposits with banks
(147,971 )
(148,610)
15,609
Treasury bills at amortised cost
(2,730,706 )
(2,730,706)
-
Sales of financial assets at fair value through profit and
loss
8
(6,143 )
(1)
58,356
Financial assets at fair value through other
comprehensive income
(5,110,987 )
4,741,587
(5,110,987)
Loans and advances to customers
(3,640,922 )
(3,291,196 )
(3,615,134)
(3,319,394)
Lease receivables
(195,110 )
(171,721 )
-
-
Other assets including trading
(709,142 )
(224,854 )
(676,642)
(191,953)
Due to banks
(42,201 )
480,078
(42,201)
Due to customers
3,997,854
2,765,760
Other liabilities
(96,340 )
1,029,379
(134,361)
Total changes in operating assets and liabilities
(5,197,779 )
2,296,059
(5,047,246)
Income tax paid
(375,059 )
(191,151 )
(360,360)
(178,384)
Cash flow from operating activities
(3,413,238 )
4,029,610
(3,328,623)
Investing activities
Acquisition of investments in associates and joint
ventures
(9,798 )
(9,800)
-
Acquisition of tangible and intangible assets
13, 15
(269,491 )
(211,730 )
(268,348)
(211,275)
Proceeds from sale of tangible and intangible assets
932
850
Cash flow from investing activities
(278,357 )
(210,880 )
(277,216)
(210,425)
Financing activities
Proceeds from borrowings
190,895,147
23,724,457
Repayment of borrowings
(189,776,959 )
(22,191,189 )
(188,814,828)
(21,005,628)
Repayment of principal lease liabilities
11
(84,665 )
(90,612 )
(81,319)
(85,398)
Dividends paid
(2,587,492 )
(52,198 )
(2,579,510)
(52,198)
Net cash from financing activities
(359,506 )
(580,510)
2,581,233
Net movements in cash and cash equivalents
(957,788 )
3,171,884
(957,815)
Cash and cash equivalents at beginning of the period
36
6,301,445
7,259,261
Cash and cash equivalents at the end of the period
36
9,473,329
6,301,445
Additional information on operational cash flows from interest and dividends:
Group
Bank
2022
2021
2022
2021
Interest paid
457,273
136,880
Interest received
2,881,812
2,107,487
Dividends received
45,894
19,315
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
as of and for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
1. Corporate information
.
The Bank commenced business as a state owned credit institution in 1990 by acquiring assets and liabilities
of the former Banca de Investitii. The Bank headquarters and registered office is
BRD together with its subsidiaries (the “Group’) offers a wide range of
, as allowed by law. The Group accepts deposits from the public and grants loans
and leases, carries out funds transfer in
financial services for its commercial and retail customers.
The ultimate parent is
The Bank has as at December 31, 2022 460 units throughout the country (December 31, 2021: 499).
The average number of active employees of the Group during 2022 was 6,158 (2021: 6,620),
and the
number of active employees of the Group as of the period-end was 6,126 (December 31, 2021: 6,408).
The average number of active employees of the Bank during 2022 was 5,846 (2021: 6,156), and the number
of active employees of the Bank as of the period-end was 5,833 (December 31, 2021: 5,974).
The active employees are the full time employees (excluding maternity leave and long-term sick leave).
BRD – Groupe Société Générale has been quoted on Bucharest Stock Exchange (“BVB”) since January 15,
2001.
The shareholding structure of the Bank is as follows:
December 31, 2022
December 31, 2021
Societe Generale
60.17%
60.17%
Fondul De Pensii Administrat Privat NN/NN Pensii S.A.F.P.A.P. S.A.
5.56%
5.31%
Fondul De Pensii Administrat Privat AZT Viitorul Tau
3.98%
3.91%
S.I.F. Oltenia
3.95%
3.97%
Fondul De Pensii Administrat Privat Metropolitan Life
3.23%
3.17%
TRANSILVANIA INVESTMENTS ALLIANCE S.A.
2.19%
2.52%
Legal entities
15.43%
16.58%
Individuals
5.49%
4.38%
Total
100.00%
100.00%
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
9
2. Basis of preparation
a)
Basis of preparation
In accordance with European Regulation 1606/2002 of July 19, 2002 on the application of International
Accounting Standards, and Order of the National Bank of Romania Governor no. 27/2010 with subsequent
amendments, BRD prepared the consolidated and separate financial statements of the Bank and its
subsidiaries for the year ended December 31, 2022 in accordance with the International Financial Reporting
Standards (IFRS) as adopted by the European Union (“EU”).
The consolidated financial statements include the consolidated statement of financial position, the
consolidated profit or loss, the consolidated statement of comprehensive income, the consolidated statement
of changes in shareholders’ equity, the consolidated cash flow statement, and consolidated notes.
The separate financial statements include the separate statement of financial position, the separate profit or
loss, the separate statement of comprehensive income, the separate statement of changes in shareholders’
equity, the separate cash flow statement, and separate notes.
The consolidated and separate financial statements are presented in Romanian lei (“RON”), which is the
Group’s and its subsidiaries’ functional and presentation currency, rounded to the nearest thousand, except
when otherwise indicated. The consolidated and separate financial statements has been prepared on a
historical cost basis, except for financial assets at fair value through profit and loss, financial assets through
other comprehensive income, derivative financial instruments, other financial assets and liabilities held for
trading, which have all been measured at fair value.
The Group and Bank’s management has made an assessment of the Group and Bank’s ability to continue
as a going concern and is satisfied that the Bank has the resources to continue in business for the foreseeable
future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt
upon the Bank’s ability to continue as a going concern. Therefore, the consolidated and separate financial
statements are prepared on the going concern basis.
b) Basis of consolidation
The consolidated financial statements comprise the financial statements of the credit institution and its
subsidiaries as at December 31, 2022. The financial statements of the subsidiaries are prepared for the same
reporting period, using consistent accounting policies.
A
subsidiary is an entity over which the Bank exercises control. An investor controls an investee when it is
exposed, or has rights to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. The consolidated financial statements include the
financial statements of BRD – Groupe Société Générale S.A. and the following subsidiaries: BRD
Sogelease IFN S.A. (99.98% ownership, 2021: 99.98%), BRD Finance IFN S.A (49% ownership, 2021:
49%) and BRD Asset Management SAI SA (99.98% ownership, 2021: 99.98%).
According to IFRS 12 9(b), the Group controls BRD Finance IFN S.A even though it holds less than half
of the voting rights, through the power to govern the financial and operating policies of the entity under
various agreements. All intercompany transactions, balances and unrealized gains and losses on
transactions between consolidated entities are eliminated on consolidation.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
10
2. Basis of preparation (continued)
b) Basis of consolidation (continued)
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Bank obtains
control, and continue to be consolidated until the date such control ceases.
Equity and net income attributable to non-controlling interest are shown separately in the statement of
financial position, statement of comprehensive income, statement of changes in equity and statement of
comprehensive income, respectively.
The Bank is accounting the investments in subsidiaries, associates and joint ventures in the separate
financial statements at cost less impairment adjustment.
Group
Associates
Field of activity
Address
%
ALD Automotive SRL
Operational leasing
1-7, Ion Mihalache Street, floor 3, district 1, Bucharest
20.00%
BRD Asigurari de Viata SA
Insurance
58-60 Gheorghe Polizu Street, Bucharest Corporate Center
building, floor 8 (zone 3) and floor 9, district 1, Bucharest
49.00%
Fondul de Garantare a Creditului Rural IFN
SA
Loans guarantee
5 Occidentului Street, district 1, Bucharest
33.33%
Biroul de Credit S.A.
Financial
institution
29 Sfanta Vineri Street, floor 4, district 3, Bucharest
16.38%
BRD Societate de Administrare a Fondurilor
de Pensii Private SA
Pension fund
management
58-60 Gheorghe Polizu Street, floor 8 (zone 1, 2 and 4),
district 1, Bucharest
49.00%
BRD Sogelease Asset Rental SRL
Operational leasing
1-7, Ion Mihalache Street, Bucharest
20.00%
Joint ventures
CIT One SA
Protection and
guard
319L Splaiul Independentei Street, Paris Building/A1, 1st
floor, district 6, Bucharest,
33.33%
Bank
Associates
Field of activity
Address
%
ALD Automotive SRL
Operational leasing
1-7, Ion Mihalache Street, floor 3, district 1, Bucharest
20.00%
BRD Asigurari de Viata SA
Insurance
58-60 Gheorghe Polizu Street, Bucharest Corporate Center
building, floor 8 (zone 3) and floor 9, district 1, Bucharest
49.00%
Fondul de Garantare a Creditului Rural
IFN SA
Loans guarantee
5 Occidentului Street, district 1, Bucharest
33.33%
Biroul de Credit S.A.
Financial
institution
29 Sfanta Vineri Street, floor 4, district 3, Bucharest
16.38%
BRD Societate de Administrare a
Fondurilor de Pensii Private SA
Pension fund
management
58-60 Gheorghe Polizu Street, floor 8 (zone 1, 2 and 4), district
1, Bucharest
49.00%
Joint ventures
CIT One SA
Protection and
guard
319L Splaiul Independentei Street, Paris Building/A1, 1st floor,
district 6, Bucharest,
33.33%
Subsidiaries
BRD Sogelease IFN SA
Financial lease
1-7, Ion Mihalache Street, floor 12, district 1, Bucharest
99.98%
BRD Finance IFN SA
Financial
institution
1-7, Ion Mihalache Street, floor 15, district 1, Bucharest
49.00%
BRD Asset Management SAI SA
Fund
administration
2 Doctor Staicovici Street, district 5, floor 5, Bucharest
99.98%
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
11
2. Basis of preparation (continued)
c)
Changes in accounting policies and adoption of revised/amended IFRS
The accounting policies adopted are consistent with those of the previous financial year except for the
following amended IFRSs which have been adopted by the Group/Bank as of 1 January 2022.
The impact of the application of these new and revised IFRSs has been reflected in the interim financial
statements and was estimated as not being material, except disclosures already presented in the Notes.
●
IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions,
Contingent Liabilities and Contingent Assets as well as Annual Improvements 2018-2020
(Amendments)
The amendments are effective for annual periods beginning on or after 1 January 2022 with earlier
application permitted. The IASB has issued narrow-scope amendments to the IFRS Standards as
follows:
●
IFRS 3 Business Combinations (Amendments)
of the IASB’s Conceptual Framework for Financial Reporting to the current version issued in 2018
without significantly changing the accounting requirements for business combinations.
●
IAS 16 Property, Plant and Equipment (Amendments)
the cost of property, plant and equipment any proceeds from the sale of items produced while
bringing the asset to the location and condition necessary for it be capable of operating in the manner
intended by management. Instead, a company recognizes such sales proceeds and related cost in
profit or loss.
●
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendments)
costs a company includes in determining the cost of fulfilling a contract for the purpose of assessing
whether a contract is onerous. The amendments clarify, the costs that relate directly to a contract to
provide goods or services include both incremental costs and an allocation of costs directly related to
the contract activities.
●
Annual Improvements 2018-2020
make minor amendments to
International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41
Agriculture
IFRS 16 Leases
.
●
IFRS 16 Leases - Cοvid 19 Related Rent Concessions beyond 30 June 2021 (Amendment)
The Amendment applies to annual reporting periods beginning on or after 1 April 2021, with earlier
application permitted, including in financial statements not yet authorized for issue at the date the
amendment is issued. In March 2021, the Board amended the conditions of the practical expedient in
IFRS 16 that provides relief to lessees from applying the IFRS 16 guidance on lease modifications to
rent concessions arising as a direct consequence of the covid-19 pandemic. Following the amendment,
the practical expedient now applies to rent concessions for which any reduction in lease payments
affects only payments originally due on or before 30 June 2022, provided the other conditions for
applying the practical expedient are met.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
12
2. Basis of preparation (continued)
d) Standards and Interpretations that are issued but have not yet come into effect
●
Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in
Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and
those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate
or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when
a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is
recognized when a transaction involves assets that do not constitute a business, even if these assets are
housed in a subsidiary. In December 2015 the IASB postponed the effective date of this amendment
indefinitely pending the outcome of its research project on the equity method of accounting.
●
IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-
current (Amendments)
The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with
earlier application permitted, and will need to be applied retrospectively in accordance with IAS 8. The
objective of the amendments is to clarify the principles in IAS 1 for the classification of liabilities as
either current or non-current. The amendments clarify the meaning of a right to defer settlement, the
requirement for this right to exist at the end of the reporting period, that management intent does not
affect current or non-current classification, that options by the counterparty that could result in
settlement by the transfer of the entity’s own equity instruments do not affect current or non-current
classification. Also, the amendments specify that only covenants with which an entity must comply on
or before the reporting date will affect a liability’s classification. Additional disclosures are also
required for non-current liabilities arising from loan arrangements that are subject to covenants to be
complied with within twelve months after the reporting period. The amendments have not yet been
endorsed by the EU.
●
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting policies (Amendments)
The Amendments are effective for annual periods beginning on or after January 1, 2023 with earlier
application permitted. The amendments provide guidance on the application of materiality judgements
to accounting policy disclosures. In particular, the amendments to IAS 1 replace the requirement to
disclose ‘significant’ accounting policies with a requirement to disclose ‘material’ accounting policies.
Also, guidance and illustrative examples are added in the Practice Statement to assist in the application
of the materiality concept when making judgements about accounting policy disclosures.
●
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates (Amendments)
The amendments become effective for annual reporting periods beginning on or after January 1, 2023
with earlier application permitted and apply to changes in accounting policies and changes in
accounting estimates that occur on or after the start of that period. The amendments introduce a new
definition of accounting estimates, defined as monetary amounts in financial statements that are subject
to measurement uncertainty, if they do not result from a correction of prior period error. Also, the
amendments clarify what changes in accounting estimates are and how these differ from changes in
accounting policies and corrections of errors.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
13
2. Basis of preparation (continued)
d) Standards and Interpretations that are issued but have not yet come into (continued)
●
IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments)
The amendments are effective for annual periods beginning on or after January 1, 2023 with earlier
application permitted. The amendments narrow the scope of and provide further clarity on the initial
recognition exception under IAS 12 and specify how companies should account for deferred tax related
to assets and liabilities arising from a single transaction, such as leases and decommissioning
obligations. The amendments clarify that where payments that settle a liability are deductible for tax
purposes, it is a matter of judgement, having considered the applicable tax law, whether such deductions
are attributable for tax purposes to the liability or to the related asset component. Under the
amendments, the initial recognition exception does not apply to transactions that, on initial recognition,
give rise to equal taxable and deductible temporary differences. It only applies if the recognition of a
lease asset and lease liability (or decommissioning liability and decommissioning asset component)
give rise to taxable and deductible temporary differences that are not equal.
●
IFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendments)
The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with
earlier application permitted. The amendments are intended to improve the requirements that a seller-
lessee uses in measuring the lease liability arising in a sale and leaseback transaction in IFRS 16, while
it does not change the accounting for leases unrelated to sale and leaseback transactions. In particular,
the seller-lessee determines ‘lease payments’ or ‘revised lease payments’ in such a way that the seller-
lessee would not recognize any amount of the gain or loss that relates to the right of use it retains.
Applying these requirements does not prevent the seller-lessee from recognizing, in profit or loss, any
gain or loss relating to the partial or full termination of a lease. A seller-lessee applies the amendment
retrospectively in accordance with IAS 8 to sale and leaseback transactions entered into after the date
of initial application, being the beginning of the annual reporting period in which an entity first applied
IFRS 16.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
14
2. Basis of preparation (continued)
e) Significant accounting judgments and estimates
In the process of applying the Group and Bank’s accounting policies, management is required to use its
judgments and make estimates in determining the amounts recognized in the consolidated and separate
financial statements. The most significant use of judgments and estimates are as follows:
Fair value of financial instruments
Where the fair values of financial assets and financial liabilities recorded on the statement of financial
position cannot be derived from active markets, they are determined using a variety of valuation techniques
that include the use of mathematical models. The inputs to these models are derived from observable market
data where possible, but where observable market data are not available, judgment is required to establish
fair values. The judgments include considerations of liquidity and model inputs such as volatility for longer
dated derivatives and discount rates, prepayment rates and default rate assumptions for asset backed
securities. The valuation of financial instruments is described in more detail in Note 41.
Expected credit losses on financial assets at amortised cost and FVOCI
The measurement of impairment losses across all categories of financial assets requires judgement, in
particular, the estimation of the amount and timing of future cash flows and collateral values when
determining impairment losses and the assessment of a significant increase in credit risk. These estimates
are driven by a number of factors, changes in which can result in different levels of allowances. The Bank
reviews its loans and advances to customers at each reporting date to assess whether there is any objective
evidence of impairment. The main considerations for the loan impairment assessment include whether any
payments of principal or interest are overdue by more than 90 days, whether a severe alteration in the
counterparty’s financial standing is observed, entailing a high probability that the debtor will not be able to
fully meet its credit obligations, whether concessions in the form of restructuring were consented under the
circumstances of financial hardship experienced by the debtor, whether legal procedures were initiated or
the debtor was transferred to specialized recovery structures (regardless of the number of days past due).
The Bank’s expected credit loss model (ECL) relies on several underlying assumptions regarding the choice
of variable inputs and their interdependencies, which affect the level of allowances:
-
The internal credit grating model, which assigns probabilities of default (PDs) to the individual
grades
-
The criteria defined (both in relative and absolute terms) for the assessment of significant increase
in credit risk since initial recognition and consequently the computation of allowances based on
life time expected credit loss (LTECL)
-
The grouping of financial assets when their ECL is measured on a collective basis
-
The development of ECL model, including the various formulas and the choice of inputs
-
The macroeconomic scenarios and their probability weightings based on which ECL is derived
-
The inputs and models used for calculating ECL may not always capture all characteristics of the
market at the date of the financial statements. To reflect this, the Bank assesses the
need/opportunity for additional amounts of provisions in the form of overlays, in order to address:
o
Sector of activity specific risks (adjustment of ECL on sectors that have a different
default behavior from the whole calibration segment)
o
Visible macroeconomic threat impossible to be captured by the models (typically, when
the predicted stress did not occur in the observed past serving as a base for models)
-
For individually significant loans and advances, the Group and Bank identify and quantify the
expected future cash flows to be used for a total or partial reimbursement of the obligations,
based on the capacity of the client/business to generate revenues, proceeds resulting from sale of
collaterals and other clearly identified sources of repayment. The individual assessment threshold
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
15
2. Basis of preparation (continued)
e) Significant accounting judgments and estimates (continued)
is defined in between 500 - 1,500 thousands EUR, depending on the client type and customers’ management
departments.
Provisions for other risks and charges
The Bank operates in a regulatory and legal environment that, by nature has a heightened element of
litigation risk inherent to its operations and, as a result it is involved in various litigations or is subject to
various obligations arising from legislation in force.
When the Bank can reliably measure the outflow of economic benefits in relation to a specific case and
considers such outflows to be probable, the Bank records a provision against the case, as mentioned in this
note. Where the probability of outflow is considered to be remote, or probable, but a reliable estimate
cannot be made, a contingent liability is disclosed.
Generally, the first step is to establish the existence of the present obligation followed by the estimation of
the amount needed to settle that obligation taking into account a number of factors including legal advice,
the stage of the matter and historical evidence from similar incidents. Significant judgment is required to
conclude on these estimates.
In case of litigations:
i)
For a single individual litigation the Bank assess whether there is more likely than not to
have an unfavorable court decision considering the factors mentioned above; then it
estimates the amount at risk; in case there are several scenarios possible with different
outcomes, the amount at risk is the weighted average of the amounts at risk for each
scenario using the probability distribution for all scenarios (100% is allocated to the
possible scenarios) and provisions 100% of the estimated amount;
ii)
For multiple litigations, the assessment of “more likely than not” could be substantiated
for the entire population using statistics and provision computation to be made at pool
level.
In case of obligations arising from various legislation, the bank assesses first if there is no realistic
alternative of settling that obligation, and if not, it estimates the amount needed to settle that obligation
(using similar approach as above) and books provisions representing 100% of the estimated amount.
Please refer to note 22 and note 40 for more details.
f) Segment information
A segment is a component of the Group and Bank:
-
That engages in business activity from which it may earn revenues and incur expenses (including
revenues and expenses relating to transactions with other components of the same entity);
-
Whose operating results are regularly reviewed by the chief operating decision maker to make
decisions about resources to be allocated to the segment and assess its performance, and;
-
For which distinct financial information is available.
The Group and Bank’s segment reporting is based on the following segments:
Retail
and Small Business,
Non-retail
and
Corporate Center
lines mentioned above (fixed assets, taxes, equity investments, etc.).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
16
3. Summary of significant accounting policies
a) Recognition of income and expenses
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group
and the benefits can be reliably measured. The following specific recognition criteria must also be met
before revenue is recognized:
i) Interest and similar income
For all financial instruments measured at amortized cost and interest-bearing financial instruments
classified as FVOCI, interest income or expense is recorded at the effective interest rate, which is the rate
that exactly discounts estimated future cash payments or receipts through the expected life of the financial
instrument. The effective interest is applied to the gross carrying amount for assets classified in Stage 1 or
2 and to all financial liabilities. For financial assets classified as Stage 3 or POCI the effective interest rate
is applied to the net carrying amount.
The calculation takes into account all contractual terms of the financial instrument and includes any
origination fees and incremental costs that are directly attributable to the instrument and are an integral part
of the effective interest rate. The net carrying amount is calculated based on the original effective interest
rate and the change in carrying amount is recorded as interest income or expense.
ii) Fee and commission income
The Group and Bank earns fee and commission income from a diverse range of services it provides to its
customers. Fee income can be divided into the following two categories:
(i) Fee income earned from services that are provided over a certain period of time are accrued over that
period. These fees include asset management, custody and other management and advisory fees.
(ii) Fee income from providing transaction services: Fees arising from negotiating or participating in the
negotiation of a transaction for a third party – such as the arrangement of the acquisition of shares or other
securities or the purchase or sale of businesses. These fees are recognized on completion of the underlying
transaction. Fees or components of fees that are linked to a certain performance are recognized after
fulfilling the corresponding criteria.
iii) Dividend income
Revenue is recognized when the Group and Bank’s right to receive the payment is established, generally
when the shareholders approve the dividend.
iv) Net trading income
Net trading income comprises gains less losses related to assets and liabilities held for trading and
derivatives and includes all realised and unrealised fair value changes, interest, dividends and foreign
exchange differences. Interest income from all interest-bearing trading financial assets required to be
measured at FVPL is recognised part of the net trading income.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
17
3. Summary of significant accounting policies (continued)
a) Recognition of income and expenses (continued)
v) Levies
IFRIC 21 “Levies” clarifies the accounting for a liability to pay a levy. For an entity, the obligating event
that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy, as identified
by the legislation. The liability to pay a levy is recognised progressively if the obligating event occurs over
a period of time. Furthermore, if an obligation to pay a levy is triggered when a minimum activity threshold
is reached, the corresponding liability is recognised when that minimum activity threshold is reached.
The main related taxes which fall under the provisions of IFRIC 21 are as follows:
●
The Bank annual contribution to Deposit Guarantee Scheme is fully recognised in the income
statement at 1st January of the year in which the payment is made.
●
The Bank annual contribution to the Single Resolution Fund, is fully recognised in the income
statement at 1st January of the year in which the payment is made.
b) Financial instruments - recognition
i) Initial recognition and date of recognition
The Group applies settlement date accounting policy for all financial assets and financial liabilities (the
financial assets / liabilities are initially recognized on the date of the transfer of funds). Between trade date
and settlement date The Group recognizes off balance sheet commitments.
ii) Measurement categories of financial assets and liabilities
Financial instruments are initially recognised at their fair value including arrangements costs. Trade
receivables are measured at the transaction price.
In accordance with IFRS 9 classification, the Group classifies financial assets in the following measurement
categories:
●
Fair value through profit and loss (FVPL);
●
Fair value through other comprehensive income (FVOCI); or
●
Amortised cost.
Classification and subsequent measurement of financial assets is generally based on the Group business
model to manage the assets and the cash flow characteristics of the assets.
The Group and the Bank classify and measure the financial liabilities at amortised cost.
The Bank classifies and measures its derivative and trading portfolio as FVPL.
Group measures the equity instruments at fair value through profit and loss. Gains and losses on equity
investments measured at fair value through profit and loss are included in the line “Net gains on financial
assets measured at fair value through profit and loss” in the statement of profit and loss.
In the Bank’s Separate Financial Statement, the equity instruments representing investment in associates
and subsidiaries continue to be measured at cost in accordance to IAS 27 “Separate financial statements”.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
18
3. Summary of significant accounting policies (continued)
c) Financial instruments – classification and measurement
According to IFRS 9, the Group classifies its financial assets that are debt instruments into one of the
following categories based on the assessment of business model and SPPI characteristics, as follows:
●
Financial assets that are held for collection of contractual cash flows and cash flows represent solely
payments of capital and interest (SPPI) are classified and measured at amortised cost. In this category
the Group includes the loans granted to customers, deposits placed with banks, corporate bonds and
repurchase transactions part of banking book portfolio. Treasury bonds in banking book portfolio
purchased starting July 1, 2022 are classified in this category.
●
Financial assets that are held for collection of contractual cash flows and for selling the assets and the
contractual cash flows represent solely payments of capital and interest are measured at fair value
through other comprehensive income. Treasury bonds in banking book portfolio purchased before June
30, 2022 are classified and measured at fair value through other comprehensive income.
●
Financial assets that are held for trading, regardless of the cash flow characteristics are measured at fair
value through profit and loss. In this category the Group includes the sub-portfolio of treasury bonds,
placements made to banks and repurchase transaction held for trading.
i) Business model assessment
The business model assessment is one of the two steps to classify financial assets.
The Group’s business model reflects how it manages its financial assets in order to generate cash flows; the
business model determines whether cash flows will result from collecting contractual cash flows, selling
the financial assets, or both.
The business model is determined at a level that reflects how groups of financial assets are managed
together to achieve a particular business objective. Accordingly, this condition is not an instrument-by-
instrument approach to classification and should be determined on a higher level of aggregation.
The business model assessment is performed on the basis of scenarios that the Group reasonably expects to
occur, without taking ‘worst case’ or ‘stress case’ scenarios. The Group assesses the business model for
newly originated financial assets, considering information about how cash flows were realized in the past
(namely before the date of the origination of new assets) for that specific portfolio of assets, along with all
other relevant information. This means that there is no 'tainting' concept, but if there is a change in the way
that cash flows are realized then this will affect the classification of assets originated after the date of that
change.
In some circumstances, the Bank separates a portfolio of financial assets into sub-portfolios to reflect how
an entity manages them. Those portfolios are split and treated as separate portfolios, provided the assets
belonging to each sub-portfolio are separately defined.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
19
3. Summary of significant accounting policies (continued)
c) Financial instruments – classification and measurement (continued)
ii) SPPI test
As a second step of its classification process the Group performs the assessment of the characteristics of
the contractual cash flows aiming to identify whether the contractual cash flows are “solely payments of
principal and interest on the principal amount outstanding” – SPPI test. The SPPI assessment is performed
at the initial recognition of the financial asset as well as subsequently when significant modifications occur.
The principal for the purpose of applying SPPI test is “the fair value of the asset at initial recognition” and
it may change over the life of the financial asset (e.g. if there are repayments of principal).
The most significant elements of interest are typically the consideration for the time value of money and
credit risk. Interest can also include consideration for other basic lending risks (for example, liquidity risk)
and costs (for example, administrative costs) associated with holding the financial asset for a particular
period of time. In addition, interest can include a profit margin that is consistent with a basic lending
arrangement.
To make the SPPI assessment, the Group applies judgements and considers relevant factors such as the
currency in which the financial asset is denominated and the period for which the interest rate is set.
iii) Debt instruments at FVOCI
These instruments largely comprise of treasury bonds.
After initial recognition FVOCI financial assets are measured at fair value with gains or losses being
recognized as OCI until the investment is derecognized. The fair value of investments that are actively
traded in organized financial markets is determined by reference to quoted market bid prices at the close of
business on the statement of financial position date. Interest income and foreign exchange gains and losses
are recognised in profit and loss.
The ECLs for debt instruments measured at FVOCI do not reduce the carrying amount of these financial
assets in the statement of financial position, which remains at fair value. Instead, an amount equal to the
allowance that would arise if the assets were measured at amortised cost is recognised in OCI as an
accumulated impairment amount, with a corresponding charge to profit or loss. The accumulated loss
recognised in OCI is recycled to the profit and loss upon derecognition of the assets.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
20
3. Summary of significant accounting policies (continued)
c) Financial instruments – classification and measurement (continued)
iv) Derivatives that are not designated accounting hedging instruments
The Group uses derivative financial instruments such as forward currency contracts, currency swaps,
currency options, swaps and cross currency swaps on interest rate, as products offered to its clients but also
to hedge its risks associated with interest rate, liquidity and exchange rate. Such derivative financial
instruments are initially recognized at fair value on the date on which a derivative contract is entered into
and are subsequently re-measured at fair value.
Derivatives are carried as assets when their fair value is positive and as liabilities when fair value is
negative. Any gains or losses arising from changes in fair value of derivatives that are not designated as
hedge accounting instruments are taken directly to profit or loss for the year.
The fair value of forward currency contracts is calculated by reference to current forward exchange rates
for contracts with similar maturity profiles. The fair value of interest swap contracts is determined by
reference to market values of similar instruments.
v) Derivatives that are designated accounting hedging instruments
As a policy choice, the Group has also elected to continue to apply the hedge accounting requirements in
accordance with IAS 39. The Group and Bank designates certain derivatives held for risk management as
hedging instruments in qualifying accounting hedging relationships. The Group and Bank formally
documents the relationship between the hedging instruments and hedged item, including the risk
management objective and strategy in undertaking the hedge, together with the method that will be used to
assess the effectiveness of the hedging relationship.
The Group and Bank makes an assessment, both at the inception of the hedge relationship as well as on an
ongoing basis, as to whether the hedging instruments are expected to be highly effective in offsetting the
changes in the fair value during the period for which the hedge is designated. The actual results of the hedge
as recommended by IAS 39 should be in the range of 80-125 percent, but the Group and Bank uses a more
prudent approach and the range considered is 88-114 percent.
The Group and Bank use fair value hedges. When a derivative is designated as the hedging instrument in a
hedge of the change in fair value of a recognized asset or liability or a firm commitment that could affect
profit or loss, changes in the fair value of the derivative are recognized immediately in profit and loss
together with changes in the fair value of the hedged item that are attributable to the hedged risk.
If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets criteria
for fair value hedge accounting, or the hedge designation is revoked, then hedge accounting is discontinued
prospectively. Any adjustment up to that point to a hedged item for which the effective interest method is
used, is amortised to profit or loss as part of the recalculated effective interest rate of the item over its
remaining life.
vi ) Financial assets and financial liabilities held for trading
The Bank classifies financial assets or financial liabilities as held for trading when they have been purchased
or issued primarily for short-term profit making through trading activities or form part of a portfolio of
financial instruments that are managed together, for which there is evidence of a recent pattern of short-
term profit taking. Held-for-trading assets and liabilities are recorded and measured in the statement of
financial position at fair value.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
21
3. Summary of significant accounting policies (continued)
c) Financial instruments – classification and measurement (continued)
Changes in fair value are recognised in net trading income. Interest income or expense is recorded in net
trading income according to the terms of the contract, or when the right to payment has been established.
Included in this classification are debt securities, repurchase transactions and short positions acquired
principally for the purpose of selling or repurchasing in the near term.
vii) Repurchase agreements
Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue
to be recognized in the statement of financial position as securities and are measured in accordance with
the applicable accounting policies. The liability for amounts received under these agreements from banking
book portfolio is included in customers’ or interbank deposits. The difference between sale and repurchase
price is treated as interest expense using the effective yield method. Assets acquired with a corresponding
commitment to resell at a specified future date (reverse repos) from the banking book portfolio are recorded
as loans and advances.
viii) Borrowings
Borrowings are initially recognized at the fair value of the consideration received less directly attributable
transaction costs. Subsequently borrowings are stated at amortized cost using the effective interest rate
method. Any discount or premium is integral part of the effective interest rate.
ix) Financial guarantees, letter of credits and loan commitments
In the ordinary course of business, the Group and Bank gives financial guarantees, consisting of letters of
credit, guarantees and acceptances and performance guarantees.
Financial guarantees are presented in ‘Other liabilities’ line with the amount of the premium received being
the instruments’ fair value. The financial guarantee are subsequently measured at the higher of the amount
initially recognised less the cumulative amortisation recognised in the income statement and an ECL.
Any increase in the liability relating to financial guarantees is taken to the income statement in ‘Credit loss
expense’. The premium received is recognized in the income statement in ‘Net fees and commission
income’ on a straight line basis over the life of the guarantee.
Undrawn loan commitments and letters of credits are commitments under which, over the duration of the
commitment, the Bank is required to provide a loan with pre-specified terms to the customer. Similar to
financial guarantee contracts, these contracts are in the scope of the ECL requirements.
The nominal contractual value of financial guarantees, letters of credit and undrawn loan commitments,
where the loan agreed to be provided is on market terms, are not recorded on in the statement of financial
position. The nominal values of these instruments together with the corresponding ECLs are disclosed in
Note 22 and in Note 41
.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
22
3. Summary of significant accounting policies (continued)
d) Financial assets - derecognition
The Group derecognizes a portfolio of financial assets, a financial asset or a part of a financial asset (herein
after called „financial asset“) when and only when one of the following conditions is fulfilled:
●
The contractual rights to the cash flows expire;
●
It transfers the financial asset and the transfer qualifies for derecognition;
●
Voluntarily renounces its rights over the financial asset due to the asset being considered
irrecoverable or in order to grant a concession to the debtor;
●
Significant modification of a financial asset that generate the extinguishment of the existing
financial asset and recognition of a new financial asset.
Derecognition due to substantial modification of terms and conditions
In certain circumstances, the Group renegotiates or otherwise modifies the contractual cash flows of loans
to customers. When this happens, the Group assesses whether or not the new terms are substantially
different to the original terms. The Group does this by considering both quantitative and qualitative factors
that are substantially changing the size or the nature of lender’s risks associated with the pre-existing loan
contract.
If the new terms are substantially different, the Group derecognises the original financial assets and
recognises a “new” financial asset. The new financial asset is initially recognized at fair value and the
classification and subsequent measurement is reassessed considering the new business model and the
contractual cash flows characteristics. The date of renegotiation is consequently considered to be the date
of initial recognition for impairment calculation purposes. All financial assets that are impaired at the date
of initial recognition (first origination or re-origination due to significant changes) are classified as
purchased or originated credit impaired (POCI).
On initial recognition the difference between transaction price and fair value of new financial asset is
recognised in P&L for loans where the fair value is calculated based on observable inputs (loans not
impaired at the date of modification).
When assessing the new terms in order to establish if they are significantly modified, the Group considers
if the change is made in order to increase recoverability of the pre-existing loan. The renegotiation or
modification of the contractual cash flow of an existing financial asset can generate derecognition of the
financial asset and the recognition of a new financial asset if the respective changes to the financial asset
are significant. Changes made for the purpose of increasing the received cash flows and which are not
considered significant change of the contractual characteristics do not generate derecognition.
The following modifications are considered significant contractual changes:
Quantitative criteria:
●
interest rate margin modification for floating interest rate and interest rate modification for
fixed interest rate higher than 3% over a 12 month period; the threshold is subject to review
depending on the market conditions;
●
tenor prolongation or reduction for non-revolving financial assets for more than 24 months or
over 50% from initial (prior to modification) remaining tenor.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
23
3. Summary of significant accounting policies (continued)
Financial assets - derecognition (continued)
Qualitative criteria refer to contractual modifications that are substantially changing the size or the nature
of lender’s risks associated with the pre-existing loan contract and are applicable to all financial assets:
●
change of the denomination currency;
●
change of the type of interest (variable or fixed) for performing loans (commercial
renegotiation);
●
contract changed obligor / counterparty;
●
consolidation of two or more loans to one loan (many to 1);
●
split of one loan to two or more loans (1 to many);
●
modification of an SPPI compliant contract by introducing a features that is non-SPPI
or modification of a non-SPPI contract by removing the features that are non-SPPI through
commercial renegotiation;
●
change of a commercial product or use of the same product but from updated bank commercial
offer available at the change date for performing loans (commercial renegotiation);
●
renewal of a performing revolving loan (regardless of new tenor) if a substantive risk analysis is
performed.
Derecognition other than for substantial modification
A financial asset is derecognized where either:
●
The rights to receive cash flows from the assets have expired;
●
The Group retains the right to receive cash flows from the asset, but has assumed an obligation
to pay them in full without material delay to a third party under a “pass-through”
arrangement; or
●
The Group has transferred its rights to receive cash flows from the asset and either a) has
transferred substantially all the risks and rewards of the asset, or b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or
expires. Where an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially changed, such an exchange or
modification is treated as a de-recognition of the original liability and the recognition of a new liability, and
the difference in the respective carrying amounts are recognized in profit or loss.
Write-offs
A write-off is performed when the entire loan is deemed uncollectible (very high uncertainty regarding
recoverable amount and timeframe). Write-off is not conditioned by the closure of the legal procedures, nor
does it imply the forfeit of the bank’s claims to the receivables / financial asset. A write-off is performed
only where the chances of recoveries are remote.
The Bank performs permanent write-offs under certain situations, such as:
●
the financial assets are considered immaterial, thus do not justify the initiation of the recovery
process;
●
the collaterals which cover the receivables have a recovery value deemed immaterial and no
other recovery sources could be identified;
●
exhaustion of all legal means;
●
end of the statute of limitation period for enforcement rights, etc.
Any recoveries of previously written-off loans and receivables are recognized as income.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
24
3. Summary of significant accounting policies (continued)
e)
Financial assets reclassification
The Group does not reclassify its financial assets subsequent to their initial recognition, apart from the
exceptional circumstances in which the Bank acquires, disposes of, or terminates a business line. Financial
liabilities are never reclassified.
f)
Impairment model of financial assets
The Group assesses on a forward-looking basis the expected credit losses (“ECL”) for the following
categories of financial assets: loans and placed deposits measured at amortised cost, debt instruments
measured at fair value to other comprehensive income, loan commitments and financial guarantee contracts,
contract assets and trade receivables.
The group recognises a loss allowance for such losses at each reporting date. The measurement of ECL
reflects:
●
An unbiased and probability-weighted amount that is determined by evaluating a range of
possible outcomes;
●
The time value of money;
●
Reasonable and supportable information that is available without undue cost or effort at the
reporting date about past events, current conditions and forecasts of future economic
conditions.
The ECL calculation considers both the number of days past due recorded by the receivables and the credit
risk analysis performed for clients with granted loans.
For contract assets and trade receivables the Group applies the simplified approach for measuring the
expected credit losses and recognizes lifetime expected credit losses in accordance to the provisions of
IFRS 9 “Financial Instruments”. Based on an assessment of historical information the Bank recognizes
expected credit loss for contract assets and the trade receivables with more than 90 days past due for the
entire exposure amount.
Overview of the ECL principles
The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime
expected credit loss or LTECL), unless there has been no significant increase in credit risk since origination,
in which case, the allowance is based on the 12 months’ expected credit loss (12mECL). The ECL is
computed from the time of origination.
Consequently, financial assets subject to loss allowances can be classified in Stage 1, Stage 2, Stage 3 or
POCI, as described below:
●
Stage 1 when there is insignificant or no impairment of credit quality since initial
recognition; Loss allowance shall be equal to 12mECL.
●
Stage 2 when a financial asset shown significant increase in credit risk since initial recognition,
though not impaired; Loss allowance shall be equal to LTECL.
●
Stage 3 financial assets classified as impaired; Loss allowance is represented by LTECL.
●
POCI financial assets that are credit impaired on initial recognition. Loss allowance shall be
equal to LTECL. ECLs are only recognized or released to the extent that there is a subsequent
change in the expected credit losses.
The expected credit loss may be calculated either individually or collectively in accordance with IFRS 9
perspective. The Bank model for computing the expected credit losses is:
●
Individual or collective assessment for clients in Stage 3;
●
Collective assessment for clients in Stage 2 or Stage 1.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
25
3. Summary of significant accounting policies (continued)
f) Impairment model of financial assets (continued)
Staging criteria
The Bank has established criteria to perform the assessment of significant increase in credit risk since initial
recognition on a monthly basis, considering both relative and absolute thresholds.
For Non Retail portfolio (Corporate and Public Authorities), the staging criteria are:
Stage 3: criteria as provided by EBA default definition as presented below.
Stage 2: assessment of
Relative threshold :
Doubling of the lifetime Probability of default (“PD”) since origination and the absolute
increase exceeds a pre-defined quantitative threshold
Absolute thresholds:
Clients rated with the last three risk classes in term of risk (“sub-standard grade”, as
detailed in note 43.1), Clients with expired ratings for more than three months, Clients not rated as of
reporting date, Healthy clients with restructured facilities in probation and DPD < 30, Clients with DPD >
30
Stage 1: include all clients not classified in Stage 2 or Stage 3 based on the above conditions
●
For Small Business, the staging criteria are:
Stage 3: criteria as provided by EBA default definition as presented below
Stage 2: assessment of
Relative threshold:
Doubling of the lifetime PD since origination and the absolute increase exceeds a pre-
defined quantitative threshold
Absolute thresholds:
Clients rated with the last three risk classes in term of risk (“sub-standard grade”, as
detailed in note 43.1), Healthy clients with restructured facilities in probation and DPD < 30, Clients with
DPD > 30
Stage 1: include all clients not classified in Stage 2 or Stage 3 based on the above conditions
●
For Individuals and Professionals, the staging criteria are:
Stage 3: criteria as provided by EBA default definition as presented below
Stage 2: assessment of
Relative threshold:
Doubling of the lifetime PD since origination and the absolute increase exceeds a pre-
defined quantitative threshold
Absolute thresholds:
Clients rated with the last two risk classes in term of risk (“sub-standard grade”, as
detailed in note 43.1), Healthy clients with restructured facilities in probation and DPD < 30, Clients with
DPD > 30
Stage 1: include all clients not classified in Stage 2 or Stage 3 based on the above conditions
In accordance with EBA default definition, the main considerations for the loan impairment assessment
include whether any payments of principal or interest are overdue by more than 90 days, whether a severe
alteration in the counterparty’s financial standing is observed, entailing a high probability that the debtor
will not be able to fully meet its credit obligations, whether concessions in the form of restructuring were
consented under the circumstances of financial hardship experienced by the debtor, whether legal
procedures were initiated or the debtor was transferred to specialized recovery structures (regardless of the
number of days past due).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
26
3. Summary of significant accounting policies (continued)
f) Impairment model of financial assets (continued)
ECL calculation techniques:
The key elements of ECL calculation are outlined below:
●
PD
Probability of Default
the-cycle (TTC) marginal PD curve and Adjustment of the TTC curve to incorporate point in
time and forward looking information;
●
LGD
Loss Given Default
recoveries;
●
EAD Exposure at default estimation at each time step is based on internally modelled
Credit Conversion Factor (“CCF”).
●
Point in time and forward looking transformation for ECL parameters.
Forward-looking information
Expected losses are computed based on three macroeconomic scenarios: optimistic, base and stress
scenario. Consequently, expected credit losses are influenced both by changes in portfolio quality as well
as changes in macroeconomic projections. Macroeconomic models are sensitive to GDP, RON/EUR
exchange rate and unemployment rate. Final ECL is derived using the weighted average of the three
scenarios (based on their probabilities of occurrence).
The inputs and models used for calculating ECL may not always capture all characteristics of the market at
the date of the financial statements. To reflect this, the Bank assesses the need/opportunity for additional
amounts of provisions in the form of overlays, in order to address:
●
Sector of activity specific risks (adjustment of ECL on sectors that have a different default
behaviour from the whole calibration segment)
●
Visible macroeconomic threat impossible to be captured by the models (typically, when the
predicted stress did not occur in the observed past serving as a base for models)
Impairment/default principles
Impairment and recoverability are assessed, measured and recognized individually for loans and receivables
that are individually significant, and on a portfolio basis for impaired loans and receivables that are not
individually significant. Loans and receivables for which an objective evidence of impairment was not
identified, regardless the loans are individually significant or not, are included in a portfolio for collective
impairment assessment. The carrying amount of the asset is reduced to its estimated recoverable amount
through the use of an allowance account. The loss amount is recognised into profit and loss. If the amount
of the impairment subsequently decreases due to an event occurring after the impairment, the release of the
allowance is credited to the income statement.
The Group implemented the definition of the default status according to the criteria set by EBA. All the PD
curves used as input elements in the ECL calculation were calibrated by applying the EBA definition
retroactively, in order to ensure the consistency regarding the entry into default status at the time of
calibration.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
27
3. Summary of significant accounting policies (continued)
f) Impairment model of financial assets (continued)
Collateral valuation
To mitigate its credit risks on financial assets, the Bank seeks to use collateral, where possible. The
collateral comes in various forms, such as cash, letters of guarantees, real estate, etc.
Real estate collaterals are regularly valuated. Their market value is estimated by certified evaluators that
can be either external or internal valuators. Depending on the collateral type, revaluation is performed:
●
Yearly, for commercial / industrial / agricultural real-estate, plots of land
●
At least once every 3 years, for residential real estate or with higher frequency if the real estate
market displays a significant negative evolution.
The value of collateral affects the calculation of ECLs through LGD parameter, which is an estimate of the
loss arising in the case where a default occurs at a given time, taking into account all the cash flows collected
from the client, as well as the recovery value of collaterals (net of any cost and additional losses), by
incorporating the effect of time value of money. The recovery value of a collateral is determined by applying
discount coefficients to its market value when computing the provisions on individual assessment basis.
g) Foreign currency translation
Transactions in foreign currencies are initially recorded using the functional currency rate ruling on the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the
functional currency rate of exchange ruling at the statement of financial position date. All differences are
taken to the profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates as of the dates of the initial transactions. Non-monetary items measured at fair value in
a foreign currency are translated using the exchange rates at the date when the fair value was determined.
The exchange rates of the currencies with the most significant impact on the Group and Bank’s consolidated
and separate financial statements as of December 31, 2022 and 2021 were as follows:
31-Dec-22
31-Dec-21
RON/ EUR
4.9474
4.9481
RON/ USD
4.6346
4.3707
h) Cash and cash equivalents
For the purpose of the cash flow statements, cash and cash equivalents comprise cash in hand, current
accounts and short-term placements at other banks, excluding amounts in transit and loans to banks with
more than 90 days maturity from the date of acquisition. The Group and Bank did not include in cash and
cash equivalents the amounts representing minimum compulsory reserve held at National Bank of Romania.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
28
3. Summary of significant accounting policies (continued)
i) Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset.
A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration.
Group as a lessor
Finance leases are those which transfer to the lessee substantially all the risks and benefits incidental to
ownership of the leased item and are recognized as assets at the inception of the lease at the fair value of
the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are
allocated both to the principal and the interest income on a pattern reflecting a constant periodic rate of
return on the lessor's net investment outstanding in respect of the finance lease.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets. For short-term leases or leases for
which the underlying asset is of low value, the related lease payments are recognized as an expense on a
straight-line basis over the lease term (please see Note 33).
Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e. the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at
or before the commencement date. Right-of-use assets are depreciated on a straight-line basis over the lease
term. The right-of-use assets are presented within Note 13.
Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments can include fixed payments, variable
lease payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments can also include payments of penalties for terminating the lease.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
29
3. Summary of significant accounting policies (continued)
j) Investment in associates and joint ventures
An associate is an enterprise in which the Group and Bank exercises significant influence and is neither a
subsidiary nor a joint venture.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. The Group and Bank recognizes its interest in a joint venture as
an investment and shall account for that investment using the equity method in accordance with IAS 28
Investments in Associates.
Associates and joint venture are accounted using the equity method for consolidation purposes and cost
method for separate financial statements.
Under the equity method, an investment in an associate and joint venture is carried in the statement of
financial position at cost plus post-acquisition changes in the Group and Bank’s share of net assets of the
associate or joint venture. Goodwill relating to an associate or joint venture is included in the carrying
amount of the investment and is not amortized. The Group and Bank does an assessment of any additional
impairment loss with respect to the net investment in associate or joint venture.
The income statement reflects the share of the results of operations of associates and joint ventures. Where
there has been a change recognized directly in the equity of the associate or joint venture, the Group
recognizes its share of any changes and discloses this, when applicable, in the statement of changes in
equity.
The reporting dates of associates and joint venture and the Group are identical and the associates’ or joint
ventures’ major accounting policies conform to those used by the Group for like transactions and similar
events in similar circumstances.
k) Tangible assets
The cost of tangible asset is recognized as an asset if, and only if: (a) it is probable that future economic
benefits associated with the item will flow to the Group; and (b) the cost of the item can be measured
reliably.
Buildings and other tangible assets are stated at cost less accumulated depreciation and any impairment
loss.
In accordance with IAS 29 “Reporting in Hyperinflationary Economies”, tangible assets have been restated,
as appropriate, by applying the change in the consumer price index from the date of acquisition through
December 31, 2003.
Depreciation is computed on a straight-line basis over the estimated useful life of the asset, as stated below:
Asset type
Years
Buildings and special constructions
10-40
Computers and equipment
3-5
Furniture and other equipment
15
Vehicles
5
Land is not depreciated. Construction-in-progress is not depreciated until used. Expenses for repairs and
maintenance are charged to operating expenses as incurred. Subsequent expenditure on property and
equipment is recognized as an asset under the same general recognition principle used at initial recognitio
n.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
30
3. Summary of significant accounting policies (continued)
k) Tangible assets (continued)
The carrying amount of tangible assets is reviewed for impairment at each statement of financial position
date or whenever events or changes in circumstances indicate the carrying amount may not be recoverable.
An asset’s recoverable amount is the higher of an asset’s or CGU (Cost Generation Unit)’s fair value less
costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from other assets or groups
of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
Tangible assets are derecognized upon disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the
year the asset is derecognized.
l) Investment properties
Assets are classified as investment property
if the property (land or a building - or part of a building - or
both) is held (by the Bank or Group as owner) to earn rentals or for capital appreciation or both, rather than
for: use in the production or for administrative purposes; or sale in the ordinary course of business.
Investment properties are measured initially at cost including transaction costs. Subsequent to initial
recognition, investment properties are carried at cost less any accumulated depreciation and any
accumulated impairment losses.
Investment properties are derecognized when either they have been disposed-off or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its disposal.
Any gains or losses on the retirement or disposal of an investment property are recognized in the income
statement in the year of retirement or disposal.
Transfers are made to investment property when and only when, there is a change in use, evidenced by
ending of owner-occupation, commencement of an operating lease to another party, or ending of
construction or development. Transfers are made from investment property when and only when, there is a
change in use evidenced by commencement of owner-occupation or commencement of development with
a view to sale. The depreciation of buildings included in investment properties is computed using the linear
method over the useful lives as presented in note 3.k).
m) Non-current assets held for sale
Non-current assets for which the carrying amount is estimated to be recovered principally through a sale
transaction rather than continuing use are classified as held for sale.
Assets held for sale are initially and subsequently measured at the lower of the carrying amount and the fair
value at the date of the measurement. For any decrease of the fair value below the carrying amount,
impairment is recognised into profit and loss accounts. The increase of the fair value of a held for sale asset
is accounted for as an impairment release. Fair value increase is recognised up to the level of the initial
carrying amount of the asset.
On the period an asset is classified as held for sale no depreciation charged is recognised. An asset that
ceases to be classified as held for sale is measured at the lower of the carrying amount before the asset was
classified as held for sale adjusted by the depreciation that would have been recognised had the asset was
not classified as held for sale and its recoverable amount.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
31
3. Summary of significant accounting policies (continued)
n) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the
business combination over the Group and Bank's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses.
Goodwill is reviewed for impairment at each reporting date or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the
recoverable amount of the cash-generating unit, to which the goodwill relates. Where the recoverable
amount of cash-generating unit is less than the carrying amount, an impairment loss is recognized.
o) Intangible assets
Intangible assets are measured initially at cost. Following initial recognition intangible assets are carried at
cost less any accumulated amortization and any accumulated impairment losses. All intangible assets of the
Group and Bank carried as of December 31, 2022 and 2021 have finite useful lives and are amortized on a
straight-line basis over the estimated useful life of up to 5 years. The amortization period and the
amortization method are reviewed at least at each financial year end.
At each statement of financial position date or whenever events or changes in circumstances indicate the
carrying value may not be recoverable, intangibles are reviewed for impairment. Where the carrying amount
of an asset is greater than the estimated recoverable amount, it is written down to its recoverable amount
by recognising impairment. An intangible asset is derecognized upon disposal (i.e., at the date the recipient
obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or
loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in the statement of profit or loss.
p) Employee benefits
Short-term employee benefits:
Short-term employee benefits include wages, salaries and social security contributions. Short-term
employee benefits are recognized as expense when services are rendered.
Social Security Contributions:
The Group and its subsidiaries as well as its employees are legally obliged to make contributions described
in the financial statements as social security contributions to the National Pension Fund, managed by the
Romanian State Social Security (a defined contribution plan financed on a pay-as-you-go basis). The Group
and Bank has no legal or constructive obligation to pay future benefits. Its only obligation is to pay the
contributions as they fall due. If the members of the Romanian State Social Security plan cease to be
employed by either the Group or its subsidiary, there will be no obligation on the Group to pay the benefits
earned by these employees in previous years. The Group and Bank’s contributions are included in salaries
and related expenses.
Post-employment benefits:
The Group and Bank has a contractual obligation to pay to retiring employees a benefit calculated taking
into account the salary at the date of retirement and the number of years served by the individual. The cost
of providing benefits under defined benefit plans is estimated annually using the projected unit credit
actuarial valuation method and is recognized to the income statement on an accruals basis. Differences
arising from changes in calculation assumptions (early retirements, discount rates, etc.) or differences
between actuarial assumptions and real performance are recognized as actuarial gains and losses.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
32
3. Summary of significant accounting policies (continued)
p) Employee benefits (continued)
Actuarial gains and losses, excluding amounts expensed as net interest on the net defined benefit liability
are components used to re-measure the net defined benefit liability. These components are immediately and
fully recognised as unrealised gains and losses and presented under Reserves from defined pension plan.
These items are subsequently never reclassified in income statement but transferred to retain earnings.
Where a new or amended plan comes into force, the past service cost is immediately recognized in profit
or loss.
An annual charge is recorded under Personnel expenses for defined benefit plans, consisting of:
-
the additional entitlements vested by each employee (current service cost);
-
past service cost resulting from a plan amendment or a curtailment;
-
the financial expense resulting from the discount rate (net interest on the net defined benefit
liability);
-
the settlement of plans.
Share–based payment transactions:
Employees (including senior executives) of the Group and Bank receive remuneration in the form of SG
share–based payment transactions, whereby employees render services as consideration for equity
instruments (‘equity–settled transactions’) and Group Société Générale attains certain ratios. The cost of
equity–settled transactions is recognized, together with a corresponding increase in equity, over the period
in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (‘the vesting date’).
Other benefits
The Bank also grants to all employees having a seniority in the Bank higher than 3 years an annual
contribution to a private pension fund (Pillar 3) in total amount of EUR 200 /year/employee.
q) Taxation
The current tax is the amount of income taxes payable in respect of the taxable profit, computed in
accordance with Romanian tax rules and accrued for in the period to which it relates.
Deferred income tax liabilities are recognized for all taxable temporary differences between the tax bases
of assets and liabilities and their carrying amounts at the statement of financial position date for financial
reporting purposes, which will result in taxable amounts in future periods.
Deferred income tax assets are recognized for all deductible temporary differences and carry-forward of
unutilized tax losses to the extent that it is probable that taxable profit will be available, against which the
deductible temporary differences and carry forward of unused tax losses can be utilized.
Deferred income tax assets and liabilities are measured at the amount that is expected to be paid to or
recovered from the tax authorities after taking into account the tax rates and legislation that have been
enacted or substantially enacted until the statement of financial position date. Current and deferred tax
assets and liabilities are offset when they arise from the same tax reporting entity and relate to the same tax
authority and when the legal right to offset exists. Income tax relating to items recognized directly in equity
is recognized in equity and not in the income statement.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
33
3. Summary of significant accounting policies (continued)
r) Provisions
Provisions are recognized when the Group and Bank has a present obligation (legal or constructive), as a
result of a past event, it is probable that an outflow of embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the
time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due
to the passage of time is recognized as borrowing cost.
s) Contingencies
Contingent liabilities are not recognized in the financial statements, but they are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not
recognized in the financial statements but disclosed when an inflow of economic benefits is probable.
t) Earnings per share
Basic earnings per share are calculated by dividing net profit/ (loss) for the reporting period attributable to
ordinary equity holders of the parent by the weighted average number of shares outstanding during the year.
As of December 31, 2022 and 2021 there were no dilutive equity instruments issued by the Group and
Bank.
u) Dividends on ordinary shares
Dividends on ordinary shares are recognized as a liability and deducted from equity when they are approved
by the Group and Bank’s shareholders.
v) Related parties
Parties are considered related with the Group and Bank when one party, either through ownership,
contractual rights, family relationship or otherwise, has the ability to directly or indirectly control or
significantly influence the other party in making financial and operating decisions. Related party transaction
represents a transfer of resources or obligations between related parties, regardless of whether a price is
charged.
w) Subsequent events
Post - balance sheet events that provide additional information about the Group and Bank’s position at the
statement of financial position (adjusting events), or those that indicate that the going concern assumption
is not appropriate are reflected in the financial statements. Post-balance sheet events that are not adjusting
events are disclosed in the notes when significant.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
34
4. Segment information
The segments used for management purposes are based on customer type and size, products and services
offered as follows:
In Retail (Individuals & Small Business) category the following customer’s segments are identified:
●
Individuals – the Bank provides individual customers with a range of banking products such
as: saving and deposits taking, consumer and housing loans, overdrafts, credit card facilities,
funds transfer and payment facilities, etc.
●
Small business – business entities with annual turnover lower than EUR 1 million and having
an aggregated exposure at group level less than EUR 0.3 million. Standardised range of
banking products is offered to small companies and professional: saving and deposits taking,
loans and other credit facilities, etc.
Retail customers include clients with similar characteristics in terms of financing needs, complexity of the
activity performed and size of business for which a range of banking products and services with medium
to low complexity is provided.
In Non –Retail category the following customer’s segments are identified:
●
Small and medium enterprises (companies with annual turnover between EUR 1 million and
EUR 50 million and the aggregated exposure at group level higher than EUR 0.3 million);
●
Large corporate (corporate banking and companies with annual turnover higher than 50
million EUR, municipalities, public sector and other financial institutions).
The Bank provides these customers with a range of banking products and services, including saving and
deposits taking, loans and other credit facilities, transfers and payment services, provides cash-
management, investment advices, securities business, project and structured finance transaction, syndicated
loans and asset backed transactions.
The Corporate Center includes: treasury activities, ALM and other categories unallocated to Retail and
Non-Retail business lines.
The Executive Committee monitors the activity of each segment separately for the purpose of making
decisions about resource allocation and performance assessment.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
35
4. Segment information (continued)
Group
December 31, 2022
December 31, 2021
Total
Retail
Non retail
Corporate
Center
Total
Retail
Non retail
Corporate
Center
Total assets
73,841,767
23,896,003
13,799,733
36,146,031
69,063,297
23,148,761
10,987,709
34,926,827
Loans and advances to customers, net &
Finance lease receivables
37,695,736
23,896,003
13,799,733
-
34,136,470
23,148,761
10,987,709
-
Other assets
36,146,031
-
-
36,146,031
34,926,827
-
-
34,926,827
Total liabilities
73,841,767
37,096,720
19,564,121
17,180,926
69,063,297
35,988,622
16,694,959
16,379,716
Due to customers
56,660,841
37,096,720
19,564,121
-
52,683,581
35,988,622
16,694,959
-
Other liabilities
17,180,926
-
-
17,180,926
16,379,716
-
-
16,379,716
Bank
December 31, 2022
December 31, 2021
Total
Retail
Non retail
Corporate
Center
Total
Retail
Non retail
Corporate
Center
Total assets
71,522,977
22,780,047
12,762,232
35,980,698
67,015,263
22,070,310
10,113,546
34,831,407
Loans and advances to customers, net
35,542,279
22,780,047
12,762,232
-
32,183,856
22,070,310
10,113,546
-
Other assets
35,980,698
-
-
35,980,698
34,831,407
-
-
34,831,407
Total liabilities
71,522,977
35,533,284
21,382,456
14,607,237
67,015,263
35,988,622
16,929,264
14,097,377
Due to customers
56,915,740
35,533,284
21,382,456
-
52,917,886
35,988,622
16,929,264
-
Other liabilities
14,607,237
-
-
14,607,237
14,097,377
-
-
14,097,377
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
36
4. Segment information (continued)
Group
2022
2021
Total
Retail
Non retail
Corporate
Center
Total
Retail
Non retail
Corporate
Center
Net interest income
2,370,434
1,578,147
653,935
138,352
2,084,187
1,405,150
458,121
220,916
Fees and commissions, net
754,329
517,720
243,820
(7,211)
744,227
528,901
223,706
(8,380)
Total non-interest income
334,460
122,488
98,202
113,769
268,723
101,661
85,745
81,317
Operating income
3,459,223
2,218,355
995,957
244,910
3,097,137
2,035,712
767,571
293,854
Total operating expenses
(1,744,602)
(1,301,754)
(443,157)
309
(1,597,030)
(1,187,264)
(409,575)
(191)
Cost of risk
(95,106)
(87,662)
41,633
(49,077)
145,656
20,142
141,853
(16,340)
Profit before income tax
1,619,515
828,939
594,434
196,142
1,645,763
868,590
499,850
277,323
Total income tax
(282,427)
(144,558)
(103,663)
(34,207)
(326,860)
(172,482)
(99,259)
(55,120)
Profit for the period
1,337,088
684,381
490,771
161,935
1,318,903
696,109
400,591
222,203
Cost Income Ratio
50.4%
58.7%
44.5%
0.0%
51.6%
58.3%
53.4%
0.0%
.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
37
4. Segment information (continued)
Bank
2022
2021
Total
Retail
Non retail
Corporate
Center
Total
Retail
Non retail
Corporate
Center
Net interest income
2,239,198
1,504,913
588,438
145,848
1,953,108
1,324,327
401,548
227,233
Fees and commissions, net
719,194
492,782
239,202
(12,789)
706,043
499,154
218,285
(11,396)
Total non-interest income
330,471
122,163
92,835
115,473
270,736
101,477
80,355
88,904
Operating income
3,288,862
2,119,856
920,474
248,531
2,929,887
1,924,960
700,187
304,740
Total operating expenses
(1,640,885)
(1,229,137)
(411,991)
243
(1,494,056)
(1,111,003)
(383,022)
(31)
Cost of risk
(92,699)
(95,202)
51,565
(49,062)
159,233
18,960
156,609
(16,337)
Profit before income tax
1,555,279
795,518
560,048
199,713
1,595,064
832,918
473,774
288,372
Total income tax
(269,341)
(137,767)
(96,988)
(34,586)
(315,808)
(164,910)
(93,803)
(57,095)
Profit for the period
1,285,938
657,751
463,059
165,127
1,279,256
668,006
379,972
231,278
Cost Income Ratio
49.9%
58.0%
44.8%
0.0%
51.0%
57.7%
54.7%
0.0%
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
38
5. Cash and due from Central Bank
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Cash in vaults
1,898,120
1,323,877
1,898,051
1,323,844
Cash in ATM
633,229
570,571
633,229
570,571
Current accounts with Central Bank
5,093,654
4,311,908
5,093,654
4,311,908
Total
7,625,002
6,206,356
7,624,933
6,206,323
6. Due from banks
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Deposits at Romanian banks
22,001
124,453
22,001
124,453
Deposits at foreign banks
622,972
3,755,293
606,997
3,738,708
Current accounts at Romanian banks
3
(0)
3
-
Current accounts at foreign banks
652,035
507,149
652,035
507,149
Reverse repo
5,450,233
-
5,450,233
-
Bonds
473,718
151,047
473,718
151,047
Total
7,220,963
4,537,941
7,204,987
4,521,357
The Due from banks portfolio is classified as Stage 1. The Group and Bank registered an impairment
allowance for Due from banks of 7 as at December 31, 2022 (December 31, 2021: 146).
7. Derivative and other financial instruments held for trading
Group
December 31, 2022
Assets
Liabilities
Notional (total)
Interest rate swaps
33,419
341,983
2,320,369
Currency swaps
47,067
32,726
2,079,583
Forward foreign exchange contracts
34,004
62,621
4,237,999
Options
65,609
65,645
3,053,774
Total derivative financial instruments
180,099
502,975
11,691,725
December 31, 2022
Assets
Liabilities
Treasury notes
426,524
294,199
Trading loans/deposits
984,869
616,757
Repo/Reverse repo
751,885
29,615
Total financial assets and liabilities held for trading
2,163,278
940,571
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
39
7. Derivative and other financial instruments held for trading (continued)
Group
December 31, 2021
Assets
Liabilities
Notional (total)
Interest rate swaps
33,962
48,399
5,101,371
Currency swaps
8,386
4,593
3,012,164
Forward foreign exchange contracts
7,126
6,056
1,110,385
Options
35,214
35,258
3,775,969
Total derivative financial instruments
84,688
94,306
12,999,889
December 31, 2021
Assets
Liabilities
Treasury notes
768,334
207,534
Trading deposits
-
76,830
Repo/Reverse repo
1,421,902
119,981
Total financial assets and liabilities held for trading
2,190,236
404,345
Bank
December 31, 2022
Assets
Liabilities
Notional (total)
Interest rate swaps
33,419
341,983
2,320,369
Currency swaps
47,067
32,726
2,079,583
Forward foreign exchange contracts
34,004
62,621
4,237,999
Options
65,609
65,645
3,053,774
Total derivative financial instruments
180,099
502,975
11,691,725
December 31, 2022
Assets
Liabilities
Treasury notes
420,458
294,199
Trading loans/deposits
984,869
616,757
Reverse repo/Repo
751,885
29,615
Total financial assets and liabilities held for trading
2,157,212
940,571
Bank
December 31, 2021
Assets
Liabilities
Notional (total)
Interest rate swaps
33,962
48,399
5,101,371
Currency swaps
8,386
4,593
3,012,164
Forward foreign exchange contracts
7,126
6,056
1,110,385
Options
35,214
35,258
3,775,969
Total derivative financial instruments
84,688
94,306
12,999,889
December 31, 2021
Assets
Liabilities
Treasury notes
768,334
207,534
Trading deposits
-
76,830
Reverse repo
1,421,902
119,981
Total financial assets and liabilities held for trading
2,190,236
404,345
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
40
7. Derivative and other financial instruments held for trading (continued)
The Group continue to apply hedge accounting (fair value hedge) as at December 31, 2022 and has 4
hedging relationships (4 hedging relationships as at December 31, 2021).
●
On June 30, 2018, the Bank initiated two macro fair value hedges one in EUR and one in USD of
interest rate risk associated with the current accounts, using several interest rate swaps (pay
variable, receive fixed). The change in the fair value of the macro fair value hedge swaps offsets
the change in the fair value of the hedged portion of the current accounts. The hedged items are
represented by the portion of the current accounts portfolio equal to the swaps nominal values of:
-
108 million EUR yearly with a fixed interest rate of 0.42%, the remaining period of 5.5 years.
-
30 million EUR yearly with a fixed interest rate of 0.171%, the remaining period of 2.5 years.
-
16 million EUR yearly with a fixed interest rate of -0.0125%, the remaining period of 0.5 years.
-
14 million EUR yearly with a fixed interest rate of -0.0125%; the remaining period of 0.5 years.
-
24 million USD yearly with a fixed interest rate of 2.813%; the remaining period of 5.5 years.
-
6 million USD yearly with a fixed interest rate of 2.765%; the remaining period of 0.5 years.
●
In October 30, 2020 the Bank initiated a macro fair value hedge of interest rate risk associated with
the current accounts, using several interest rate swaps (pay variable, receive fixed). The change in
the fair value of the macro fair value hedge swaps offsets the change in the fair value of the hedged
portion of the current accounts. The hedged item is represented by the portion of the current
accounts portfolio equal to the swaps nominal of 315 million EUR. The swap has a fixed interest
rate of -0.403% and a remaining period of 7.84 years.
●
On September 30, 2021 the Bank initiated a macro fair value hedge of interest rate risk associated
with the current accounts, using several interest rate swaps (pay variable, receive fixed). The change
in the fair value of the macro fair value hedge swaps offsets the change in the fair value of the
hedged portion of the current accounts. The hedged item is represented by the portion of the current
accounts portfolio equal to the swaps nominal of 120 million EUR. The swap has a fixed interest
rate of -0.337% and a remaining period of 3.75 years.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
41
7. Derivative and other financial instruments held for trading (continued)
All hedging relationships have quarterly settlement periods for both fixed and variable legs. The hedging
relationships were effective throughout the reporting period.
Main source of hedge ineffectiveness that might be expected to affect the hedging relationships is the
amortization model of current accounts. However, the amortization of the hedged item is based on a
behavioral ALM model that is reviewed / back tested on a yearly basis. In order to avoid inefficiency
generated by the underestimated amortization of the current accounts, maximum 70% of the current
accounts portfolio per each time band is designated as hedged item.
The hedging relationship were designated on the date of the IRS origination. At that date, the theoretical
derivative was built as to match the interest rate behavior of the current accounts, the hedged item (i.e. a
spread was added to the variable leg so that the fair value of the theoretical swap on the designation date to
be zero). Consequently, no other major sources of ineffectiveness were identified.
As at December 31, 2022, the accumulated amount of fair value hedge adjustments on the current accounts
hedged item are included in the carrying amount and presented in due to customer line in the statement of
financial position and amounts to -300,004. The change in value of the hedged item during the period is
explained by the cumulated effect of a gain from revaluation in amount of 280,948 and of the exchange rate
evolution effect in amount of 449.
The fair value of hedging instrument for Group and Bank was the following:
December 31, 2022
Assets
Liabilities
Notional (total)
Interest rate swaps
-
305,027
2,949,161
December 31, 2021
Assets
Liabilities
Notional (total)
Interest rate swaps
21,192
39,703
3,593,965
Forwards
Forward contracts are contractual agreements to buy or sell a specified financial instrument at a specific
price and date in the future. Forwards are customised contracts transacted in the over-the-counter market.
Swaps
Swaps are contractual agreements between two parties to exchange streams of payments over time based
on specified notional amounts, in relation to movements in a specified underlying index such as an interest
rate, foreign currency rate or equity index.
Interest rate swaps relate to contracts concluded by the Bank with other financial institutions in which the
Bank either receives or pays a floating rate of interest in return for paying or receiving, respectively, a fixed
rate of interest. The payment flows are usually netted against each other, with the difference being paid by
one party to the other. In a currency swap, the Bank pays a specified amount in one currency and receives
a specified amount in another currency. Currency swaps are mostly gross–settled.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
42
7. Derivative and other financial instruments held for trading (continued)
Options
Options are contractual agreements that convey the right, but not the obligation, for the purchaser either to
buy or sell a specific amount of a financial instrument at a fixed price, either at a fixed future date or at any
time within a specified period. The Bank purchases and sells options in the over-the-counter markets.
Options purchased by the Bank provide the Bank with the opportunity to purchase (call options) or sell (put
options) the underlying asset at an agreed-upon value either on or before the expiration of the option.
The Bank is exposed to credit risk on purchased options only to the extent of their carrying amount, which
is their fair value. Options written by the Bank provide the purchaser the opportunity to purchase from or
sell to the Bank the underlying asset at an agreed-upon value either on or before the expiration of the option.
The options are kept in order to neutralize the customer deals.
Trading treasury notes are treasury discount notes and coupon bonds held for trading purposes. All the
treasury notes in Bank’s portfolio are issued by the Romanian Government in RON, EUR and USD.
Trading loans/deposits (including reverse repo/repo)
interbank flow and the associated risk management, those resulting from Bank obligations as primary dealer
and from Bank position al liquidity provider.
8. Financial assets at fair value through profit or loss
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Equity investments
8,133
6,947
8,132
6,947
Other securities
6,130
-
-
-
Total
14,262
6,947
8,132
6,947
Equity investments
Other equity investments represent shares in Romanian Commodities Exchange (Bursa de Valori
Bucuresti), Romanian Credit Guarantee Fund for Private Investors (Fondul Roman de Garantare a
Creditelor pentru Intreprinzatorii Privati SA), National Society for Transfer of Funds and Settlements-
TransFonD (Societatea Nationala de Transfer de Fonduri si Decontari), SWIFT, Shareholders’ Register
for the National Securities Commission (Depozitarul Central S.A.), Bucharest Stock Exchange (Bursa
Romana de Marfuri SA).
Other securities
In July 2022 BRD Asset Management issued new funds. The Grup participation in this funds as at
December 31, 2022 is the following:
December 31, 2022
Unit value RON
No of units
Market value
BRD Oportunitati clasa A
102
18,000
1,841
BRD Oportunitati clasa E
126
2,000
253
BRD Orizont 2035 clasa A
99
18,000
1,779
BRD Orizont 2035 clasa E
122
2,000
244
BRD Orizont 2045 clasa A
98
18,000
1,770
BRD Orizont 2045 clasa E
121
2,000
243
Total
6,130
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
43
9. Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include treasury notes, respectively
treasury discount notes and coupon bonds issued by the Ministry of Public Finance, in amount of
10,982,029 (December 31, 2021: 15,769,371) rated as very good according to internal rating, bonds issued
by French State in amount of 1,939,772 (December 31, 2021: 3,389,311) and bonds issued by the Belgian
State in amount of 517,795 (December 31, 2021: 705,143) rated as very good according to internal rating.
As at December 31, 2022, these financial assets at fair value through other comprehensive income are
classified as Stage 1 and ECL impairment allowance amounts to 2,558 (December 31, 2021: 3,045).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
44
10. Financial assets at amortised cost
10.1. Loans and advances to customers
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Loans, gross
38,053,311
34,668,675
37,242,399
33,853,032
Loans impairment
(1,764,969)
(1,754,800)
(1,700,120)
(1,669,176)
Total
36,288,342
32,913,875
35,542,279
32,183,856
The structure of loans is the following:
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Working capital loans
7,158,039
4,706,233
7,158,039
4,706,233
Loans for equipment
3,650,998
3,428,885
3,275,108
3,171,233
Trade activities financing
1,385,051
1,318,133
1,385,051
1,318,133
Acquisition of real estate, including
mortgage for individuals
14,476,288
13,747,465
14,476,288
13,747,465
Consumer loans
9,014,881
9,104,171
8,579,859
8,546,180
Other
2,368,053
2,363,788
2,368,053
2,363,788
Total
38,053,311
34,668,675
37,242,399
33,853,032
During 2022 the gross loan portfolio increased by 3,389 million RON as compared with 31 December 2021.
As at 31 December 2022 the Bank’s gross loan portfolio and movements were distributed as follows:
●
Stage 1: 27,178 million RON, with a 2,646 million increase compared to 31 December 2021
●
Stage 2: 9,002 million RON, with a 838 million RON increase compared to 31 December 2021
●
Stage 3: 1,010 million RON, with a 88 million RON decrease compared to 31 December 2021
●
POCI: 53 million RON, with 6 million decrease compared to 31 December 2021.
The main movements on gross exposure value are along the following dimensions:
●
Stage 1 increase driven mainly by robust performance on Non Retail segment
●
The increase in Stage 2 portfolio reflects mainly the migrations from Stage 1 as a result of
macroeconomic evolution, mainly on Retail portfolio
●
The Stage 3 and POCI evolution is characterized by a net inflow of 276 million RON from
performing portfolios, offset by good recovery performance on already defaulted portfolios of 204
million RON, and portfolio sale and write-off in amount of 167 million RON.
As of December 31, 2022 the amortized cost of loans granted to the 20 largest corporate clients (groups of
connected borrowers) amounts to 4,748,797 (December 31, 2021: 3,614,157), while the value of letters of
guarantee and letters of credit issued in favour of these clients amounts for the Group and Bank to 5,148,297
(December 31, 2021: 4,961,898).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
45
10. Financial assets at amortised cost (continued)
10.1. Loans and advances to customers (continued)
Impairment allowance movement
Group
Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
133,801
457,954
602,990
3,875
1,198,619
New assets originated or purchased
88,882
22,940
10,229
9
122,060
Assets derecognised or repaid (excluding write offs)
(15,373)
(30,293)
(105,813)
(467)
(151,945)
Net provision movement for assets that did not change classification
(49,371)
(17,293)
(357)
1,528
(65,494)
Movements due to change in classification
(22,631)
72,287
174,935
(20)
224,571
Amounts written off
-
-
(97,064)
(1,695)
(98,759)
Other adjustments
1
(46)
(116)
(10)
(171)
Impairment allowance as at 31 December 2022
135,308
505,549
584,804
3,219
1,228,880
Non-Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
175,458
100,573
255,406
24,742
556,180
New assets originated or purchased
151,155
46,900
22,406
-
220,461
Assets derecognised or repaid (excluding write offs)
(97,119)
(27,058)
(57,544)
(367)
(182,088)
Net provision movement for assets that did not change classification
6,025
(27,730)
(15,779)
(2,685)
(40,168)
Movements due to change in classification
(3,306)
(6,373)
11,077
-
1,398
Amounts written off
-
-
(19,601)
(0)
(19,601)
Other adjustments
(4)
14
(101)
(3)
(94)
Impairment allowance as at 31 December 2022
232,210
86,326
195,865
21,687
536,088
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
309,259
558,527
858,398
28,617
1,754,801
New assets originated or purchased
240,037
69,840
32,635
9
342,521
Assets derecognised or repaid (excluding write offs)
(112,492)
(57,351)
(163,357)
(834)
(334,033)
Net provision movement for assets that did not change classification
(43,346)
(45,023)
(16,136)
(1,157)
(105,662)
Movements due to change in classification
(25,937)
65,915
186,012
(20)
225,969
Amounts written off
-
-
(116,665)
(1,695)
(118,360)
Other adjustments
(3)
(31)
(219)
(14)
(267)
Impairment allowance as at 31 December 2022
367,518
591,876
780,668
24,905
1,764,968
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
46
10. Financial assets at amortised cost (continued)
10.1. Loans and advances to customers (continued)
Impairment allowance movement (continued)
Bank
Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
118,917
451,772
544,071
3,875
1,118,635
New assets originated or purchased
88,678
17,592
2,359
9
108,637
Assets derecognised or repaid (excluding write offs)
(15,357)
(30,269)
(105,481)
(467)
(151,573)
Net provision movement for assets that did not change classification
(49,332)
(18,027)
(1,055)
1,528
(66,886)
Movements due to change in classification
(19,059)
74,491
176,608
(20)
232,019
Amounts written off
-
-
(69,895)
(1,695)
(71,590)
Other adjustments
(12)
(33)
(116)
(10)
(171)
Impairment allowance as at 31 December 2022
123,834
495,526
546,491
3,219
1,169,070
Non-Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
175,057
97,758
252,985
24,742
550,542
New assets originated or purchased
150,889
44,715
22,406
-
218,011
Assets derecognised or repaid (excluding write offs)
(97,091)
(26,804)
(57,143)
(367)
(181,406)
Net provision movement for assets that did not change classification
7,184
(27,607)
(14,692)
(2,685)
(37,800)
Movements due to change in classification
(4,360)
(5,284)
11,042
-
1,398
Amounts written off
-
-
(19,601)
(0)
(19,601)
Other adjustments
(4)
14
(100)
(3)
(93)
Impairment allowance as at 31 December 2022
231,675
82,792
194,896
21,687
531,050
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2022
293,973
549,531
797,056
28,617
1,669,176
New assets originated or purchased
239,567
62,307
24,765
9
326,648
Assets derecognised or repaid (excluding write offs)
(112,448)
(57,073)
(162,624)
(834)
(332,979)
Net provision movement for assets that did not change classification
(42,148)
(45,634)
(15,747)
(1,157)
(104,687)
Movements due to change in classification
(23,419)
69,207
187,650
(20)
233,417
Amounts written off
-
-
(89,496)
(1,695)
(91,191)
Other adjustments
(16)
(19)
(216)
(12)
(263)
Impairment allowance as at 31 December 2022
355,510
578,318
741,386
24,907
1,700,121
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
47
10. Financial assets at amortised cost (continued)
10.1. Loans and advances to customers (continued)
Impairment allowance movement (continued)
Group
Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2021
136,253
597,234
572,879
3,955
1,310,321
New assets originated or purchased
93,146
24,232
18,924
24
136,326
Assets derecognised or repaid (excluding write offs)
(13,595)
(45,764)
(105,908)
(273)
(165,540)
Net provision movement for assets that did not change classification
(67,011)
(55,945)
(14,927)
1,554
(136,328)
Movements due to change in classification
(15,903)
(64,171)
208,292
8
128,226
Amounts written off
-
-
(79,061)
(1,412)
(80,474)
Other adjustments
910
2,369
2,791
18
6,088
Impairment allowance as at 31 December 2021
133,801
457,954
602,990
3,875
1,198,619
Non-Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2021
72,612
157,710
320,906
29,502
580,730
New assets originated or purchased
91,947
54,735
2,173
192
149,047
Assets derecognised or repaid (excluding write offs)
(29,847)
(19,511)
(38,276)
(465)
(88,099)
Net provision movement for assets that did not change classification
14,207
(25,946)
491
(3,736)
(14,984)
Movements due to change in classification
25,502
(67,906)
32,994
(1,171)
(10,581)
Amounts written off
-
-
(66,312)
(5)
(66,317)
Other adjustments
1,037
1,491
3,432
425
6,384
Impairment allowance as at 31 December 2021
175,458
100,573
255,406
24,742
556,180
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2021
208,865
754,944
893,787
33,457
1,891,052
New assets originated or purchased
185,094
78,967
21,096
216
285,373
Assets derecognised or repaid (excluding write offs)
(43,442)
(65,275)
(144,184)
(738)
(253,639)
Net provision movement for assets that did not change classification
(52,804)
(81,891)
(14,436)
(2,182)
(151,312)
Movements due to change in classification
9,600
(132,077)
241,285
(1,163)
117,645
Amounts written off
-
-
(145,373)
(1,417)
(146,791)
Other adjustments
1,947
3,859
6,222
443
12,471
Impairment allowance as at 31 December 2021
309,259
558,527
858,397
28,617
1,754,800
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
48
10. Financial assets at amortised cost (continued)
10.1. Loans and advances to customers (continued)
Impairment allowance movement (continued)
Bank
Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2021
116,439
588,819
477,017
3,955
1,186,230
New assets originated or purchased
92,928
21,637
2,988
24
117,577
Assets derecognised or repaid (excluding write offs)
(13,548)
(45,750)
(105,566)
(273)
(165,137)
Net provision movement for assets that did not change
classification
(66,858)
(55,706)
(15,524)
1,554
(136,534)
Movements due to change in classification
(10,951)
(59,590)
210,010
8
139,477
Amounts written off
-
-
(27,596)
(1,412)
(29,008)
Other adjustments
907
2,362
2,742
18
6,029
Impairment allowance as at 31 December 2021
118,917
451,772
544,071
3,875
1,118,635
Non-Retail lending
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2021
72,115
154,895
318,100
29,502
574,612
New assets originated or purchased
91,759
53,457
1,926
192
147,335
Assets derecognised or repaid (excluding write offs)
(29,816)
(19,366)
(37,785)
(465)
(87,432)
Net provision movement for assets that did not change
classification
15,398
(25,770)
739
(3,736)
(13,369)
Movements due to change in classification
24,585
(66,919)
32,924
(1,171)
(10,581)
Amounts written off
-
-
(66,312)
(5)
(66,317)
Other adjustments
1,015
1,461
3,393
425
6,294
Impairment allowance as at 31 December 2021
175,057
97,758
252,985
24,742
550,542
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment allowance as at 1 st January 2021
188,554
743,714
795,117
33,457
1,760,842
New assets originated or purchased
184,687
75,094
4,914
216
264,912
Assets derecognised or repaid (excluding write offs)
(43,365)
(65,116)
(143,350)
(738)
(252,569)
Net provision movement for assets that did not change
classification
(51,460)
(81,476)
(14,785)
(2,182)
(149,902)
Movements due to change in classification
13,634
(126,509)
242,933
(1,163)
128,896
Amounts written off
-
-
(93,908)
(1,417)
(95,325)
Other adjustments
1,922
3,823
6,135
443
12,323
Impairment allowance as at 31 December 2021
293,973
549,531
797,056
28,617
1,669,176
The sensitivity assessment of ECL to key inputs shows that a +/- 1 p.p. change in LGD would result in an
increase/ decrease of ECL with 35.9 million RON.
The sensitivity assessment of ECL to the macroeconomic scenarios used is described below:
●
A change of +/- 1 p.p. of the optimistic scenario weight correlated with a -/+ 1 p.p. change in base
scenario weight, will generate an ECL decrease/ increase of 0.4 million RON
●
A change of +/- 1 p.p. of the pessimistic scenario weight correlated with a -/+ 1 p.p. change in
base scenario weight, will generate an ECL increase/ decrease of 2.1 million RON.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
49
10. Financial assets at amortised cost (continued)
10.2. Treasury bills at amortised cost
Treasury bills at amortised cost income include bonds classified as being Hold To Collect (HTC), measured
at amortised cost and rated as very good according to internal rating. These bonds are issued by: French
State (in amount of 1,999,312), United States Government (in amount of 431,715) and by Romanian
Ministry of Public Finances (in amount of 299,679).
As at December 31, 2022, these treasury bills at amortised cost are classified as Stage 1 and the ECL
impairment allowance amounts to 40.
11. Finance lease receivables
The Group acts as a lessor through the subsidiary BRD Sogelease IFN SA, having in the portfolio vehicles,
equipment (industrial, agricultural) and real estate leases. The leases are denominated mainly in EUR and
RON, with transfer of ownership of the leased asset at the end of the lease term. The receivables are secured
by the underlying assets and by other collateral. The payment timing analysis of lease receivables is as
follows:
Group
December 31, 2022
December 31, 2021
Gross investment in finance lease:
Under 1 year
651,209
561,433
Between 1 and 5 years
963,284
824,401
Higher than 5 years
8,046
8,625
-
-
1,622,539
1,394,459
Unearned finance income
(121,160)
(82,656)
-
-
Net investment in finance lease
1,501,379
1,311,803
Net investment in finance lease:
Under 1 year
593,826
528,107
Between 1 and 5 years
899,704
775,580
Higher than 5 years
7,849
8,115
1,501,379
1,311,802
December 31, 2022
December 31, 2021
Net investment in the lease
1,501,379
1,311,802
Accumulated allowance for uncollectible
minimum lease payments receivable
(93,985)
(89,207)
Total
1,407,394
1,222,595
As at December 31, 2022 and December 31, 2021, the future minimum lease receipts regarding operating
leases (rents) concluded by the Group and Bank as a lessor are:
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Less than one year
499
393
499
393
Between one and five years
559
373
559
373
More than five years
113
184
113
184
Total
1,171
950
1,171
950
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
50
11. Finance lease receivables (continued)
Impairment allowance movement
Retail
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2022
1,450
3,544
19,701
24,695
New assets originated or purchased
937
3,541
3,261
7,739
Assets derecognised or fully repaid (excluding write offs)
(142)
(375)
(1,549)
(2,066)
Movements due to change in classification
354
1,020
(1,374)
-
Net movement for assets that did not change classification
(725)
(680)
2,895
1,489
Amounts written off
(1)
(40)
(204)
(245)
Other adjustments
(0)
(1)
(2)
(3)
Impairment allowance as at 31 December 2022
1,873
7,010
22,726
31,609
Non-retail
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2022
1,866
16,210
46,436
64,512
New assets originated or purchased
1,479
4,948
1,027
7,453
Assets derecognised or fully repaid (excluding write offs)
(117)
(2,508)
(1,975)
(4,601)
Movements due to change in classification
4,804
(5,002)
198
0
Net movement for assets that did not change classification
(5,414)
(1,364)
3,927
(2,850)
Amounts written off
-
-
(770)
(770)
Other adjustments
(1)
(15)
(1,351)
(1,367)
Impairment allowance as at 31 December 2022
2,616
12,269
47,491
62,377
Total
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2022
3,316
19,754
66,137
89,207
New assets originated or purchased
2,415
8,489
4,287
15,192
Assets derecognised or fully repaid (excluding write offs)
(259)
(2,883)
(3,524)
(6,666)
Movements due to change in classification
5,158
(3,982)
(1,176)
-
Net movement for assets that did not change classification
(6,139)
(2,044)
6,822
(1,361)
Amounts written off
(1)
(40)
(975)
(1,015)
Other adjustments
(1)
(16)
(1,354)
(1,370)
Impairment allowance as at 31 December 2022
4,489
19,279
70,218
93,986
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
51
11. Finance lease receivables (continued)
Impairment allowance movement (continued)
Retail
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2021
1,291
1,927
16,476
19,694
New assets originated or purchased
877
2,034
1,797
4,708
Assets derecognised or fully repaid (excluding write offs)
(158)
(285)
(921)
(1,365)
Movements due to change in classification
113
(860)
747
-
Net movement for assets that did not change classification
(691)
718
4,181
4,209
Amounts written off
(0)
(2)
(2,780)
(2,783)
Other adjustments
19
12
201
232
Impairment allowance as at 31 December 2021
1,450
3,544
19,701
24,695
Non-retail
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2021
2,710
16,351
41,566
60,626
New assets originated or purchased
851
6,700
4,324
11,875
Assets derecognised or fully repaid (excluding write offs)
(319)
(1,345)
(1,858)
(3,523)
Movements due to change in classification
2,667
(3,819)
1,153
-
Net movement for assets that did not change classification
(4,113)
(1,749)
4,320
(1,542)
Amounts written off
(6)
-
(2,107)
(2,113)
Other adjustments
76
74
(962)
(812)
Impairment allowance as at 31 December 2021
1,866
16,211
46,435
64,512
Total
Stage 1
Stage 2
Stage 3
Total
Impairment allowance as at 1 st January 2021
4,000
18,279
58,042
80,321
New assets originated or purchased
1,728
8,735
6,121
16,583
Assets derecognised or fully repaid (excluding write offs)
(478)
(1,630)
(2,779)
(4,887)
Movements due to change in classification
2,780
(4,679)
1,899
-
Net movement for assets that did not change classification
(4,803)
(1,031)
8,501
2,667
Amounts written off
(7)
(2)
(4,887)
(4,896)
Other adjustments
95
85
(761)
(581)
Impairment allowance as at 31 December 2021
3,316
19,755
66,136
89,207
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
52
12. Investments in subsidiaries associates and joint ventures
Group
Associates and joint ventures
%
December 31,
2021
Additions/
Reclassificatio
ns
Increase /
(decrease) in
net assets
December 31,
2022
BRD Asigurari de Viata SA
49.00%
29,144
-
4,822
33,966
BRD Fond de Pensii S.A.
49.00%
10,646
9,800
(13,857)
6,589
Fondul de Garantare a Creditului Rural
33.33%
19,130
-
352
19,482
ALD Automotive
20.00%
30,336
-
3,992
34,328
BRD Sogelease Asset Rental SRL
20.00%
1,087
-
892
1,979
Biroul de Credit S.A.
16.38%
3,291
-
382
3,673
CIT One SA
33.33%
13,571
-
82
13,653
107,205
9,800
(3,335)
113,670
Associates and joint ventures
%
December 31,
2020
Increase /
(decrease) in net
assets
December 31,
2021
BRD Asigurari de Viata SA
49.00%
27,714
1,430
29,144
BRD Fond de Pensii S.A.
49.00%
11,153
(507)
10,646
Fondul de Garantare a Creditului Rural
33.33%
18,774
356
19,130
ALD Automotive
20.00%
25,597
4,739
30,336
BRD Sogelease Asset Rental SRL
20.00%
1,256
(169)
1,087
Biroul de Credit S.A.
16.38%
3,054
237
3,291
CIT One SA
33.33%
11,566
2,005
13,571
99,114
8,091
107,205
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
53
12. Investments in subsidiaries associates and joint ventures (continued)
Bank
Associates and joint ventures
%
December 31,
2021
Additions/
Reclassificat
ions
Disposals
December 31,
2022
BRD Asigurari de Viata SA
49.00%
17,697
-
-
17,697
BRD Fond de Pensii S.A.
49.00%
33,599
9,800
(38,752)
4,647
Fondul de Garantare a Creditului Rural
33.33%
14,220
-
-
14,220
ALD Automotive
20.00%
11,873
-
-
11,873
Biroul de Credit S.A.
16.38%
729
-
-
729
CIT One SA
33.33%
11,900
-
-
11,900
Total associates and joint ventures
90,018
9,800
(38,752)
61,066
BRD Sogelease IFN SA
99.98%
11,558
-
-
11,558
BRD Asset Management SAI SA
99.98%
4,321
-
-
4,321
BRD Finance SA
49.00%
53,019
-
-
53,019
Subsidiaries
68,898
-
-
68,898
Total associates and subsidiaries
158,916
9,800
(38,752)
129,964
Bank
Associates and joint ventures
%
December 31, 2020
December 31, 2021
BRD Asigurari de Viata SA
49.00%
17,697
17,697
BRD Fond de Pensii S.A.
49.00%
33,599
33,599
Fondul de Garantare a Creditului Rural
33.33%
14,220
14,220
ALD Automotive
20.00%
11,873
11,873
Biroul de Credit S.A.
16.38%
729
729
CIT One SA
33.33%
11,900
11,900
Total associates and joint ventures
90,018
90,018
BRD Sogelease IFN SA
99.98%
11,558
11,558
BRD Asset Management SAI SA
99.98%
4,321
4,321
BRD Finance SA
49.00%
53,019
53,019
Subsidiaries
68,898
68,898
Total associates and subsidiaries
158,916
158,916
In May 2022, BRD participation in the share capital of BRD Fond de Pensii SA was increased by an amount
of 9,800. During 2022, the Bank also booked an impairment of this participation in amount of 38,752 as of
December 31, 2022.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
54
12. Investments in subsidiaries associates and joint ventures (continued)
The subsidiaries, associates and joint venture summary of financial position and income statement as at December 31, 2022 are as follows:
December 31, 2022
%
Current
assets
Non-current
assets
Net assets
% of net
assets
Total assets
Current
liabilities
Non-current
liabilities
Total
liabilities
Revenue
Net profit/(loss)
Subsidiaries
BRD Sogelease IFN SA
99.98%
1,028,812
1,075,966
257,648
n/a
2,104,778
676,720
1,170,410
1,847,131
91,494
32,626
BRD Finance IFN SA
49.00%
160,063
353,361
116,506
n/a
513,424
238,748
158,171
396,919
100,843
17,804
BRD Asset Management SAI
SA
99.98%
13,633
17,794
26,831
n/a
31,427
919
3,676
4,595
33,477
3,415
Associate and joint ventures
ALD Automotive
20.00%
77,530
727,693
171,643
34,329
805,223
70,617
562,963
633,580
234,834
40,691
BRD Asigurari de Viata SA
49.00%
618,168
140,032
69,327
33,970
758,200
139,915
548,958
688,873
302,173
23,298
Fondul de Garantare a
Creditului Rural
33.33%
1,003,886
4,930
58,438
19,478
1,008,816
64,584
885,794
950,378
17,499
3,106
Biroul de Credit S.A.
16.38%
22,030
914
22,448
3,676
22,944
496
-
496
15,676
7,791
BRD Fond de Pensii S.A.
49.00%
76,884
427
13,442
6,586
77,310
942
62,927
63,869
21,839
(6,543)
BRD Sogelease Asset Rental
SRL
20.00%
11,611
7,376
9,894
1,979
18,987
405
8,688
9,093
10,489
(2,996)
CIT One SA
33.33%
38,624
88,518
40,962
13,652
127,142
37,066
49,114
86,180
227,257
(351)
Total
113,670
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
55
12. Investments in subsidiaries associates and joint ventures (continued)
The subsidiaries and associates summary of financial position and income statement as at December 31, 2021 are as follows:
December 31, 2021
%
Current
assets
Non-
current
assets
Net assets
% of net
assets
Total assets
Current
liabilities
Non-
current
liabilities
Total
liabilities
Revenue
Net profit/(loss)
Subsidiaries
BRD Sogelease IFN SA
99.98%
778,924
950,705
248,834
n/a
1,729,628
597,132
883,662
1,480,794
73,236
23,778
BRD Finance IFN SA
49.00%
178,424
452,703
114,342
n/a
631,128
287,373
229,412
516,785
112,328
18,073
BRD Asset Management SAI
SA
99.98%
32,957
1,937
29,169
n/a
34,894
5,725
-
5,725
37,186
5,504
Associate
ALD Automotive
20.00%
54,760
644,348
151,683
30,337
699,108
55,301
492,124
547,425
203,354
23,532
BRD Asigurari de Viata SA
49.00%
685,889
96,156
59,485
29,148
782,045
131,555
591,005
722,560
424,696
13,970
Fondul de Garantare a
Creditului Rural
33.33%
780,817
4,787
57,383
19,126
785,604
50,147
678,074
728,221
15,050
3,342
Biroul de Credit S.A.
16.38%
20,036
526
20,112
3,293
20,562
450
-
450
12,699
5,456
BRD Fond de Pensii S.A.
49.00%
74,648
767
21,722
10,644
75,415
811
52,882
53,693
23,063
2,651
BRD Sogelease Asset Rental
SRL
20.00%
13,410
13,986
5,435
1,087
27,396
339
21,622
21,961
10,471
(1,645)
CIT One SA
33.33%
37,887
66,226
40,715
13,570
104,113
27,494
35,904
63,398
176,270
8,148
Total
107,205
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
56
13. Property, plant and equipment
Group
Land & Buildings
Investment
properties
Materials and
other assets
Construction in
progress
Right of use
Total
Cost:
as of December 31, 2020
1,297,082
40,437
262,158
518,662
53,957
453,816
2,626,112
Additions
-
-
918
10
85,220
112,934
199,082
Transfers
23,931
(1,219)
27,248
26,877
(76,837)
-
-
Transfers into/from inventory
(16,800)
(331)
-
-
-
-
(17,131)
Disposals
(39,770)
(644)
(10,688)
(60,002)
(7,169)
(45,354)
(163,627)
as of December 31, 2021
1,264,443
38,243
279,636
485,547
55,171
521,396
2,644,436
Additions
-
-
66
7
128,781
42,012
170,866
Transfers
36,282
(293)
26,567
27,440
(89,995)
-
1
Disposals
(21,293)
(937)
(16,832)
(53,334)
5,530
(77,390)
(164,256)
as of December 31, 2022
1,279,432
37,013
289,437
459,660
99,487
486,018
2,651,047
Depreciation and impairment:
as of December 31, 2020
(785,792)
(22,639)
(195,804)
(416,769)
(1,954)
(119,500)
(1,542,458)
Depreciation
(36,145)
(625)
(29,525)
(32,538)
-
(90,425)
(189,258)
Impairment
1,009
-
-
351
-
-
1,360
Disposals
32,442
610
10,612
56,587
-
69,249
169,500
Transfers
(723)
723
-
-
-
-
-
Transfers into/from inventory
4,831
-
-
-
-
-
4,831
as of December 31, 2021
(784,378)
(21,931)
(214,717)
(392,369)
(1,954)
(140,676)
(1,556,025)
Depreciation
(33,958)
(481)
(29,780)
(26,668)
-
(86,283)
(177,170)
Impairment
1,617
-
-
(56)
-
-
1,561
Disposals
14,903
697
16,824
50,608
-
76,921
159,953
Transfers
127
207
-
(334)
-
-
-
as of December 31, 2022
(801,689)
(21,508)
(227,673)
(368,819)
(1,954)
(150,038)
(1,571,681)
Net book value:
as of December 31, 2020
511,290
17,798
66,354
101,893
52,003
334,316
1,083,654
as of December 31, 2021
480,065
16,312
64,919
93,178
53,217
380,720
1,088,411
as of December 31, 2022
477,743
15,505
61,764
90,841
97,533
335,980
1,079,366
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
57
13. Property, plant and equipment (continued)
Bank
Land & Buildings
Investment
properties
Materials and
other assets
Construction in
progress
Right of use
Total
Cost:
as of December 31, 2020
1,286,971
40,437
253,160
518,092
53,955
436,399
2,589,013
Additions
-
-
-
6
85,220
103,796
189,022
Transfers
23,931
(1,219)
27,248
26,877
(76,837)
-
-
Transfers into/from inventory
(16,800)
(331)
-
-
-
-
(17,131)
Disposals
(39,770)
(644)
(9,914)
(59,717)
(7,169)
(44,945)
(162,159)
as of December 31, 2021
1,254,332
38,243
270,494
485,258
55,169
495,250
2,598,745
Additions
-
-
-
7
128,781
41,563
170,351
Transfers
36,282
(293)
26,566
27,440
(89,995)
-
-
Disposals
(21,181)
(937)
(16,520)
(53,311)
5,530
(68,595)
(155,014)
as of December 31, 2022
1,269,433
37,013
280,540
459,394
99,485
468,218
2,614,082
Depreciation and impairment:
as of December 31, 2020
(780,567)
(22,638)
(188,990)
(416,462)
(1,954)
(108,019)
(1,518,630)
Depreciation
(35,894)
(625)
(28,387)
(32,375)
-
(84,695)
(181,976)
Impairment
1,009
-
-
351
-
-
1,360
Disposals
32,441
610
9,913
56,304
-
63,970
163,238
Transfers
(723)
723
-
-
-
-
-
Transfers into/from inventory
4,829
-
-
-
-
-
4,829
as of December 31, 2021
(778,905)
(21,930)
(207,464)
(392,182)
(1,954)
(128,744)
(1,531,179)
Depreciation
(33,706)
(481)
(28,937)
(26,640)
-
(82,779)
(172,543)
Impairment
1,617
-
-
(56)
-
-
1,561
Disposals
14,789
697
16,518
50,587
-
67,434
150,025
Transfers
127
207
-
(334)
-
-
-
as of December 31, 2022
(796,078)
(21,507)
(219,883)
(368,625)
(1,954)
(144,089)
(1,552,136)
Net book value:
as of December 31, 2020
506,404
17,799
64,170
101,630
52,001
328,380
1,070,383
as of December 31, 2021
475,427
16,313
63,030
93,076
53,215
366,506
1,067,566
as of December 31, 2022
473,355
15,506
60,657
90,769
97,531
324,129
1,061,946
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
58
13. Property, plant and equipment (continued)
Group
Right-of-use assets
Land & Buildings
IT Office equipments
Cars and other assets
Total
as of January 1, 2022
366,047
4,220
10,453
380,720
Additions
26,415
11,904
3,409
41,728
Depreciation expense
(77,269)
(3,531)
(5,483)
(86,283)
Disposals and other decreases
(18,761)
(1,815)
(19)
(20,595)
Contractual changes
20,128
253
29
20,410
as of December 31, 2022
316,560
11,031
8,389
335,980
Lease liabilities
as of January 1, 2022
392,275
Additions
41,725
Disposals and other decreases
(32,025)
Other movements (FX, other contractual changes)
22,435
Interest expense
5,042
Payments
(89,706)
as of December 31, 2022
339,746
Bank
Right-of-use assets
Land & Buildings
IT Office equipments
Cars and other assets
Total
as of January 1, 2022
353,107
3,187
10,212
366,506
Additions
26,418
11,904
3,241
41,563
Depreciation expense
(74,661)
(3,531)
(4,587)
(82,779)
Disposals and other decreases
(18,761)
(1,815)
-
(20,576)
Contractual changes
19,678
(247)
(16)
19,415
as of December 31, 2022
305,781
9,498
8,850
324,129
Lease liabilities
as of January 1, 2022
377,699
Additions
41,563
Disposals and other decreases
(29,506)
Other movements (FX, other contractual changes)
19,084
Interest expense
4,920
Payments
(86,238)
as of December 31, 2022
327,522
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
59
13. Property, plant and equipment (continued)
Group
Right-of-use assets
Land & Buildings
IT Office equipments
Cars and other assets
Total
as of January 1, 2021
323,403
5,510
5,403
334,316
Additions
91,995
1,470
10,837
104,302
Depreciation expense
(81,861)
(2,862)
(5,702)
(90,425)
Disposals and other decreases
(15,785)
-
-
(15,785)
Contractual changes
48,295
102
(85)
48,312
as of December 31, 2021
366,047
4,220
10,453
380,720
Lease liabilities
as of January 1, 2021
342,813
Additions
104,302
Disposals and other decreases
(21,100)
Other movements (FX, other contractual changes)
56,872
Interest expense
4,618
Payments
(95,230)
as of December 31, 2021
392,275
Bank
Right-of-use assets
Land & Buildings
IT Office equipments
Cars and other assets
Total
as of January 1, 2021
319,395
4,514
4,471
328,380
Additions
91,683
1,470
10,643
103,796
Depreciation expense
(76,931)
(2,862)
(4,902)
(84,695)
Disposals and other decreases
(15,784)
-
-
(15,784)
Contractual changes
34,744
65
-
34,809
as of December 31, 2021
353,107
3,187
10,212
366,506
Lease liabilities
as of January 1, 2021
336,838
Additions
103,796
Disposals and other decreases
(20,416)
Other movements (FX, other contractual changes)
42,879
Interest expense
4,450
Payments
(89,848)
as of December 31, 2021
377,699
The Group and Bank holds investment property as a consequence of the ongoing rationalisation of its retail branch network. Investment properties comprise a
number of commercial properties that are leased to third parties. The investment properties have a fair value of 12,529 as at December 31, 2022 (December 31,
2021: 12,705). The fair value has been determined based on a valuation by an independent valuer in 2022. Rental income from investment property of 2,427
(December 31, 2021: 1,708) has been recognized in other income.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
60
14. Goodwill
Goodwill represents the excess of the acquisition cost over the fair value of net identifiable assets
transferred from Société Générale Bucharest to the Group in 1999.
Following the acquisition, the branch become the present Sucursala Mari Clienti Corporativi (“SMCC”) –
the branch dedicated to large significant clients, most of them taken over from the former Société Générale
Bucharest.
As at December 31, 2022, the branch had a number of 3,737 active customers (2021: 3,507), with loans
representing approximately 17% from total loans managed by the network (2021: 14%) and with deposits
representing about 15% of networks’ deposits (2021: 11%). Most of the SMCC non-retail clients are large
multinational and national customers.
Taking into account the stable base of clients and the contribution to the bank’s net banking income, the
branch which generated the goodwill is considered profitable, without any need of impairment.
15. Intangible assets
The balance of the intangible assets as of December 31, 2022 and December 31, 2021 represents mainly
software.
Group
Bank
Cost:
as of December 31, 2020
728,832
696,109
Additions
126,837
126,025
Disposals
(7,212)
(201)
as of December 31, 2021
848,457
821,933
Additions
140,411
139,072
Disposals
(529)
45
as of December 31, 2022
988,339
961,050
Amortization:
as of December 31, 2020
(481,453)
(451,810)
Amortization expense
(51,673)
(50,468)
Disposals
5,732
-
as of December 31, 2021
(527,394)
(502,278)
Amortization expense
(53,852)
(53,105)
Disposals
395
-
as of December 31, 2022
(580,851)
(555,383)
Net book value:
as of December 31, 2020
247,379
244,299
as of December 31, 2021
321,063
319,655
as of December 31, 2022
407,488
405,667
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
61
16. Other assets
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Advances to suppliers
77,413
66,480
-
-
Sundry receivable
422,867
143,706
414,235
133,450
Prepaid expenses
73,545
52,377
56,755
39,780
Repossessed assets
4,536
3,242
924
924
Other assets
12,602
5,451
2,044
2,756
Total
590,963
271,256
473,958
176,910
The sundry receivables balances includes various commissions, sundry debtors and are net of impairment
allowance, which at Group level is 200,209 (December 31, 2021: 165,640) and at Bank level is 190,512
(December 31, 2021: 156,860).
As of December 31, 2022 the carrying value of repossessed assets for Group is 4,536 (December 31, 2021:
3,242). As of December 31, 2022 the carrying value of repossessed assets for Bank is 924 (December 31,
2021: 924), representing 3 residential buildings (December 31, 2021: 4 residential buildings).
Group
Sundry receivables
Total (Stage3)
Impairment allowance as at January 1, 2022
165,641
Additional expenses
67,810
Reversals of provisions
(23,868)
Receivables written off
(9,469)
Foreign exchange adjustments
95
Impairment allowance as at December 31, 2022
200,209
Total (Stage3)
Impairment allowance as at 1 st January 2021
117,001
Additional expenses
83,383
Reversals of provisions
(14,068)
Receivables written off
(21,106)
Foreign exchange adjustments
430
Impairment allowance as at 31 December 2021
165,641
Bank
Sundry receivables
Total (Stage3)
Impairment allowance as at January 1, 2022
156,860
Additional expenses
66,146
Reversals of provisions
(23,262)
Receivables written off
(9,328)
Foreign exchange adjustments
95
Impairment allowance as at December 31, 2022
190,512
Total (Stage3)
Impairment allowance as at 1 st January 2021
107,223
Additional expenses
82,126
Reversals of provisions
(12,872)
Receivables written off
(20,047)
Foreign exchange adjustments
429
Impairment allowance as at 31 December 2021
156,860
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
62
17. Due to banks
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Demand deposits
591,058
156,810
591,058
156,810
Term deposits
45,830
-
45,830
-
Due to banks
636,888
156,810
636,888
156,810
18. Due to customers
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Demand deposits
40,921,389
43,299,719
41,037,420
43,417,784
Term deposits
15,739,452
9,383,862
15,878,320
9,500,102
Total due to customers
56,660,841
52,683,581
56,915,740
52,917,886
19. Borrowed funds
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Borrowings from related parties
5,295,703
3,737,904
3,565,843
2,227,448
Borrowings from international financial
institutions
329,785
318,566
1,419
3,124
Total
5,625,488
4,056,470
3,567,262
2,230,572
Borrowings from related parties includes three senior non-preferred loans from Société Générale in amount
of:
●
450 million EUR, with an interest rate of EURIBOR 3M+0.86% and an initial term of three years
(received in December 2021)
●
150 million EUR, with an interest rate of EURIBOR 3M+1.98% and an initial term of three years
(received in June 2022)
●
120 million EUR, with a fixed interest rate of 4.77% and an initial term of three years (received in
December 2022).
Other funds borrowed from related parties are senior unsecured and are used in the normal course of
business.
20. Subordinated debts
Two subordinated debts were received from Société Générale in amount of:
●
100 million EUR with an interest rate of EURIBOR 3M+1.98% and an initial term of ten years (in
December 2021)
●
150 million EUR with an interest rate of EURIBOR 3M+4.31% and an initial term of ten years (in
June 2022).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
63
21. Provisions
The line Provisions includes provisions for financial guarantee and loan commitments and other provisions.
Financial guarantees and loan commitments provisions movement
Group
Retail lending
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
3,374
3,132
3,371
9,877
New commitments originated or purchased
10,460
1,929
902
13,291
Commitments derecognised or transferred into assets
(1,241)
(659)
(706)
(2,606)
Net provision movement not resulting from changes in
classification
(7,307)
(672)
(1,613)
(9,592)
Movements due to change in classification
(692)
329
1,327
964
Provision as at 31 December 2022
4,594
4,059
3,281
11,934
Non-Retail
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
72,616
25,268
200,787
298,671
New commitments originated or purchased
99,008
35,196
1,386
135,590
Commitments derecognised or transferred into assets
(47,357)
(5,188)
(69,194)
(121,739)
Net provision movement not resulting from changes in
classification
14,131
(10,007)
3,755
7,879
Movements due to change in classification
(10,064)
4,931
8,602
3,469
Other adjustments
(95)
(12)
2,135
2,028
Provision as at 31 December 2022
128,239
50,188
147,471
325,898
Total
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
75,990
28,400
204,159
308,549
New commitments originated or purchased
109,468
37,125
2,288
148,881
Commitments derecognised or transferred into assets
(48,598)
(5,847)
(69,900)
(124,345)
Net provision movement not resulting from changes in
classification
6,824
(10,679)
2,142
(1,713)
Movements due to change in classification
(10,756)
5,260
9,929
4,433
Other adjustments
(95)
(12)
2,135
2,028
Provision as at 31 December 2022
132,833
54,247
150,753
337,833
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
64
21. Provisions (continued)
Financial guarantees and loan commitments provisions movement (continued)
Bank
Retail lending
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
3,365
3,125
3,371
9,861
New commitments originated or purchased
10,430
1,793
902
13,125
Commitments derecognised or transferred into assets
(1,234)
(650)
(706)
(2,590)
Net provision movement not resulting from changes in classification
(7,306)
(672)
(1,613)
(9,591)
Movements due to change in classification
(692)
329
1,328
965
Other adjustments
(1)
-
-
(1)
Provision as at 31 December 2022
4,562
3,925
3,282
11,769
Non-Retail
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
72,589
24,749
212,015
309,353
New commitments originated or purchased
98,864
34,849
1,386
135,099
Commitments derecognised or transferred into assets
(47,333)
(4,689)
(69,194)
(121,216)
Net provision movement not resulting from changes in classification
14,131
(10,006)
3,755
7,880
Movements due to change in classification
(10,064)
4,934
8,602
3,472
Other adjustments
(95)
(26)
787
666
Provision as at 31 December 2022
128,092
49,811
157,351
335,254
Total
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2022
75,954
27,874
215,386
319,214
New commitments originated or purchased
109,294
36,642
2,288
148,224
Commitments derecognised or transferred into assets
(48,567)
(5,339)
(69,900)
(123,806)
Net provision movement not resulting from changes in classification
6,825
(10,678)
2,142
(1,711)
Movements due to change in classification
(10,756)
5,263
9,930
4,437
Other adjustments
(96)
(26)
787
665
Provision as at 31 December 2022
132,654
53,736
160,633
347,023
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
65
21. Provisions (continued)
Financial guarantees and loan commitments provisions movement (continued)
Group
Retail lending
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2021
3,924
3,080
3,255
10,259
New commitments originated or purchased
8,116
1,226
335
9,677
Commitments derecognised or transferred into assets
(909)
(514)
(171)
(1,594)
Net provision movement not resulting from changes in
classification
(6,969)
120
(4)
(6,853)
Movements due to change in classification
(793)
(781)
(45)
(1,619)
Other adjustments
5
1
1
7
Provision as at 31 December 2021
3,374
3,132
3,371
9,877
Non-Retail
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2021
32,754
52,854
272,841
358,449
New commitments originated or purchased
63,972
21,279
562
85,813
Commitments derecognised or transferred into assets
(18,583)
(9,421)
(13,271)
(41,275)
Net provision movement not resulting from changes in
classification
(14,258)
(15,298)
(64,048)
(93,604)
Movements due to change in classification
8,447
(24,658)
941
(15,270)
Other adjustments
284
512
3,762
4,558
Provision as at 31 December 2021
72,616
25,268
200,787
298,671
Total
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2021
36,678
55,934
276,097
368,709
New commitments originated or purchased
72,088
22,505
897
95,490
Commitments derecognised or transferred into assets
(19,492)
(9,935)
(13,442)
(42,869)
Net provision movement not resulting from changes in
classification
(21,227)
(15,178)
(64,052)
(100,457)
Movements due to change in classification
7,654
(25,439)
896
(16,889)
Other adjustments
289
513
3,763
4,565
Provision as at 31 December 2021
75,990
28,400
204,159
308,549
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
66
21. Provisions (continued)
Financial guarantees and loan commitments provisions movement (continued)
Bank
Retail lending
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2021
3,913
3,080
3,255
10,248
New commitments originated or purchased
8,109
1,217
335
9,661
Commitments derecognised or transferred into assets
(897)
(514)
(171)
(1,582)
Net provision movement not resulting from changes in classification
(6,968)
121
(4)
(6,851)
Movements due to change in classification
(793)
(781)
(45)
(1,619)
Other adjustments
1
2
1
4
Provision as at 31 December 2021
3,365
3,125
3,371
9,861
Non-Retail
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2021
32,727
52,784
285,417
370,928
New commitments originated or purchased
63,947
20,749
562
85,258
Commitments derecognised or transferred into assets
(18,556)
(9,285)
(13,271)
(41,112)
Net provision movement not resulting from changes in classification
(14,258)
(15,297)
(64,048)
(93,603)
Movements due to change in classification
8,447
(24,655)
941
(15,267)
Other adjustments
282
453
2,414
3,149
Provision as at 31 December 2021
72,589
24,749
212,015
309,353
Total
Stage 1
Stage 2
Stage 3
Total
Provision as at 1 st January 2021
36,640
55,864
288,672
381,176
New commitments originated or purchased
72,056
21,966
897
94,919
Commitments derecognised or transferred into assets
(19,453)
(9,799)
(13,442)
(42,694)
Net provision movement not resulting from changes in classification
(21,226)
(15,176)
(64,052)
(100,454)
Movements due to change in classification
7,654
(25,436)
896
(16,886)
Other adjustments
283
455
2,415
3,153
Provision as at 31 December 2021
75,954
27,874
215,386
319,214
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
67
21. Provisions (continued)
The line Provisions includes also Other provisions representing provisions for litigation in amount of
19,837 as of December 31, 2022 (20,030 as of December 31, 2021), other provisions for risks and charges
in amount of 10,826 as of December 31, 2022 (22,873 as of December 31, 2022) and provisions for risks
related to banking activity in amount of 2,486 as of December 31, 2022 (12,594 as of December 31, 2021).
The movement in other provisions is as follows:
Group
TOTAL
Carrying value as of December 31, 2020
73,393
Additional expenses
14,164
Reversals of provisions
(8,877)
Usage
(4,043)
Carrying value as of December 31, 2021
74,637
Additional expenses
19,000
Reversals of provisions
(30,466)
Usage
(7,553)
Carrying value as of December 31, 2022
55,618
Bank
TOTAL
Carrying value as of December 31, 2020
54,416
Additional expenses
13,562
Reversals of provisions
(8,410)
Usage
(4,037)
Carrying value as of December 31, 2021
55,531
Additional expenses
15,354
Reversals of provisions
(30,184)
Usage
(7,552)
Carrying value as of December 31, 2022
33,149
22. Other liabilities
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Sundry creditors
272,164
205,589
201,271
136,574
Other payables to State budget
59,038
52,261
56,716
50,733
Deferred income
40,772
32,809
40,772
32,809
Payables to employees
165,820
143,776
137,401
124,445
Creditors - Lease liabilities
339,746
392,275
327,522
377,699
Total
877,540
826,710
763,682
722,260
Sundry creditors are expected to be settled in no more than twelve months after the reporting period.
Payables to employees include, among other, gross bonuses, amounting 93,153 as of December 31, 2022
(December 31, 2021: 71,305) and post-employment benefits amounting 19,576 as of December 31, 2022
(December 31, 2021: 31,678).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
68
22. Other liabilities (continued)
Post-employment benefit plan
This is a defined benefit plan under which the amount of benefit that an employee is entitled to receive on
retirement depends on years of service and salary. The plan covers substantially all the employees and the
benefits are unfunded. A full actuarial valuation by a qualified independent actuary is carried out annually.
During 2022, the movements in defined benefit obligation is generated by the service cost and benefits
paid, resulting in a change of obligation carrying value 19,576 as of December 31, 2022, from 31,678 as of
December 31, 2021.
Movement in defined benefits obligations
Movement in defined benefits obligations
December 31, 2022
December 31, 2021
Opening defined benefit obligation
31,678
65,651
Total service cost
4,887
4,342
Benefits paid
(633)
(1,159)
Interest cost on benefit obligation
207
106
Past service cost
-
(632)
Actuarial (gains) / losses arising from changes in demographic assumptions
-
30
Actuarial (gains) / losses arising from changes in financial assumptions
(16,563)
(995)
Other increases or (decreases)
-
(35,665)
Closing defined benefit obligation
19,576
31,678
Main actuarial assumptions
December 31, 2022
December 31, 2021
Discount rate
9.20%
0.66%
Long term inflation rate
3.00%
2.02%
Average remaining working period (years)
12
12
Sensitivities on the defined benefit obligation
The results of any valuation depend upon the assumptions employed. Significant actuarial assumptions for
the determination of the defined obligation are discount rate and expected salary increase.
The sensitivity analyses below have been determined based on reasonably possible changes of the
respective assumptions occurring at the end of the reporting period, while holding all other assumptions
constant.
●
If the discount rate used were 0.5% higher, then the defined benefit obligation would be lower by
about 4.73% meaning 18,650.
●
If the discount rate used were 0.5% lower, then the defined benefit obligation would be higher by
about 5.04% meaning 20,562.
●
If the salary increase rate used were 0.5% higher, then the defined benefit obligation would be
higher by about 4.94% meaning 20,543.
The sensitivity analysis presented above may not be representative of the actual change in the defined
benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another
as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis,
the present value of the defined benefit obligation has been calculated using the projected unit credit method
at the end of the reporting period, which is the same as that applied in calculating the defined benefit
obligation liability recognised in the statement of financial position. The eventual cost of providing the
benefits depends on the current future experience. Other factors such as the number of new employees
could also change the cost.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
69
23. Share capital
The nominal share capital, as registered with the Registry of Commerce is 696,901 (2021: 696,901).
Included in the share capital there is an amount of 1,818,721 (2021: 1,818,721) representing hyperinflation
restatement surplus.
Share capital as of December 31, 2022 represents 696,901,518 (2021: 696,901,518) authorized common
shares, issued and fully paid. The nominal value of each share is RON 1 (2021: RON 1). During 2022 and
2021, the Bank did not buy back any of its own shares.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
70
24. Taxation
Current income tax is calculated based on the taxable income as per the tax statement derived from the
stand-alone accounts of each consolidated entity. As of December 31, 2022 the Group has a current tax
liability in total amount of 5,595 (December 31, 2021: 83,963) and 23,563 current tax asset (December 31,
2021: 7,484) and at Bank level a current tax liability in total amount of 0 (December 31, 2021: 79,979) and
23,563 current tax asset (December 31, 2021: 7,484).
The deferred tax liability/asset is reconciled as follows:
Group
December 31, 2022
Temporary
differences Asset /
(Liability)
Consolidated
Statement of
Financial Position
Asset / (Liability)
Consolidated
Income Statement
(Expense) /
Income
Consolidated OCI
(Expense) /
Income
Elements generating deferred tax
Defined benefit obligation
71,315
(11,410)
-
(2,650)
Financial assets at fair value through other
comprehensive income
(2,484,289)
397,486
-
320,411
Tangible and intangible assets
(9,772)
1,564
(11,617)
-
Provisions and other liabilities
(677,465)
108,394
9,800
-
Taxable items
(3,100,211)
Deferred tax
496,034
(1,817)
317,761
Bank
December 31, 2022
Temporary
differences Asset /
(Liability)
Individual
Statement of
Financial Position
Asset / (Liability)
Individual Income
Statement
(Expense) /
Income
Consolidated OCI
(Expense) /
Income
Elements generating deferred tax
Defined benefit obligation
71,315
(11,410)
-
(2,650)
Financial assets at fair value through other
comprehensive income
(2,484,289)
397,486
-
320,411
Tangible and intangible assets
(9,772)
1,563
(11,648)
-
Provisions and other liabilities
(570,335)
91,255
6,607
-
Taxable items
(2,993,081)
Deferred tax
478,893
(5,041)
317,761
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
71
24. Taxation (continued)
Group
December 31, 2021
Temporary
differences Asset /
(Liability)
Consolidated
Statement of
Financial
Position Asset /
(Liability)
Consolidated
Income
Statement
(Expense) /
Income
Consolidated OCI
(Expense) /
Income
Retained
earnings
Elements generating deferred tax
Defined benefit obligation
54,752
(8,760)
-
(154)
(5,706)
Financial assets at fair value through other
comprehensive income
(481,722)
77,076
-
226,856
Tangible and intangible assets
(82,368)
13,179
(8,460)
-
Provisions and other liabilities
(616,221)
98,593
(4,826)
-
Taxable items
(1,125,559)
Deferred tax
180,089
(13,286)
226,702
(5,706)
Bank
December 31, 2021
Temporary
differences
Asset /
(Liability)
Individual
Statement of
Financial
Position Asset /
(Liability)
Individual Income
Statement
(Expense) /
Income
Consolidated OCI
(Expense) /
Income
Retained
earnings
Elements generating deferred tax
Defined benefit obligation
54,752
(8,760)
-
(154)
(5,706)
Financial assets at fair value through
other comprehensive income
(481,722)
77,076
-
226,856
Tangible and intangible assets
(82,561)
13,210
(8,457)
-
Provisions and other liabilities
(529,050)
84,647
(8,459)
-
Taxable items
(1,038,581)
Deferred tax
166,173
(16,916)
226,702
(5,706)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
72
24. Taxation (continued)
Movement in deferred tax is as follows:
Group
Bank
Deferred tax asset, net as of December 31, 2020
(27,620)
(37,907)
Deferred tax recognized in other comprehensive income
226,701
226,702
Deferred tax recognized in profit and loss
(13,286)
(16,916)
Deferred tax recognized in retained earnings
(5,706)
(5,706)
Deferred tax liability, net as of December 31, 2021
180,089
166,173
Deferred tax recognized in other comprehensive income
317,761
317,761
Deferred tax recognized in profit and loss
(1,817)
(5,041)
Deferred tax asset, net as of December 31, 2022
496,032
478,892
Reconciliation of total tax charge
Group
Bank
2022
2021
2022
2021
Profit before income tax
1,619,515
1,645,763
1,555,279
1,595,064
Income tax (16%)
259,122
263,322
248,845
255,210
Fiscal credit
(6,987)
(7,994)
(5,214)
(5,210)
Income tax without basis
7,484
35,625
7,484
35,625
Non-deductible elements
39,941
48,155
31,641
36,225
Non-taxable elements
(17,133)
(12,249)
(13,415)
(6,042)
Expense from income tax at effective tax rate
282,427
326,860
269,341
315,808
Effective tax rate
17.4%
19.9%
17.3%
19.8%
Recognition of deferred tax asset is based on the management’s profit forecasts, which indicates that it is
probable that future taxable profits will be available against which the deferred tax assets can be utilised.
At the Bank level, as at December 31, 2022, permanent non-deductible elements include the impact of
provisions for overdue commissions 9,777 (December 31, 2021: 9,535), sponsorship expenses with an
impact of 1,276 (December 31, 2021: 1,099) and debt sales and other operations with limited deductibility
in amount of 8,225 (December 31, 2021: 15,142); permanent non-taxable elements are mainly a result of
releases for provisions for overdue commissions in amount of 1,722 (December 31, 2021: 1,833),
provisions for risks and charges/litigations 1,184 (December 31, 2021: 572) and dividends income with an
impact of 7,574 (December 31, 2021: 3,257).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
73
25. Interest and similar income
Group
Bank
2022
2021
2022
2021
Interest on loans
2,289,039
1,617,870
2,201,210
1,521,489
Interest on finance lease
62,781
51,675
-
-
Interest on deposit with banks
60,254
19,645
59,622
18,998
Interest on financial assets
520,035
526,898
520,034
526,898
Interest income from hedging instruments
9,177
18,141
9,177
18,142
Total
2,941,286
2,234,229
2,790,043
2,085,527
The interest income on loans includes the accrued interest on net (after impairment allowance) impaired
loans in amount of 51,540 for Group (2021: 58,337) and 47,953 for Bank (2021: 52,690).
26. Interest and similar expense
Group
Bank
2022
2021
2022
2021
Interest on term deposits
323,977
68,583
324,590
69,220
Interest on demand deposits
110,324
57,246
114,448
58,339
Interest on borrowings
119,242
19,595
94,620
410
Interest expense on lease liabilities
5,042
4,618
4,920
4,450
Interest expense from hedging instruments
12,267
-
12,267
-
Total
570,852
150,042
550,845
132,419
27. Fees and commissions, net
Group
Bank
2022
2021
2022
2021
Services
608,341
601,912
605,206
594,002
110,532
107,879
110,532
107,879
70,122
57,174
70,122
57,174
70,472
73,166
70,472
73,166
68,293
72,081
68,293
72,081
206,032
197,345
206,032
197,345
48,254
52,513
48,254
52,513
34,636
41,754
31,502
33,845
Loan activity
100,766
105,933
68,765
75,658
Off balance sheet
45,222
36,382
45,222
36,382
Total
754,329
744,227
719,194
706,043
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
74
28. Gain on derivative and other financial instruments held for trading and foreign exchange
Group
Bank
2022
2021
2022
2021
FX position revaluation
(12,498)
(7,682)
(12,498)
(7,682)
FX Spot
233,802
190,027
230,738
189,045
Gain on instruments held for trading
56,251
28,100
56,251
28,100
Derivative financial instruments
38,674
34,853
38,674
34,853
Gain/ (loss) on interest rate derivatives
(7,948)
(2,775)
(7,948)
(2,775)
Gain/ (loss) on currency and interest swap
998
5,520
998
5,520
Gain on forward foreign exchange contracts
39,420
22,619
39,420
22,619
Gain on currency options
6,879
3,444
6,879
3,444
Gain/ (loss) on hedging
-
4,075
-
4,075
Other
(675)
1,970
(675)
1,970
Gain on derivative, other financial instruments held
for trading and foreign exchange
316,229
245,298
313,165
244,316
29. Other income/expense from banking activities
Group
Bank
2022
2021
2022
2021
Dividend income from subsidiaries
-
-
37,217
15,966
Provision for litigations
(3,385)
(4,548)
(3,385)
(4,539)
Held for sale fixed assets expenses
(3,836)
(1,582)
-
-
Other income/(expenses)
15,152
(1,593)
8,580
(7,727)
Total income / (expense ) from banking activity
7,931
(7,723)
42,412
3,700
For the Bank, other income includes dividends from subsidiaries in amount of 37,217 as of December 31
2022 (15,966 as of December 31, 2021), income from banking activities offered to the clients and income
from non-banking activities, such as income from rentals. The income from rental of investment properties,
for the Bank, is 2,427 (2021: 1,708).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
75
30. Contribution to Guarantee Scheme and Resolution Fund
According to the Romanian legislation (Law no. 311/2015 on Deposit Guarantee Schemes and the Bank
Deposit Guarantee Fund), the deposits of individuals and certain entities, including small and medium
enterprises and large companies are covered up to EUR 100,000 by the Bank Deposit Guarantee Fund
(“Fund”).
Each credit institution participating to deposit guarantee scheme shall pay the annual contribution as
determined and notified by the Fund. The amount of the contribution refers to the total covered deposits at
the end of the previous year and reflects also the degree of risk associated to each credit institution in the
scheme.
The degree of risk is determined based on the financial and prudential indicators reported by the credit
institutions to the National Bank of Romania. For this purpose, the Bank Deposits Guarantee Fund uses a
methodology approved by the National Bank of Romania considering also the guidelines issued by the
European Banking Authority.
For the year 2022 the expense related to the Deposit Guarantee Fund amounts to 33,575 (2021: 11,547).
According to Law no. 312/2015 on recovery and resolution of credit institution and investment firms, each
credit institution shall pay an annual contribution to Bank Resolution Fund as determined and notified by
the National Bank of Romania.
The National Bank of Romania as the local resolution authority establish the credit institutions annual
contributions to Bank Resolution Fund, in compliance with Commission Delegated Regulation EU
2015/63, supplementing Directive 2014/59 of the European Parliament and of the Council with regard to
ex ante contributions to resolution financing arrangements.
For the year 2022 the expense related to the Bank Resolution Fund was 35,690 (2021: 37,949).
Both contributions to the Bank Deposit Guarantee Fund and Bank Resolution Fund meet the criteria for
recognition as taxes and accounted in accordance with IFRIC 21 “Levies” requirements. The liability is
recognized at the date when the obligating event occurs and the contribution is recognized as an expense in
full on 1
st
31. Personnel expenses
Group
Bank
2022
2021
2022
2021
Salaries
775,468
738,028
742,372
690,825
Social security
19,065
17,920
17,594
16,422
Bonuses
96,614
66,963
72,976
55,471
Post-employment benefits
5,094
3,816
5,094
3,816
Capitalisation of internal projects
(31,130)
(31,131)
(31,130)
(31,131)
Other
33,790
33,095
32,263
29,867
Total
898,901
828,692
839,169
765,270
In 2022, the expense related to the Bank defined benefit contribution plan was 4,286 (2021: 4,583).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
76
32. Depreciation, amortisation and impairment on tangible and intangible assets
Group
Bank
2022
2021
2022
2021
Depreciation and impairment
175,115
187,273
170,494
179,990
Amortisation
53,775
51,673
53,105
50,468
Total
228,889
238,946
223,599
230,458
The difference as at December 31, 2022 between the amount presented in note 13 and the amount presented
in note 32 represents depreciation of investment property in total amount of 481 (December 31, 2021: 625).
33. Other operating expense
Group
Bank
2022
2021
2022
2021
Administrative expenses
437,767
384,846
409,840
364,306
Publicity and sponsorships
36,627
29,742
36,349
29,667
Other expenses
73,247
65,420
62,757
54,971
Total
547,641
480,008
508,946
448,944
Administrative expenses include for the Bank maintenance expenses, various utilities such as energy and
telecommunication, expenses related to short-term leases of 5,824 (December 31, 2021: 5,913) and to leases
of low-value assets of 3,934 (December 31, 2021: 3,866). This line also includes audit fees amounting
3,246 for Group (out of which statutory audit in amount of 2,229, other audit fees in amount of 982 and
other non-audit services in amount of 35) and 2,574 for Bank (out of which statutory audit in amount of
1,693, other audit fees in amount of 846 and other non-audit services in amount of 35).
34. Cost of risk
Group
Bank
2022
2021
2022
2021
Net impairment allowance for loans
186,295
70,015
179,897
63,548
Net impairment allowance for sundry debtors
44,165
68,742
43,137
68,730
Net impairment allowance for finance lease
10,311
16,025
-
-
Income from recoveries of derecognized receivables &
sales of bad debts
(225,825)
(250,742)
(207,149)
(236,522)
Write-offs
11,897
14,662
8,669
9,764
Financial guarantee and loan contracts provisions
68,709
(64,722)
68,591
(65,117)
Net impairment allowance for debt securities
(446)
364
(446)
364
Total
95,106
(145,656)
92,699
(159,233)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
77
35. Earnings per share
Basic earnings per share are calculated by dividing net profit/(loss) for the reporting period attributable to
ordinary equity holders of the parent by the weighted average number of shares outstanding during the year.
As of December 31, 2022 and December 31, 2021 there were no dilutive equity instruments issued by the
Group and Bank.
Group
Bank
2022
2021
2022
2021
Ordinary shares on market
696,901,518
696,901,518
696,901,518
696,901,518
Profit attributable to shareholders
1,328,008
1,309,686
1,285,938
1,279,256
Earnings per share (in RON)
1.9056
1.8793
1.8452
1.8356
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
78
36. Cash and cash equivalents details
Cash and cash equivalents:
For the purpose of the cash flow statements, cash and cash equivalents comprise cash in hand, current
accounts and short-term placements at other banks. The amounts in transit in amount of 262,937 (December
31, 2021: 114,327) and loans to banks, with more than 90 days maturity from the date of acquisition in
amount of 15,975 (December 31, 2021: 16,585), for the Group, are excluded. The Group and Bank did not
include in cash and cash equivalents the amounts representing minimum compulsory reserve held at
National Bank of Romania.
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Cash in hand
2,531,348
1,894,448
2,531,279
1,894,415
Current accounts and deposits with banks
6,942,051
4,407,030
6,942,050
4,407,030
Total
9,473,399
6,301,478
9,473,329
6,301,445
Impairment and provisions adjustment for non-cash items:
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Net impairment allowance for loans
186,295
70,015
179,897
63,548
Net impairment allowance for sundry debtors
44,165
68,742
43,137
68,730
Net impairment allowance for financial leases
10,311
16,025
-
-
Write-offs
11,897
14,662
8,669
9,764
Financial guarantee and loan contracts provisions
68,709
(64,722)
68,591
(65,117)
Net movement in other provisions
(19,019)
1,244
(22,383)
1,115
Net impairment allowance for debt securities
(446)
364
(446)
364
Total
301,912
106,330
277,465
78,404
37. Other commitments
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Tangible non-current assets
13,470
7,159
13,470
7,159
Intangible non-current assets
81,086
19,553
81,086
19,553
Commitments relating to short-term and low value leases
24,547
17,297
24,547
17,297
Total
119,103
44,009
119,103
44,009
The other commitments presented above include short term and low value leases, software maintenance
contracts and other IT services.
As at December 31, 2022 and December 31, 2021 the future minimum lease payments regarding rents
concluded by the Group and Bank as a lessee are:
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Less than one year
11,654
9,033
11,654
9,033
Between one and five years
9,855
5,910
9,855
5,910
More than five years
104
55
104
55
Total
21,613
14,999
21,613
14,999
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
79
38. Related parties
The Group entered into related party transactions with its parent, other SG entities, subsidiaries, associates and joint venture and key management personnel.
All related party transactions were made on substantially the same terms, including interest rates and collateral requirements, as those prevailing for similar
transactions with unrelated parties. The transactions/balances with subsidiaries were eliminated for consolidation purposes. The transactions/balances with
related parties can be summarized as follows:
2022
2021
Parent
Other related
parties
Associates & Joint
ventures
Key management
of the institution
Parent
Other related
parties
Associates & Joint
ventures
Key management
of the institution
Assets
353,013
133,944
28,438
9,506
87,078
36,250
9,671
8,920
Nostro accounts
29,287
115,287
-
-
14,158
23,812
-
-
Deposits
220,963
-
-
-
16,585
-
-
-
Loans
-
18,462
25,866
9,505
-
12,362
7,119
8,915
Derivative financial instruments
100,173
-
-
-
54,762
2
-
4
Other assets
2,590
195
2,572
0
1,573
73
2,551
1
Liabilities
8,656,069
172,742
89,915
13,226
4,328,132
93,454
92,845
15,505
Loro accounts
-
1,031
-
-
44
8,938
-
-
Deposits
217,000
171,056
71,348
13,226
-
83,792
78,609
15,505
Borrowings
5,295,707
-
-
-
3,737,904
-
-
-
Subordinated borrowings
1,238,651
-
-
-
495,022
-
-
-
Derivative financial instruments
313,410
-
-
-
62,415
2
-
-
Other liabilities
1,591,301
655
18,567
-
32,747
721
14,236
-
Commitments
5,800,063
255,718
51,381
758
7,896,555
181,197
79,232
971
Total commitments granted
249,274
85,330
1,364
561
120,406
71,018
18,138
537
Total commitments received
129,358
163,376
28,137
197
165,066
103,322
31,789
210
Uncommitted facilities granted
12,968
7,012
21,879
-
12,969
5,868
29,305
-
Notional amount of foreign exchange transactions
2,095,028
-
-
-
3,585,978
990
-
224
Notional amount of interest rate derivatives
3,313,435
-
-
-
4,012,136
-
-
-
Income statement
(297,798)
(3,860)
2,643
263
(73,666)
(6,196)
2,850
170
Interest and commision revenues
13,440
10,713
56,869
373
21,500
7,131
23,350
237
Interest and commission expense
(90,705)
(5,264)
(17,497)
(46)
(25,300)
(3,374)
(6,765)
(38)
Net (loss) on interest rate derivatives
(223,663)
-
-
(5)
(51,304)
-
-
(4)
Net gain on foreign exchange derivatives
39,601
-
-
-
15,731
-
-
-
Dividend income
-
-
8,677
-
-
-
3,349
-
Other income
733
2
76
-
389
(308)
1,429
-
Other expenses
(37,203)
(9,311)
(45,483)
(58)
(34,683)
(9,644)
(18,513)
(26)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
80
38. Related parties (continued)
Bank
2022
2021
Parent
Other related
parties
Subsidiaries
Associates &
Joint ventures
Key
management
of the
institution
Parent
Other related
parties
Subsidiaries
Associates &
Joint ventures
Key
management
of the
institution
Assets
336,818
133,944
46,553
26,165
9,506
70,493
36,250
48,378
7,673
8,920
Nostro accounts
29,287
115,287
-
-
-
14,158
23,812
-
-
-
Deposits
204,988
-
-
-
-
-
-
-
-
-
Loans
-
18,462
44,934
25,866
9,505
-
12,362
45,078
7,119
8,915
Derivative financial instruments
100,173
-
-
-
-
54,762
2
-
-
4
Other assets
2,370
195
1,619
300
0
1,573
73
3,300
553
1
Liabilities
6,920,955
172,716
256,653
89,333
13,226
2,813,630
93,425
235,571
92,012
15,505
Loro accounts
-
1,031
-
-
-
44
8,938
-
-
-
Deposits
217,000
171,056
255,776
71,348
13,226
-
83,792
234,828
78,609
15,505
Borrowings
3,564,997
-
-
-
-
2,226,835
-
-
-
-
Subordinated borrowings
1,238,651
-
-
-
-
495,022
-
-
-
-
Lease payable
-
-
847
-
-
-
-
613
-
-
Derivative financial instruments
313,410
-
-
-
-
62,415
2
-
-
-
Other liabilities
1,586,897
629
29
17,985
-
29,315
692
130
13,403
-
Commitments
5,800,063
255,718
76,081
51,381
758
7,896,555
181,197
91,131
79,232
971
Total commitments granted
249,274
85,330
21,580
1,364
561
120,406
71,018
25,691
18,138
537
Total commitments received
129,358
163,376
-
28,137
197
165,066
103,322
-
31,789
210
Uncommitted facilities granted
12,968
7,012
54,501
21,879
-
12,969
5,868
65,441
29,305
-
Notional amount of foreign exchange
transactions
2,095,028
-
-
-
-
3,585,978
990
-
-
224
Notional amount of interest rate
derivatives
3,313,435
-
-
-
-
4,012,136
-
-
-
-
Income statement
(272,495)
(3,762)
56,996
(5,744)
263
(53,239)
(6,295)
38,423
(6,829)
170
Interest and commision revenues
12,808
9,961
19,251
47,331
373
20,853
6,344
19,980
12,285
237
Interest and commission expense
(65,901)
(5,264)
(4,743)
(17,494)
(46)
(5,461)
(3,374)
(1,736)
(6,762)
(38)
Net (loss) on interest rate derivatives
(223,663)
-
-
-
(5)
(51,304)
-
-
-
(4)
Net gain on foreign exchange derivatives
39,601
-
(621)
-
-
15,731
-
61
-
-
Dividend income
-
-
37,217
8,677
-
-
-
15,966
3,349
-
Other income
733
2
266
-
-
389
(308)
(276)
1,353
-
Other expenses
(36,073)
(8,461)
5,626
(44,257)
(58)
(33,447)
(8,956)
4,429
(17,053)
(26)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
81
38. Related parties (continued)
Other liabilities and other expenses include mainly corporate and technical assistance with Société Générale
Paris.
The Bank has collateral received from SG Paris regarding derivative instruments in total amount of 23,868
at December 31, 2022 (December 31, 2021: 1,826).
As of December 31, 2022 the Board of Directors and Managing Committee members own 48,858 shares
(2021: 21,730).
Key management personnel benefits for 2022 and 2021:
Group
Bank
2022
2021
2022
2021
Short-term benefits
17,992
17,790
13,954
13,821
Long-term benefits
5,129
5,460
4,442
5,022
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
82
39. Interest in unconsolidated structured entities
According to IFRS 12 applied starting with January 1, 2014 the Group and Bank has to present the interests it has in entities that have been designated so that
voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and
the relevant activities are directed by means of contractual arrangements.
The Group and Bank has identified the investment funds in which it invested during the years and which manages, through the Bank’s subsidiary, BRD Asset
Management, as being unconsolidated structured entities. The structured entities are financed through the resources (unit funds) received from individuals and
corporates that are afterwards placed on monetary and capital markets.
Interests in unconsolidated structured entities and size of structured entities in 2022:
Name of structured entity
Carrying amount
of financial assets
recognised in the
reporting
institution's
balance sheet
Of which:
liquidity support
drawn
Fair value of
liquidity support
drawn
Carrying amount
of financial
liabilities
recognised in the
reporting
institution's sheet
Nominal amount
of off-balance
sheet items given
by the reporting
institution
Of which:
Nominal amount
of loan
commitments
given
Losses incurred
by the reporting
institution in the
current period
Maximum
exposure to loss
Total balance
sheet of the
structured entity
(size)
BRD Oportunitati
2,751
657
646
1,213
-
-
-
2,751
9,254
BRD Orizont 2035
2,023
-
-
367
-
-
-
2,023
2,780
BRD Orizont 2045
2,013
-
-
100
-
-
-
2,013
2,380
Breakdown of interests in unconsolidated structured entities in 2022:
Name of structured entity
Selected financial assets recognised in the reporting institution's balance sheet
Selected equity and financial liabilites recognised in the reporting
institution's balance sheet
Off-balance sheet items
given by the reporting
institution
of which:
defaulted
Derivatives
Equity
instruments
Debt
securities
Loans and
advances
Total
Equity
instruments
issued
Derivatives
Deposits
Debt
securities
issued
Total
of which:
defaulted
Total
BRD Oportunitati
-
-
2,094
-
657
2,751
-
-
1,213
-
1,213
-
-
BRD Orizont 2035
-
-
2,023
-
-
2,023
-
-
367
-
367
-
-
BRD Orizont 2045
-
-
2,013
-
-
2,013
-
-
100
-
100
-
-
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
83
40. Contingencies
As of December 31, 2022 the Bank is the defendant in a number of lawsuits arising in the course of business,
amounting to approximately 670,213 (December 31, 2021: 689,921). The amounts disclosed represent the
additional potential loss in the event of a negative court decision, the amounts not being provisioned. The
management believes that the ultimate resolution of these matters will not have a material adverse effect
on the Group’s overall financial position and performance. The Bank already booked a provision of 20,853
(December 31, 2021: 21,202) and the Group 43,324 (December 31, 2021: 40,308) in relation with the
litigations.
41. Fair value
Determination of fair value and fair value hierarchy
To determine and disclose the fair value hierarchy of the financial instruments, the Group follows the three-
level classification of the inputs to valuation techniques used to measure fair value:
●
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 1 instruments contain the government bonds, priced directly by external counterparties on various
dealing platforms (Bloomberg, Reuters etc.);
●
Level 2: other inputs than those quoted princes included within Level 1, that are observable for
that particular asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from
prices);
Level 2 instruments include in particular securities that cannot directly be quoted on the market (e.g.
corporate bonds) and firm derivatives, with standard features and common maturities, whose value can be
retrieved or derived from market data;
●
Level 3: inputs that are not based on observable market data (unobservable inputs).
Level 3 instruments include options traded over-the-counter and other derivatives with specifically-tailored
return profiles and/or maturities extended over the normal spectrum;
The following table shows an analysis of financial instruments recorded at fair value by level of the fair
value hierarchy:
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
84
41. Fair value (continued)
Group
Bank
December 31, 2022
December 31, 2022
Assets measured at fair value
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Derivative financial instruments
Interest rate swaps
-
33,419
-
33,419
-
33,419
-
33,419
Currency swaps
-
47,067
-
47,067
-
47,067
-
47,067
Forward foreign exchange contracts
-
34,004
-
34,004
-
34,004
-
34,004
Options
-
-
65,609
65,609
-
-
65,609
65,609
-
114,490
65,609
180,099
-
114,490
65,609
180,099
Financial assets at fair value through other comprehensive
income
13,439,596
-
-
13,439,596
13,439,596
-
-
13,439,596
Equity investments (listed)
4,012
-
-
4,012
4,012
-
-
4,012
Equity investments (not listed)
-
-
4,120
4,120
-
-
4,120
4,120
Other securities quoted
-
6,130
-
6,130
-
-
-
-
Total
13,443,608
6,130
4,120
13,453,857
13,443,608
-
4,120
13,447,728
Other financial instruments held for trading
426,524
1,736,754
-
2,163,278
420,458
1,736,754
-
2,157,212
Total
13,870,132
1,857,374
69,729
15,797,234
13,864,066
1,851,244
69,729
15,785,039
Assets for which fair value is disclosed
Cash and due from Central Bank
7,625,002
-
-
7,625,002
7,624,933
-
-
7,624,933
Due from banks
-
7,220,963
-
7,220,963
-
7,204,987
-
7,204,987
Loans and advances to customers
-
-
36,259,563
36,259,563
-
-
35,554,410
35,554,410
Treasury bills at amortised cost
2,675,354
-
-
2,675,354
2,675,354
-
-
2,675,354
Financial lease receivables
-
-
1,390,610
1,390,610
-
-
-
-
Total
10,300,356
7,220,963
37,650,172
55,171,491
10,300,287
7,204,987
35,554,410
53,059,684
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
85
41. Fair value (continued)
Group
Bank
December 31, 2022
December 31, 2022
Liabilities measured at fair value
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities
Derivative financial instruments
Interest rate swaps
-
341,983
-
341,983
-
341,983
-
341,983
Currency swaps
-
32,726
-
32,726
-
32,726
-
32,726
Forward foreign exchange contracts
-
62,621
-
62,621
-
62,621
-
62,621
Options
-
-
65,645
65,645
-
-
65,645
65,645
Total
-
437,330
65,645
502,975
-
437,330
65,645
502,975
Other financial instruments held for trading
294,199
646,372
-
940,571
294,199
646,372
-
940,571
Total
294,199
1,083,702
65,645
1,443,546
294,199
1,083,702
65,645
1,443,546
Liabilities for which fair value is disclosed
Due to banks
-
636,888
-
636,888
-
636,888
-
636,888
Due to customers
-
56,645,790
-
56,645,790
-
56,900,621
-
56,900,621
Borrowed funds
-
5,625,488
-
5,625,488
-
3,567,262
-
3,567,262
Subordinated debts
-
1,238,651
-
1,238,651
-
1,238,651
-
1,238,651
Total
-
64,146,817
-
64,146,817
-
62,343,422
-
62,343,422
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
86
41. Fair value (continued)
Group
Bank
December 31, 2021
December 31, 2021
Assets measured at fair value
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Derivative financial instruments
Interest rate swaps
-
33,962
-
33,962
-
33,962
-
33,962
Currency swaps
-
8,386
-
8,386
-
8,386
-
8,386
Forward foreign exchange contracts
-
7,126
-
7,126
-
7,126
-
7,126
Options
-
-
35,214
35,214
-
-
35,214
35,214
-
49,474
35,214
84,688
-
49,474
35,214
84,688
Financial assets at fair value through other
comprehensive income
19,863,825
-
-
19,863,825
19,863,825
-
-
19,863,825
Equity investments (listed)
2,898
-
-
2,898
2,898
-
-
2,898
Equity investments (not listed)
-
-
4,049
4,049
-
-
4,049
4,049
Total
19,866,723
-
4,049
19,870,772
19,866,723
-
4,049
19,870,772
Other financial instruments held for trading
768,334
1,421,902
-
2,190,236
768,334
1,421,902
-
2,190,236
Total
20,635,057
1,471,376
39,263
22,145,696
20,635,057
1,471,376
39,263
22,145,696
Assets for which fair value is disclosed
Cash and due from Central Bank
6,206,356
-
-
6,206,356
6,206,323
-
-
6,206,323
Due from banks
-
4,537,941
-
4,537,941
-
4,521,357
-
4,521,357
Loans and advances to customers
-
-
33,164,250
33,164,250
-
-
32,465,118
32,465,118
Financial lease receivables
-
-
1,218,394
1,218,394
-
-
-
-
Total
6,206,356
4,537,941
34,382,643
45,126,940
6,206,323
4,521,357
32,465,118
43,192,798
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
87
41. Fair value (continued)
Group
Bank
December 31, 2021
December 31, 2021
Liabilities measured at fair value
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities
Derivative financial instruments
Interest rate swaps
-
48,399
-
48,399
-
48,399
-
48,399
Currency swaps
-
4,593
-
4,593
-
4,593
-
4,593
Forward foreign exchange contracts
-
6,056
-
6,056
-
6,056
-
6,056
Options
-
-
35,258
35,258
-
-
35,258
35,258
Total
-
59,048
35,258
94,306
-
59,048
35,258
94,306
Other financial instruments held for trading
207,534
196,811
-
404,345
207,534
196,811
-
404,345
Total
207,534
255,859
35,258
498,651
207,534
255,859
35,258
498,651
Financial liabilities
Due to banks
-
156,810
-
156,810
-
156,810
-
156,810
Due to customers
-
52,685,690
-
52,685,690
-
52,920,005
-
52,920,005
Borrowed funds
-
4,056,470
-
4,056,470
-
2,230,572
-
2,230,572
Subordinated debts
-
495,022
-
495,022
-
495,022
-
495,022
Total
-
57,393,992
-
57,393,992
-
55,802,409
-
55,802,409
The bank reviewed the classification of financial instruments in fair value categories (deposits taking, deposits placed, repos and reverse repos) to reflect the
methodology for determining the fair value. Consequently, the bank also changed the comparative period for these instruments.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
88
41. Fair value (continued)
Financial instruments measured at fair value
The following is a description of the determination of fair value for financial instruments which are recorded
at fair value using valuation techniques. These incorporate the Group’s estimate of assumptions that a
market participant would make when valuing the instruments.
Treasury notes
value through other comprehensive income or financial instruments held for trading measured at fair value
through profit and loss, being measured using a valuation technique based on market quotes published by
Bloomberg or by Reuters (market approach).
Derivatives
The fair value of the derivatives is determined using valuation techniques commonly known on the market,
such as discounted cash flows for swaps or Black-Sholes formula for options.
Firm derivatives
main derivative products measured using as valuation technique the income approach (discounting cash
flows) and incorporating observable inputs from market (foreign exchange spot rate, forward rates, interest
rate rates, futures), both directly observable ones (explicit parameters) and indirectly observable ones.
The directly observable parameters are variables that come directly from the market and are presumed to
be easily available, accessible to each market participant. The main explicit parameters used in valuation
of firm financial instruments are interbank fixing FX rates published by NBR, interbank swap points,
interbank bid/ask interest rates, futures quotes on EUR and USD. Implicit parameters are variables obtained
through standard intermediary calculation, using market prices for relevant financial instruments. The yield
curves designated at the level of each product and currency are fed with explicit parameters according to
the pre-set configuration, facilitating the computation of implicit parameters used in computing the fair
value such as Zero-coupons, Discount Factors and Forward Interest Rates.
Conditional derivatives
mark-to-model approach. The model is calibrated to derive the value of the option based on the current
market conditions (spot rates) and the future values presumed to be attained by the underlying (forward
exchange rates, FRAs etc), integrating in the calculation the standard option-sensitivities (delta, gamma,
vega, theta), along with information regarding the size of the positions and the liquidity of the instrument.
The fair value is determined through SG’s computation module, the values of the specific parameters being
daily retrieved from the market and stored in the database, serving as direct input in the daily final formula
or further used for the statistical calculation implied by the valuation process.
BRD manages the group of these financial asset s and liabilities (options) on the basis of the entity’s net
exposure to a particular market risk (foreign exchange, interest rate, price risk) and, according to the trading
book policy in place, BRD assumes no residual market risk induced by option-trading. Any bought option
is perfectly matched on the same day with a sold option, identical in terms of option type, underlying,
exercise prices, maturity. The perfect back-to-back system is subject to daily controls performed at back-
office level, to ensure that no mismatch occurred and there is no residual open position on options.
Therefore, the impact of a specific change on the estimated value on one non-observable parameter used
on the valuation of an option classified/ accounted as financial asset is offset by same specific change on
estimated value of the same non-observable parameter on the valuation of the mirror-replicated option
classified/ accounted as financial liability.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
89
41. Fair value (continued)
Equities
These assets are valued using models which sometimes only incorporate data observable in the market and
at other times use both observable and non-observable data. The non-observable inputs to the models
include assumptions regarding the financial performance of the investee.
The fair value of equity instruments not listed classified as at fair value through profit and loss and
consisting of ordinary shares of other entities is determined by using the net assets of the entities as at the
end of the last closed reporting period. The entities net assets represent the best estimation of the current
replacement cost that would be paid in order to replace the holding as it consists of the initial capital
investment adjusted by the financial performance of the entity.
In the case of Visa share, following the acquisition of VISA Europe by VISA Inc, transaction which was
closed in June 2016, the Bank, as principal member, received a share of the sale proceeds, having both a
cash component and a share in VISA Inc component. Following the SG approach, in order to determine the
fair value of the share, the Bank adjusted the sale proceeds using some prudential haircuts (liquidity,
litigation risks etc.).
Fair value of financial assets and liabilities not carried at fair value
Financial assets
Deposits with banks, loans originated by the Group and leases are measured at amortized cost using the
effective interest rate method less any impairment allowance.
For deposits with banks, amortized cost is estimated to approximate fair value due to their short–term
nature, interest rates reflecting current market conditions and no significant transaction costs.
For loans and lease receivables the fair value is determined by using discounted cash-flows based on interest
rate offered to similar products and similar time horizons.
Financial liabilities
The amortized cost of deposits from banks is considered to approximate their respective fair values, since
these items have predominantly short maturities, carry interest rates reflecting current market conditions
and are settled without significant transaction costs.
For due to customers and borrowings amounts the fair value is determined by using discounted cash-flows
based on interest rate offered to similar products and customers and with similar time horizons.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
90
41. Fair value (continued)
The following table presents the fair value and the carrying amount per type of financial instrument.
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Carrying value
Fair value
Carrying value
Fair value
Carrying value
Fair value
Carrying value
Fair value
Financial assets
Cash and due from Central Bank
7,625,002
7,625,002
6,206,356
6,206,356
7,624,933
7,624,933
6,206,323
6,206,323
Due from banks
7,220,963
7,220,963
4,537,941
4,537,941
7,204,987
7,204,987
4,521,357
4,521,357
Loans and advances to customers
36,288,342
36,259,563
32,913,875
33,164,250
35,542,279
35,554,410
32,183,856
32,465,118
Treasury bills at amortised cost
2,730,706
2,675,354
-
-
2,730,706
2,675,354
-
-
Financial lease receivables
1,407,394
1,390,610
1,222,595
1,218,394
-
-
-
-
55,272,407
55,171,491
44,880,767
45,126,940
53,102,905
53,059,684
42,911,536
43,192,798
Financial liabilities
Due to banks
636,888
636,888
156,810
156,810
636,888
636,888
156,810
156,810
Due to customers
56,660,841
56,645,790
52,683,581
52,685,690
56,915,740
56,900,621
52,917,886
52,920,005
Borrowed funds
5,625,488
5,625,488
4,056,470
4,056,470
3,567,262
3,567,262
2,230,572
2,230,572
Subordinated debts
1,238,651
1,238,651
495,022
495,022
1,238,651
1,238,651
495,022
495,022
64,161,868
64,146,817
57,391,883
57,393,992
62,358,541
62,343,422
55,800,290
55,802,409
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
91
41. Fair value (continued)
The methods and significant assumptions applied in determining the fair value of the elements in the table
above are listed below.
The fair value of fixed rate instruments is estimated by discounting the maturing cash flows with discount
factors derived from the rates offered to similar clients, for similar products on similar maturities. The fair
value of floating instruments is estimated by discounting from the next re-pricing date using as discount
factors rates offered to similar clients, for similar products on similar time horizons.
Changes in the credit quality of loans within the portfolio are not taken into account in determining gross
fair values, as the impact of impairment is recognized separately by deducting the amount of the allowance
for credit losses from both carrying and fair values.
For the purposes of the fair value disclosure, the interest accrued to date is included in the carrying value
of the financial instruments.
The transfers between levels of fair value hierarchy are deemed to have occurred the date of the event or
change in circumstances that caused the transfer, but not later that the end of the reporting period.
Movement in level 3:
Fair value of equity investments not listed is estimated based on net assets of the investments.
Equity investments
(not listed)
Options (A)
Options (L)
Closing balance as at December 31, 2020
37,121
13,273
13,357
Acquisitions
-
12,227
12,227
Sales
(35,434)
(34)
(34)
Reimbursements
-
(5,020)
(5,020)
Gain losses from change in fair value
1,373
14,768
14,728
Translation differences
989
-
-
Closing balance as at December 31, 2021
4,049
35,214
35,258
Acquisitions
-
7,777
7,777
Sales
-
(1,579)
(1,579)
Reimbursements
-
(23,968)
(23,968)
Gain losses from change in fair value
71
48,165
48,157
Closing balance as at December 31, 2022
4,120
65,609
65,645
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
92
42. Subsequent events
The Extraordinary General Shareholders’ Meeting approved on its meeting from 16
th
envelope of 300 MEUR for one/several loans that can be eligible as Additional Tier 1 instruments, in
accordance with EU Regulation no 575/2013 on prudential requirements for credit institutions and
investment firms. The Loans shall be perpetual (including call options for the issuer), denominated in EUR
or RON, having a fixed or variable interest rate, an annually or semi-annually frequency, through one or
several drawings, until the maximum ceiling is reached. The envelope has a preventive purpose, answering
regulatory ratios in case of need.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
93
43. Risk management
Risk management within the Group and Bank is based on an integrated concept that takes into account the
statutory and regulatory norms as defined and required by the National Bank of Romania, Société Générale
risk management standards as well as best practices accepted by the banking industry. The level of risk
appetite fully reflects the Group’s and Bank’s risk management strategy, aiming to support a sustainable
growth of its lending activity while reinforcing the Bank’s and Group’s market position.
Risk governance relies on the three lines of defense model, which reinforces segregation of duties between
various control functions.
The
first line
management of the risks arisen in conducting their daily activities, taking into account the Bank’s risk
appetite and its existing policies, procedures and controls.
The
second line
responsible for further identifying, measuring, monitoring and reporting risks, while ensuring the
compliance with internal and external requirements and providing support to the business/operational
functions in executing their duties.
The
third line
and objective assurance on the quality and effectiveness of the Bank’s internal control system, the first and
second lines of defense and the risk governance framework.
The Group and Bank’s risk management governance is centered along the following axes:
●
continuous process of identification, assessment, monitoring, reporting and control, considering
risk limits, approval competences, segregation of duties and other mitigation techniques;
●
risks are taken within the defined risk appetite approved by the Board of Directors;
●
strong involvement of the Bank’s management body in the risk management system and
promotion of risk culture, throughout the entire organizational structure, from the Board of
Directors down to operational teams;
●
clearly defined internal rules and procedures;
●
communication of information regarding risk management across the organization in a timely,
accurate, comprehensible and meaningful manner;
●
continuous supervision by an independent risk function to monitor risks and to enforce rules
and procedures.
The Group and Bank’s risk management is organized around two key principles:
●
risk assessment departments must be independent from the business divisions;
●
the risk management approach and risk monitoring must be consistent throughout the Group
and Bank.
The Group and the Bank is exposed to the risks inherent to its core businesses. The main financial assets
and liabilities are the loans and advances, lease receivables, amounts placed with NBR, demand and term
deposits and borrowings. These instruments are exposed to a series of risks such as credit risk, foreign
exchange risk, interest rate risk, liquidity risk and market risk which are discussed below.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
94
43. Risk management (continued)
43.1 Credit risk
Credit risk represents current or future risk of negative impact on profits and capital arising from a debtor’s
failure to fulfil the contractual obligations or failure to perform as agreed. The credit risk is inherent to
traditional banking products - loans, commitments to lend and other contingent liabilities such as letters of
credit - and to fair value derivative contracts (refer to the Notes 7, 9, 10, 11, and 40).
The Group and Bank’s credit policy is based on the principle that approval of any credit risk undertaking
must rely on a sound knowledge of a given client and its business, an understanding of the purpose and
structure of the transaction and the sources of debt repayment. As part of Group Société Générale, the Bank
has a cash flow based lending approach, meaning the bank expects debt to be serviced primarily through
the future cash flow (legal entities)/income (individuals) generated by the client.
The Group and Bank assesses the quality of its Non Retail portfolio by use of Société Générale’s rating
system, with a scale from 1 to 10 (1 to 7- in bonis exposures, 8 to 10 – defaulted exposures). Within the in
bonis portfolio, the most vulnerable counterparties are grouped into a distinct category (referred to as
sensitive, rating class 7) which is subject to increased monitoring requirements, in order to improve
reactivity through timely implementation of corrective measures.
The internal rating system is based on models that include both quantitative and qualitative assessment
criteria, differentiated by counterparty type and size, in which the expert judgment is a key element. Internal
models are developed based on the Group and Bank’s available data history and the use of rating model is
regulated by internal norms and procedures. Rating review is performed at least once per year, or as soon
as new and significant aspects impacting the credit quality of the counterparty occur. This process results
in the classification of exposures between sound, sensitive and non performing client status.
Throughout the post approval period, the monitoring of counterparties is conducted on a continuous basis,
so that potential vulnerabilities can be identified early and reacted upon. The outcome of monitoring activity
is analyzed as an inherent responsibility of commercial and risk structures. Risky counterparties defined
according to internally prescribed criteria are closely monitored through dedicated committees, with the
aim of defining a strategy towards them and ensuring consistent rating and loss recognition.
Retail counterparties are assessed at origination, based on application scorecards and/or behavioral rating
models, and monitored throughout the lifespan of the loans using behavioral rating models.
Security, in the form of collateral (funded protection) or guarantee (unfunded protection), is accepted by
the Bank in order to mitigate credit risk and do not serve as a substitute for the borrower’s ability to meet
obligations. The securities accepted by the Bank in support of granted commitments primarily include real
estate, both residential and commercial, guarantees issued by other banks and guarantee funds, equipment
and inventories.
Concentration risk related to credit risk is managed primarily through a set of limits established based on
the Bank’s risk appetite and the expectations on the evolution of the economic environment. The limits are
monitored periodically and revised whenever necessary, but at least annually. The set of limits is related to
the following dimensions: individual concentration (single name or group of connected clients), economic
sector concentration, geographical concentration, concentration by product type/transaction type and credit
risk mitigations techniques types.
The Bank has in place a process of continuous monitoring of exposure by concentration dimensions, set
out in the local normative guidelines, meant to prevent any excessive concentration.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
95
43. Risk management (continued)
43.1 Credit risk (continued)
Maximum exposure to credit risk before considering any collaterals or guarantees
Group
December 31, 2022
December 31, 2021
ASSETS
Due from Central Bank
5,093,654
4,311,908
Due from banks
7,220,963
4,537,941
Derivatives and other financial instruments held for trading
2,343,377
2,274,924
Financial assets at fair value through profit and loss
14,262
6,947
Financial assets at fair value through other comprehensive income
13,439,596
19,863,825
Financial assets at amortised cost
39,019,048
32,913,875
Loans, gross
38,053,311
34,668,675
Impairment allowance for loans
(1,764,969)
(1,754,800)
36,288,342
32,913,875
2,730,706
-
Finance lease receivables
1,407,394
1,222,595
Other assets
392,517
115,317
Total assets
68,930,811
65,247,332
Letters of guarantee granted
6,449,588
5,427,857
Financing commitments granted
6,183,371
5,834,265
Total commitments granted
12,632,959
11,262,122
Total credit risk exposure
81,563,770
76,509,454
Bank
December 31, 2022
December 31, 2021
ASSETS
Due from Central Bank
5,093,654
4,311,908
Due from banks
7,204,987
4,521,357
Derivatives and other financial instruments held for trading
2,337,311
2,274,924
Financial assets at fair value through profit and loss
8,132
6,947
Financial assets at fair value through other comprehensive income
13,439,596
19,863,825
Financial assets at amortised cost
38,272,985
32,183,856
Loans, gross
37,242,399
33,853,032
Impairment allowance for loans
(1,700,120)
(1,669,176)
35,542,279
32,183,856
2,730,706
-
Other assets
383,885
105,060
Total assets
66,740,550
63,267,877
Letters of guarantee granted
6,451,531
5,441,448
Financing commitments granted
5,740,595
5,344,315
Total commitments granted
12,192,126
10,785,763
Total credit risk exposure
78,932,676
74,053,640
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
96
43. Risk management (continued)
43.1 Credit risk (continued)
Analyses of the inputs to the ECL model under multiple economic scenarios
An overview of the approach to estimate ECLs is set out in Note 2 e) Significant accounting judgments and
estimates and Note 3 Summary of significant accounting policies. Economic input data is obtained from a
team of economists in the Bank and Group Société Générale. To ensure accuracy and completeness, inputs
are corroborated with third party sources – economic forecasts issued by specialized institutions.
Expected losses are computed based on three macroeconomic scenarios, each with a corresponding weight:
optimistic (10%), baseline (60%) and stress scenario (30%). The table below shows the values of the key
forward looking economic variables/ assumptions used in the base, optimistic and stress economic scenario
for the ECL calculation.
The Bank presents the estimation of key drivers for 2022 because these scenarios have produced effects
during the year and have been used in the computation of ECL as at December 31, 2022.
December, 31 2022
Key drivers
ECL Scenario
2023
2024
2025
GDP growth [%]
Baseline/ Central
1.9
2.5
2.8
Stress
-3.1
-0.5
1.3
Optimistic
2.9
4.5
3.8
Unemployment rate [%]
Baseline/ Central
5.8
5.6
5.4
Stress
6.8
7.1
7.6
Optimistic
5.2
4.7
4.4
Exchange rate RON/EUR [RON]
Baseline/ Central
5
5
5
Stress
6.2
6.5
6.2
Optimistic
5
5
5
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
97
43. Risk management (continued)
43.1 Credit risk (continued)
Considering the internal rating quality, the exposures of the counterparties not impaired are split in 4
categories which are defined below:
Very good
strong.
Good
counterparty is somewhat more sensitive to adverse changes in circumstances and economic conditions.
Standard grade
but more likely to be undermined by unfavourable economic conditions and changes in circumstances.
Sub-standard grade
increased credit risk. Timely debt service repayment is uncertain and depends on favourable economic and
financial conditions. Close and more frequent monitoring of the client’s capacity to service the bank debt
is needed, in order to be able to react to a potential deterioration via implementation of corrective measures.
Analysis of due from banks by credit rating
Group
Bank
2022
2021
2022
2021
Internal rating grade
Very good grade
6,926,230
4,240,203
6,910,254
4,223,619
Good grade
246,081
273,361
246,081
273,361
Standard grade
22,007
14,798
22,007
14,798
Not rated internally
26,652
9,725
26,652
9,725
Total
7,220,970
4,538,087
7,204,994
4,521,503
Less allowance
Very good grade
(7)
(146)
(7)
(146)
Net Carying amount
7,220,963
4,537,941
7,204,987
4,521,357
Ø
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
98
43. Risk management (continued)
43.1 Credit risk (continued)
Sector analysis of loans granted and impairment allowance
Group
December 31, 2022
%
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Individuals
54.7%
35.1%
82.3%
83.1%
70.7%
72.3%
52.8%
12.9%
61.8%
67.3%
Agriculture, forestry and fishing
3.8%
6.3%
2.8%
3.6%
4.2%
4.6%
0.0%
0.0%
3.5%
4.6%
Mining and quarrying
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.0%
Manufacturing
7.5%
11.1%
2.7%
2.5%
3.0%
3.2%
1.6%
0.7%
6.2%
4.6%
Electricity, gas, steam and air conditioning supply
5.3%
5.2%
1.8%
0.3%
2.6%
0.9%
0.0%
0.0%
4.3%
1.6%
Water supply
0.3%
0.5%
0.2%
0.1%
0.0%
0.0%
0.0%
0.0%
0.3%
0.1%
Construction
2.3%
4.4%
0.3%
0.3%
7.0%
7.5%
0.0%
0.0%
1.9%
4.3%
Wholesale and retail trade
11.8%
18.2%
1.9%
1.6%
1.9%
1.3%
2.6%
2.3%
9.1%
4.9%
Transport and storage
2.1%
3.8%
0.9%
2.0%
0.5%
0.5%
0.0%
0.0%
1.8%
1.7%
Accommodation and food service activities
0.9%
1.6%
0.1%
0.2%
3.9%
3.6%
0.0%
0.0%
0.8%
2.0%
Information and communication
1.7%
1.7%
0.0%
0.1%
0.0%
0.0%
0.0%
0.0%
1.2%
0.4%
Financial institutions
2.3%
3.2%
2.9%
2.1%
0.0%
0.0%
0.0%
0.0%
2.4%
1.4%
Real estate activities
1.2%
2.4%
2.7%
2.0%
1.1%
1.5%
42.4%
82.9%
1.6%
3.0%
Professional, scientific and technical activities
0.4%
0.3%
0.1%
0.2%
2.8%
3.5%
0.0%
0.0%
0.4%
1.7%
Administrative and support service activities
0.4%
0.7%
0.1%
0.2%
0.1%
0.1%
0.6%
1.3%
0.3%
0.3%
Public administration and defence, compulsory social security
3.7%
2.7%
0.3%
0.3%
2.0%
0.9%
0.0%
0.0%
2.9%
1.0%
Education
0.0%
0.1%
0.3%
0.5%
0.0%
0.0%
0.0%
0.0%
0.1%
0.2%
Human health services and social work activities
1.2%
2.0%
0.5%
0.8%
0.2%
0.2%
0.0%
0.0%
1.0%
0.8%
Arts, entertainment and recreation
0.2%
0.4%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
0.1%
Other services
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.0%
Total
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Loans to individuals include mortgage loans, consumer loans and overdrafts.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
99
43. Risk management (continued)
43.1 Credit risk (continued)
Sector analysis of loans granted and impairment allowance (continued)
Bank
December 31, 2022
%
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Gross
carrying
amount
Impairment
allowance
Individuals
54.3%
33.2%
83.8%
84.3%
70.2%
71.5%
52.8%
12.9%
61.8%
67.0%
Agriculture, forestry and fishing
3.6%
6.5%
1.4%
2.5%
3.8%
4.5%
0.0%
0.0%
3.1%
4.1%
Mining and quarrying
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.0%
Manufacturing
7.6%
11.5%
2.8%
2.6%
3.2%
3.3%
1.6%
0.7%
6.3%
4.7%
Electricity, gas, steam and air conditioning supply
5.4%
5.3%
1.8%
0.3%
2.7%
0.9%
0.0%
0.0%
4.4%
1.6%
Water supply
0.3%
0.5%
0.2%
0.1%
0.0%
0.0%
0.0%
0.0%
0.3%
0.2%
Construction
2.3%
4.5%
0.3%
0.3%
7.3%
7.9%
0.0%
0.0%
2.0%
4.5%
Wholesale and retail trade
12.0%
18.8%
1.7%
1.5%
1.9%
1.3%
2.6%
2.3%
9.2%
5.0%
Transport and storage
1.8%
3.8%
0.6%
1.8%
0.2%
0.3%
0.0%
0.0%
1.4%
1.5%
Accommodation and food service activities
0.9%
1.7%
0.1%
0.1%
4.1%
3.8%
0.0%
0.0%
0.8%
2.0%
Information and communication
1.7%
1.8%
0.0%
0.1%
0.0%
0.0%
0.0%
0.0%
1.3%
0.4%
Financial institutions
2.5%
3.3%
3.0%
2.1%
0.0%
0.0%
0.0%
0.0%
2.6%
1.4%
Real estate activities
1.3%
2.5%
2.8%
2.1%
1.1%
1.5%
42.4%
82.9%
1.7%
3.1%
Professional, scientific and technical activities
0.4%
0.3%
0.1%
0.2%
3.0%
3.7%
0.0%
0.0%
0.4%
1.8%
Administrative and support service activities
0.4%
0.7%
0.2%
0.2%
0.1%
0.1%
0.6%
1.3%
0.3%
0.3%
Public administration and defence, compulsory social security
3.8%
2.8%
0.3%
0.3%
2.1%
0.9%
0.0%
0.0%
2.9%
1.1%
Education
0.0%
0.1%
0.3%
0.5%
0.0%
0.0%
0.0%
0.0%
0.1%
0.2%
Human health services and social work activities
1.2%
2.0%
0.5%
0.8%
0.2%
0.3%
0.0%
0.0%
1.0%
0.8%
Arts, entertainment and recreation
0.2%
0.5%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
0.1%
Other services
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.1%
Total
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Loans to individuals include mortgage loans, consumer loans and overdrafts.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
100
43. Risk management (continued)
43.1 Credit risk (continued)
Sector analysis of loans granted and impairment allowance (continued)
Group
December 31, 2021
%
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying
amount
Impairmen
t allowance
Gross
carrying
amount
Impairmen
t allowance
Gross
carrying
amount
Impairmen
t allowance
Gross
carrying
amount
Impairmen
t allowance
Gross
carrying
amount
Impairmen
t allowance
Individuals
61.4%
41.9%
81.8%
81.2%
68.2%
67.9%
50.5%
13.4%
66.5%
66.6%
Agriculture, forestry and fishing
2.8%
5.8%
1.9%
3.7%
5.3%
5.2%
0.0%
0.0%
2.7%
4.7%
Mining and quarrying
0.2%
0.1%
0.0%
0.0%
0.1%
0.1%
0.0%
0.0%
0.1%
0.1%
Manufacturing
6.1%
8.5%
5.2%
3.6%
3.1%
3.2%
2.0%
0.1%
5.8%
4.2%
Electricity, gas, steam and air conditioning supply
4.7%
3.9%
0.0%
0.0%
5.5%
2.1%
0.0%
0.0%
3.6%
1.7%
Water supply
0.6%
1.1%
0.1%
0.2%
0.1%
0.2%
0.0%
0.0%
0.4%
0.3%
Construction
1.6%
2.6%
0.2%
0.2%
6.7%
8.1%
0.0%
0.0%
1.4%
4.5%
Wholesale and retail trade
8.2%
15.4%
1.9%
2.3%
2.0%
1.7%
4.2%
2.9%
6.5%
4.3%
Transport and storage
2.3%
4.2%
1.5%
1.8%
0.5%
0.5%
0.2%
0.0%
2.1%
1.6%
Accommodation and food service activities
0.8%
1.4%
0.1%
0.2%
3.9%
5.1%
0.0%
0.0%
0.8%
2.8%
Information and communication
2.3%
2.6%
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
1.7%
0.5%
Financial institutions
2.0%
2.1%
3.5%
1.7%
0.0%
0.0%
0.0%
0.0%
2.3%
0.9%
Real estate activities
1.3%
3.5%
1.9%
2.0%
1.1%
1.4%
41.9%
81.5%
1.5%
3.3%
Professional, scientific and technical activities
0.4%
0.3%
0.2%
0.1%
3.1%
4.0%
0.0%
0.0%
0.4%
2.1%
Administrative and support service activities
0.2%
0.3%
0.1%
0.1%
0.2%
0.2%
1.1%
2.0%
0.2%
0.2%
Public administration and defence, compulsory social security
3.6%
3.1%
0.9%
1.4%
0.0%
0.0%
0.0%
0.0%
2.8%
1.0%
Education
0.0%
0.3%
0.3%
0.7%
0.0%
0.0%
0.0%
0.0%
0.1%
0.3%
Human health services and social work activities
1.1%
2.4%
0.1%
0.2%
0.2%
0.3%
0.0%
0.0%
0.8%
0.6%
Arts, entertainment and recreation
0.1%
0.1%
0.2%
0.6%
0.0%
0.0%
0.0%
0.0%
0.1%
0.2%
Other services
0.2%
0.3%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
0.1%
Total
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Loans to individuals include mortgage loans, consumer loans and overdrafts.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
101
43. Risk management (continued)
43.1 Credit risk (continued)
Sector analysis of loans granted and impairment allowance (continued)
Bank
December 31, 2021
%
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying
amount
Impairment
allowance
Gross carrying
amount
Impairment
allowance
Gross carrying
amount
Impairment
allowance
Gross carrying
amount
Impairment
allowance
Gross carrying
amount
Impairment
allowance
Individuals
60.9%
39.2%
82.4%
81.4%
67.0%
66.2%
50.5%
13.4%
66.3%
65.5%
Agriculture, forestry and fishing
2.5%
6.0%
1.6%
3.5%
5.1%
5.2%
0.0%
0.0%
2.3%
4.7%
Mining and quarrying
0.2%
0.1%
0.0%
0.0%
0.1%
0.1%
0.0%
0.0%
0.1%
0.1%
Manufacturing
6.2%
8.9%
5.2%
3.6%
3.3%
3.5%
2.0%
0.1%
5.9%
4.4%
Electricity, gas, steam and air conditioning supply
4.8%
4.1%
0.0%
0.0%
5.9%
2.2%
0.0%
0.0%
3.7%
1.8%
Water supply
0.6%
1.2%
0.1%
0.2%
0.1%
0.2%
0.0%
0.0%
0.4%
0.3%
Construction
1.7%
2.7%
0.2%
0.2%
7.2%
8.7%
0.0%
0.0%
1.5%
4.7%
Wholesale and retail trade
8.4%
16.2%
1.9%
2.3%
2.0%
1.7%
4.2%
2.9%
6.6%
4.5%
Transport and storage
2.1%
4.3%
1.2%
1.5%
0.2%
0.3%
0.2%
0.0%
1.8%
1.4%
Accommodation and food service activities
0.9%
1.4%
0.1%
0.2%
4.1%
5.5%
0.0%
0.0%
0.8%
2.9%
Information and communication
2.4%
2.8%
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
1.7%
0.5%
Financial institutions
2.3%
2.2%
3.5%
1.7%
0.0%
0.0%
0.0%
0.0%
2.5%
1.0%
Real estate activities
1.4%
3.7%
1.9%
2.1%
1.2%
1.6%
41.9%
81.5%
1.6%
3.5%
Professional, scientific and technical activities
0.4%
0.3%
0.2%
0.1%
3.3%
4.3%
0.0%
0.0%
0.4%
2.2%
Administrative and support service activities
0.2%
0.4%
0.1%
0.1%
0.2%
0.3%
1.1%
2.0%
0.2%
0.3%
Public administration and defence, compulsory social security
3.7%
3.2%
0.9%
1.4%
0.0%
0.0%
0.0%
0.0%
2.9%
1.0%
Education
0.0%
0.3%
0.3%
0.7%
0.0%
0.0%
0.0%
0.0%
0.1%
0.3%
Human health services and social work activities
1.1%
2.5%
0.1%
0.2%
0.3%
0.3%
0.0%
0.0%
0.8%
0.6%
Arts, entertainment and recreation
0.1%
0.1%
0.2%
0.6%
0.0%
0.0%
0.0%
0.0%
0.1%
0.2%
Other services
0.2%
0.3%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
0.1%
Total
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Loans to individuals include mortgage loans, consumer loans and overdrafts.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
102
43. Risk management (continued)
43.1 Credit risk (continued)
Analysis of collateral coverage – Loans and advances
Group
December 31, 2022
collateralized
exposure
Collaterals &
Guarantees
Under-
collateralized
exposure
Collaterals &
Guarantees
Non-retail lending
2,189,968
4,961,785
11,261,966
1,679,572
Retail lending
15,185,445
26,902,441
9,415,931
574,100
376,637
830,323
710,299
314,552
11,631
34,776
8,390,992
1,231
14,797,177
26,037,342
314,640
258,317
Total
17,375,413
31,864,226
20,677,898
2,253,672
out of which non-performing
Non-retail lending
131,395
272,730
174,531
90,108
Retail lending
272,185
638,242
466,304
29,239
5,703
27,797
15,425
4,784
627
371
415,970
43
265,856
610,074
34,909
24,411
Total
403,580
910,973
640,835
119,347
December 31, 2021
collateralized
exposure
Collaterals &
Guarantees
Under-
collateralized
exposure
Collaterals &
Guarantees
Non-retail lending
1,801,528
3,894,168
8,973,434
1,321,398
Retail lending
14,591,880
24,057,314
9,301,832
602,913
332,167
798,084
521,361
222,088
13,672
34,213
8,327,828
4,050
14,246,041
23,225,017
452,642
376,774
Total
16,393,408
27,951,482
18,275,266
1,924,310
out of which non-performing
Non-retail lending
182,848
351,344
190,640
113,074
Retail lending
269,074
611,550
501,145
46,869
8,932
42,602
12,064
1,955
598
445
427,141
15
259,545
568,503
61,940
44,899
Total
451,922
962,894
691,785
159,943
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
103
43. Risk management (continued)
43.1 Credit risk (continued)
Analysis of collateral coverage – Loans and advances (continued)
Bank
December 31, 2022
collateralized
exposure
Collaterals &
Guarantees
Under-
collateralized
exposure
Collaterals &
Guarantees
Non-retail lending
2,014,971
4,704,502
11,278,311
1,657,127
Retail lending
15,035,398
26,677,474
8,913,718
553,755
226,591
605,356
688,396
294,206
11,631
34,776
7,910,682
1,231
14,797,177
26,037,342
314,640
258,317
Total
17,050,369
31,381,976
20,192,029
2,210,882
out of which non-performing
Non-retail lending
129,759
268,796
174,296
90,108
Retail lending
272,185
638,242
466,304
29,239
5,703
27,797
15,425
4,784
627
371
415,970
43
265,856
610,074
34,909
24,411
Total
401,944
907,038
640,600
119,347
December 31, 2021
collateralized
exposure
Collaterals &
Guarantees
Under-
collateralized
exposure
Collaterals &
Guarantees
Non-retail lending
1,653,844
3,669,874
9,010,244
1,314,183
Retail lending
14,494,541
23,899,237
8,694,403
600,607
234,828
640,008
517,160
219,783
13,672
34,213
7,724,601
4,050
14,246,041
23,225,017
452,642
376,774
Total
16,148,385
27,569,111
17,704,647
1,914,790
out of which non-performing
Non-retail lending
179,564
344,429
189,993
113,074
Retail lending
269,074
611,550
501,145
46,869
8,932
42,602
12,064
1,955
598
445
427,141
15
259,545
568,503
61,940
44,899
Total
448,638
955,979
691,138
159,943
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
104
43. Risk management (continued)
43.1 Credit risk (continued)
Analysis of collateral coverage for finance lease receivables
December 31, 2022
exposure
Collaterals &
Guarantees
Under-collateralized
exposure
Collaterals &
Guarantees
877,900
1,333,317
68,262
43,749
533,868
856,018
21,349
7,083
residential
533,815
855,958
21,277
7,083
53
59
73
-
Total
1,411,768
2,189,335
89,611
50,832
December 31, 2021
exposure
Collaterals &
Guarantees
Under-collateralized
exposure
Collaterals &
Guarantees
751,095
1,144,990
82,343
57,215
450,140
710,350
28,224
10,705
residential
450,063
710,223
28,096
10,661
77
128
128
44
Total
1,201,235
1,855,340
110,567
67,920
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
105
43. Risk management (continued)
43.1 Credit risk (continued)
Rating analysis of loans
Group
Retail lending
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Very good grade
8,682,463
6,044
-
-
8,688,507
Good grade
5,771,318
5,205,882
-
-
10,977,199
Standard grade
1,086,252
1,647,851
-
-
2,734,102
Sub-standard grade
-
791,378
-
18,885
810,262
Non- performing
-
-
729,609
8,880
738,489
-
-
19,698
113
19,811
Not rated internally
496,465
107,354
48,997
-
652,817
Total
16,036,497
7,758,509
778,606
27,765
24,601,377
Provision allowance
Internal rating grade
Very good grade
(46,987)
(90)
-
-
(47,077)
Good grade
(47,240)
(117,360)
-
-
(164,600)
Standard grade
(29,607)
(174,635)
-
-
(204,243)
Sub-standard grade
-
(203,440)
-
(92)
(203,533)
Non- performing
-
-
(546,491)
(3,127)
(549,617)
-
-
(18,993)
(87)
(19,080)
Not rated internally
(11,475)
(10,023)
(38,313)
-
(59,811)
Total
(135,309)
(505,549)
(584,804)
(3,219)
(1,228,881)
Net Carying amount
15,901,189
7,252,959
193,802
24,546
23,372,496
Non-Retail lending
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Very good grade
-
-
-
-
-
Good grade
8,095,047
865,172
-
-
8,960,218
Standard grade
3,628,529
231,841
-
-
3,860,370
Sub-standard grade
-
324,606
-
814
325,420
Non- performing
-
-
281,901
24,025
305,926
-
-
254,369
24,025
278,394
Total
11,723,576
1,421,619
281,901
24,838
13,451,935
Provision allowance
Internal rating grade
Very good grade
-
-
-
-
-
Good grade
(136,420)
(34,204)
-
-
(170,624)
Standard grade
(95,791)
(15,845)
-
-
(111,636)
Sub-standard grade
-
(36,277)
-
(64)
(36,341)
Non- performing
-
-
(195,865)
(21,623)
(217,488)
-
-
(178,010)
(21,625)
(199,634)
Total
(232,210)
(86,326)
(195,865)
(21,687)
(536,088)
Net Carying amount
11,491,365
1,335,293
86,037
3,151
12,915,846
Total
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Very good grade
8,682,463
6,044
-
-
8,688,507
Good grade
13,866,364
6,071,054
-
-
19,937,418
Standard grade
4,714,780
1,879,692
-
-
6,594,472
Sub-standard grade
-
1,115,984
-
19,698
1,135,683
Non- performing
-
-
1,011,510
32,905
1,044,415
-
-
274,067
24,137
298,205
Not rated internally
496,465
107,354
48,997
-
652,817
Total
27,760,073
9,180,128
1,060,507
52,603
38,053,312
Provision allowance
Internal rating grade
Very good grade
(46,987)
(90)
-
-
(47,077)
Good grade
(183,659)
(151,564)
-
-
(335,224)
Standard grade
(125,398)
(190,481)
-
-
(315,879)
Sub-standard grade
-
(239,717)
-
(156)
(239,873)
Non- performing
-
-
(742,355)
(24,750)
(767,105)
-
-
(197,003)
(21,711)
(218,714)
Not rated internally
(11,475)
(10,023)
(38,313)
-
(59,811)
Total
(367,519)
(591,876)
(780,668)
(24,906)
(1,764,969)
Net Carying amount
27,392,554
8,588,252
279,839
27,697
36,288,342
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
106
43. Risk management (continued)
43.1 Credit risk (continued)
Rating analysis of loans (continued)
Bank
Retail lending
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Very good grade
8,682,463
6,044
-
-
8,688,507
Good grade
5,771,318
5,205,882
-
-
10,977,199
Standard grade
1,086,252
1,647,851
-
-
2,734,102
Sub-standard grade
-
791,378
-
18,885
810,262
Past due but not impaired
-
-
-
-
-
Non- performing
-
-
729,609
8,880
738,489
-
-
19,698
113
19,811
Not rated internally
556
-
-
-
556
Total
15,540,588
7,651,154
729,609
27,765
23,949,116
Provision allowance
Internal rating grade
Very good grade
(46,987)
(90)
-
-
(47,077)
Good grade
(47,240)
(117,360)
-
-
(164,600)
Standard grade
(29,607)
(174,635)
-
-
(204,243)
Sub-standard grade
-
(203,440)
-
(92)
(203,533)
Non- performing
-
-
(546,491)
(3,127)
(549,617)
-
-
(18,993)
(87)
(19,080)
Total
(123,834)
(495,526)
(546,491)
(3,219)
(1,169,070)
Net Carying amount
15,416,754
7,155,628
183,118
24,546
22,780,047
Non-Retail lending
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Very good grade
-
-
-
-
-
Good grade
8,095,605
864,840
-
-
8,960,445
Standard grade
3,541,813
202,648
-
-
3,744,461
Sub-standard grade
-
283,507
-
814
284,320
Non- performing
-
-
280,031
24,025
304,056
-
-
254,369
24,025
278,394
Total
11,637,418
1,350,995
280,031
24,838
13,293,282
Provision allowance
Internal rating grade
Very good grade
-
-
-
-
-
Good grade
(136,238)
(34,187)
-
-
(170,425)
Standard grade
(95,438)
(14,384)
-
-
(109,822)
Sub-standard grade
-
(34,220)
-
(64)
(34,284)
Non- performing
-
-
(194,896)
(21,623)
(216,519)
-
-
(178,010)
(21,625)
(199,634)
Total
(231,676)
(82,792)
(194,896)
(21,687)
(531,051)
Net Carying amount
11,405,742
1,268,203
85,135
3,151
12,762,232
Total
December 31, 2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Internal rating grade
Very good grade
8,682,463
6,044
-
-
8,688,507
Good grade
13,866,922
6,070,722
-
-
19,937,644
Standard grade
4,628,065
1,850,499
-
-
6,478,563
Sub-standard grade
-
1,074,884
-
19,698
1,094,583
Non- performing
-
-
1,009,640
32,905
1,042,545
-
-
274,067
24,137
298,205
Not rated internally
556
-
-
-
556
Total
27,178,006
9,002,150
1,009,640
52,603
37,242,399
Provision allowance
Internal rating grade
Very good grade
(46,987)
(90)
-
-
(47,077)
Good grade
(183,477)
(151,548)
-
-
(335,025)
Standard grade
(125,045)
(189,020)
-
-
(314,065)
Sub-standard grade
-
(237,660)
-
(156)
(237,817)
Non- performing
-
-
(741,386)
(24,750)
(766,136)
-
-
(197,003)
(21,711)
(218,714)
Total
(355,510)
(578,318)
(741,386)
(24,906)
(1,700,120)
Net Carying amount
26,822,496
8,423,832
268,253
27,697
35,542,278
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
107
43. Risk management (continued)
43.1 Credit risk (continued)
Rating analysis of loans (continued)
Group
Retail lending
December 31, 2021
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Very good grade
9,582,650
5,962
-
-
9,588,612
Good grade
5,070,420
4,713,135
-
-
9,783,555
Standard grade
970,014
1,407,731
-
-
2,377,746
Sub-standard grade
-
652,675
-
15,793
668,468
Non- performing
-
-
756,316
13,903
770,220
-
-
32,639
454
33,092
Not rated internally
615,749
17,196
72,168
-
705,113
Total
16,238,832
6,796,699
828,484
29,697
23,893,712
Provision allowance
Very good grade
(51,114)
(114)
-
-
(51,228)
Good grade
(40,869)
(110,791)
-
-
(151,660)
Standard grade
(26,933)
(165,354)
-
-
(192,287)
Sub-standard grade
-
(175,514)
-
(138)
(175,652)
Non- performing
-
-
(544,071)
(3,736)
(547,807)
-
-
(26,317)
(80)
(26,397)
Not rated internally
(14,885)
(6,182)
(58,919)
-
(79,986)
Total
(133,801)
(457,955)
(602,990)
(3,874)
(1,198,620)
Net Carying amount
16,105,031
6,338,744
225,495
25,822
22,695,092
Non-Retail lending
December 31, 2021
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Very good grade
422,745
-
-
-
422,745
Good grade
5,669,791
746,615
-
-
6,416,406
Standard grade
2,829,625
314,204
-
-
3,143,829
Sub-standard grade
38,449
378,575
-
1,337
418,361
Non- performing
-
-
345,992
27,495
373,487
-
-
305,958
26,915
332,873
Not rated internally
133
-
-
-
133
Total
8,960,744
1,439,393
345,992
28,832
10,774,962
Provision allowance
Very good grade
(2,143)
-
-
-
(2,143)
Good grade
(84,653)
(36,629)
-
-
(121,282)
Standard grade
(88,113)
(17,189)
-
-
(105,302)
Sub-standard grade
(139)
(43,940)
-
(201)
(44,280)
Non- performing
(4)
-
(252,985)
(24,541)
(277,529)
-
-
(228,202)
(24,369)
(252,571)
Not rated internally
(408)
(2,814)
(2,422)
-
(5,644)
Total
(175,459)
(100,572)
(255,406)
(24,742)
(556,180)
Net Carying amount
8,785,285
1,338,820
90,586
4,090
10,218,782
Total
December 31, 2021
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Very good grade
10,005,395
5,962
-
-
10,011,357
Good grade
10,740,211
5,459,750
-
-
16,199,961
Standard grade
3,799,639
1,721,935
-
-
5,521,574
Sub-standard grade
38,449
1,031,249
-
17,131
1,086,829
Non- performing
-
-
1,102,309
41,398
1,143,707
-
-
338,596
27,369
365,965
Not rated internally
615,882
17,196
72,168
-
705,246
Total
25,199,576
8,236,092
1,174,477
58,529
34,668,674
Provision allowance
Very good grade
(53,257)
(114)
-
-
(53,371)
Good grade
(125,522)
(147,420)
-
-
(272,942)
Standard grade
(115,046)
(182,543)
-
-
(297,589)
Sub-standard grade
(139)
(219,454)
-
(340)
(219,932)
Non- performing
(4)
-
(797,056)
(28,277)
(825,336)
-
-
(254,520)
(24,449)
(278,969)
Not rated internally
(15,293)
(8,996)
(61,341)
-
(85,630)
Total
(309,260)
(558,527)
(858,396)
(28,617)
(1,754,800)
Net Carying amount
24,890,317
7,677,565
316,081
29,912
32,913,874
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
108
43. Risk management (continued)
43.1 Credit risk (continued)
Rating analysis of loans (continued)
Bank
Retail lending
December 31, 2021
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Very good grade
9,582,650
5,962
-
-
9,588,612
Good grade
5,070,420
4,713,135
-
-
9,783,555
Standard grade
970,014
1,407,731
-
-
2,377,746
Sub-standard grade
-
652,675
-
15,793
668,468
Non- performing
-
-
756,316
13,903
770,220
-
-
32,639
454
33,092
Not rated internally
345
-
-
-
345
Total
15,623,428
6,779,503
756,316
29,697
23,188,944
Provision allowance
Very good grade
(51,114)
(114)
-
-
(51,228)
Good grade
(40,869)
(110,791)
-
-
(151,660)
Standard grade
(26,933)
(165,354)
-
-
(192,287)
Sub-standard grade
-
(175,514)
-
(138)
(175,652)
Non- performing
-
-
(544,071)
(3,736)
(547,807)
-
-
(26,317)
(80)
(26,397)
Not rated internally
-
-
-
-
-
Total
(118,916)
(451,772)
(544,071)
(3,875)
(1,118,634)
Net Carying amount
15,504,512
6,327,731
212,245
25,821
22,070,310
Non-Retail lending
December 31, 2021
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Very good grade
422,745
-
-
-
422,745
Good grade
5,708,101
743,744
-
-
6,451,844
Standard grade
2,738,943
303,762
-
-
3,042,705
Sub-standard grade
38,449
337,317
-
1,337
377,104
Non- performing
-
-
342,062
27,495
369,557
-
-
305,958
26,915
332,873
Total
8,908,371
1,384,823
342,062
28,832
10,664,088
Provision allowance
Very good grade
(2,143)
-
-
-
(2,143)
Good grade
(84,653)
(36,629)
-
-
(121,282)
Standard grade
(88,113)
(17,189)
-
-
(105,302)
Sub-standard grade
(139)
(43,940)
-
(201)
(44,280)
Non- performing
(4)
-
(252,985)
(24,541)
(277,529)
-
-
(228,202)
(24,369)
(252,571)
Not rated internally
(6)
-
-
-
(6)
Total
(175,057)
(97,758)
(252,985)
(24,742)
(550,542)
Net Carying amount
8,733,314
1,287,065
89,077
4,090
10,113,546
Total
December 31, 2021
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount
Very good grade
10,005,395
5,962
-
-
10,011,357
Good grade
10,778,520
5,456,879
-
-
16,235,399
Standard grade
3,708,957
1,711,493
-
-
5,420,450
Sub-standard grade
38,449
989,992
-
17,131
1,045,572
Non- performing
-
-
1,098,378
41,398
1,139,776
-
-
338,596
27,369
365,965
Not rated internally
478
-
-
-
478
Total
24,531,799
8,164,326
1,098,378
58,529
33,853,032
Provision allowance
Very good grade
(53,257)
(114)
-
-
(53,371)
Good grade
(125,522)
(147,420)
-
-
(272,942)
Standard grade
(115,046)
(182,543)
-
-
(297,589)
Sub-standard grade
(139)
(219,454)
-
(340)
(219,932)
Non- performing
(4)
-
(797,056)
(28,277)
(825,336)
-
-
(254,520)
(24,449)
(278,969)
Not rated internally
(6)
-
-
-
(6)
Total
(293,973)
(549,531)
(797,056)
(28,617)
(1,669,176)
Net Carying amount
24,237,826
7,614,795
301,322
29,912
32,183,855
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
109
43. Risk management (continued)
43.1 Credit risk (continued)
Rating analysis of Finance Lease receivables
Retail
December 31, 2022
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Not rated internally
383,487
120,540
51,190
555,217
Total
383,487
120,540
51,190
555,217
Provision allowance
(1,867)
(7,119)
(22,724)
(31,710)
Net Carying amount
381,620
113,421
28,466
523,507
Non-Retail
December 31, 2022
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Internal rating grade
Good grade
191,115
38,103
-
229,218
Standard grade
446,936
149,435
-
596,370
Sub-standard grade
-
48,243
-
48,243
Non- performing
-
-
68,782
68,782
Not rated internally
(663)
4,094
118
3,549
Total
637,387
239,875
68,901
946,162
Provision allowance
(2,623)
(12,158)
(47,495)
(62,275)
Net Carying amount
634,764
227,716
21,406
883,887
Total
December 31, 2022
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Internal rating grade
Good grade
191,115
38,103
-
229,218
Standard grade
446,936
149,435
-
596,370
Sub-standard grade
-
48,243
-
48,243
Non- performing
-
-
68,782
68,782
Not rated internally
382,824
124,634
51,308
558,766
Total
1,020,874
360,415
120,091
1,501,380
Provision allowance
(4,490)
(19,277)
(70,219)
(93,986)
Net Carying amount
1,016,384
341,137
49,872
1,407,394
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
110
43. Risk management (continued)
43.1 Credit risk (continued)
Rating analysis of Finance Lease receivables:
Retail
December 31, 2021
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Not rated internally
365,749
67,385
45,230
478,364
Total
365,749
67,385
45,230
478,364
Provision allowance
(1,450)
(3,544)
(19,701)
(24,695)
Net Carying amount
364,299
63,841
25,530
453,669
Non-Retail
December 31, 2021
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Internal rating grade
Good grade
68,746
27,838
-
96,584
Standard grade
379,133
114,379
-
493,513
Sub-standard grade
-
157,599
-
157,599
Non- performing
-
-
74,382
74,382
Not rated internally
(10)
11,134
237
11,361
Total
447,869
310,950
74,619
833,438
Provision allowance
(1,865)
(16,211)
(46,436)
(64,512)
Net Carying amount
446,004
294,739
28,183
768,926
Total
December 31, 2021
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount
Internal rating grade
Good grade
68,746
27,838
-
96,584
Standard grade
379,133
114,379
-
493,513
Sub-standard grade
-
157,599
-
157,599
Non- performing
-
-
74,382
74,382
Not rated internally
365,739
78,518
45,468
489,724
Total
813,618
378,335
119,850
1,311,802
Provision allowance
(3,315)
(19,755)
(66,137)
(89,207)
Net Carying amount
810,302
358,580
53,713
1,222,595
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
111
43. Risk management (continued)
43.1 Credit risk (continued)
Guarantees and other credit commitments
Guarantees and letters of credit
The Group and Bank issues guarantees and letters of credit for its customers. The primary purpose of letters
of credit is to ensure that funds are available to a customer as required. Guarantees and standby letters of
credit, which represent irrevocable assurances that the Group and Bank will make payments in the event
that a customer cannot meet its obligations (delivery of goods, documents submitting, etc.) to third parties
with which it entered previously into a contractual relationship, carry a similar credit risk as loans once they
are executed.
The market and credit risks on these financial instruments, as well as the operational risk are similar to
those arising from granting of loans. In the event of a claim on the Group and Bank as a result of a
customer’s default on a guarantee these instruments also present a degree of liquidity risk to the Group and
Bank.
Credit related commitments
Financing commitments represent unused amounts of approved credit facilities.
The Group and Bank monitors the term to maturity of credit commitments because longer-term
commitments generally have a greater degree of credit risk than shorter-term commitments. The total
outstanding contractual amount of commitments does not necessarily represent future cash requirements
since many of these commitments will expire or be terminated without being funded.
Group
Bank
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Letters of guarantee granted
6,449,588
5,427,857
6,451,531
5,441,448
Financing commitments granted
6,183,371
5,834,265
5,740,595
5,344,315
Total commitments granted
12,632,959
11,262,122
12,192,126
10,785,763
Uncommitted facilities granted
9,454,516
9,317,203
9,509,016
9,382,644
Letters of guarantee received
23,730,601
20,033,701
23,730,601
20,033,701
Total commitments received
23,730,601
20,033,701
23,730,601
20,033,701
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
112
43. Risk management (continued)
43.2 Market risk
Market risk is defined as the risk of registering losses related to the on and off-balance sheet positions
arising from unfavorable movements of market parameters (FX rates, interest rates, share prices, etc) and
might be incurred both by the trading book portfolio and by some banking book positions (structural
portfolio).
The management of market risks is a continuous process, whose primary aim is to identify and measure the
market risks induced by the business activities undergone by the entity.
Trading Book related market risks
The trading activity’s business model is mainly driven by the clients’ requests, the trading portfolio
comprising mostly foreign exchange spot transactions, transactions with bonds issued by the Romanian
Government (outright or reversible transactions), forward and swap deals on foreign exchange or interest
rate, as well as options on different underlying (foreign exchange, interest rates and equities).
Although the trading book portfolio generates a small portion of the Bank’s entire exposure to market risks
(mainly interest rate risk and foreign exchange risk), it is monitored separately from the banking book
portfolio. The identified risks are further reported to the bank’s management and to the Group, ensuring
timely distribution of accurate information for the decision-making processes.
The risk awareness related to the trading book activity is embraced by all actors pertaining to the Financial
Markets perimeter, several sets of controls, some of them with daily frequency,
being
each involved department. The functional independence conferred to the risk line from the business line,
translated in an independent follow-up of risks conducted at the Market Risk Department level, guarantees
a fair, unbiased picture of BRD’s exposure to assumed market risks.
The foundation of an efficient management framework addressing market risks relies on the main principles
listed below:
●
frequent update of the risk management policy and framework, to comply with regulatory
requisites, permanently adapted to market evolutions and internal changes;
●
ongoing improvement of the market risk practice, aligned with the best market practices;
●
validation of valuation techniques used to calculate risks metrics and results;
●
defining risk measurement models and provisions for the market risks assumed (reserves);
●
authorization of various market risk limits, consistent with the stated market risk appetite;
●
approval of the instruments allowed for trading (new products or significant changes of existing
products);
●
involvement in designing the functionalities of the IT systems, data flows and operational
procedures;
●
monitoring and analyzing exposures and compliance with the limits, periodical dissemination of
essential data mirroring the bank’s exposure to market risks to the management bodies.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
113
43. Risk management (continued)
43.2 Market risk (continued)
On an annual basis, the market risk appetite is approved by the Board of Directors, being aligned with the
Bank’s business strategy. The top-down approach transposes this high level indicator into limits, notified
to middle management and executive functions, calibrated on different measurement types (nominal,
sensitivity, stress test results, VaR and SVaR levels).
To properly support the trading activities, a daily report, presenting all the market risk indicators, is
delivered to the personnel acting within the Financial Markets perimeter, to the management of Risk
Department and to the Group.
The process of monitoring the compliance with the limits includes the daily metrics report, the monthly
analysis of the trading book activity, and the quarterly summaries submitted to the General Management.
The assesment process of trading book related market risks is designed according with the Group’s
methodology, combining three main risk approaches:
●
Trading VaR, accompanied by SVaR;
●
Stress test scenarios, based on shocks derived from historical and hypothetical scenarios;
●
Complementary indicators (sensitivities, nominal, etc.) which decompose the global indicators into
specific ones, enabling the identification of risk areas, concentration on products and/or maturities
that might generate important risks unrevealed by the global risk metrics.
Value at Risk (VaR)
The purpose of VaR
is to determine a maximum potential loss the bank might incur from the trading
activity, over a given period of time, with a certain level of confidence. BRD computes daily the VaR level
for 1-day holding period, based on historical approach, with a confidence level of 99%.
The relevance of the VaR model is assessed through back testing, by comparing the daily trading result
with the loss estimated by the model, and is performed with daily frequency, in order to forewarn of the
need to recalibrate the computational model or to reconsider the observation period of the market
parameters. The model’s accuracy is tested by comparing the number of days with negative P&L exceeding
the VaR figure with the number of expected overshoots (induced by the model’s assumptions).
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
114
43. Risk management (continued)
43.2 Market risk (continued)
Should a breach occur, an investigation is conducted to identify its root cause and the event is escaladed to
the management of the Financial Markets’ perimeter.
The VaR model developed in BRD is used for trading position management purposes only and it is not
transposed into capital requirements.
99%
VAR
(1
D
AY
)
-
K
EY FIGURES
(
IN
MEUR)
Begin of year
End of year
Minimum
Average
Maximum
2020
0.21
0.60
0.13
0.43
0.71
2021
0.59
0.18
0.18
0.47
0.71
2022
0.18
0.42
0.12
0.35
0.97
Stressed VAR (SVaR)
SVaR estimates a maximum
potential
loss from trading activity, for 1-day horizon and with 99% confidence
level, as a consequence of adverse market movements associated with a financial crisis. SVaR is computed
using the same approach as VaR, the only difference being that, in the case of SVaR, the observation period
for the risk factors is fixed to a window of 12 consecutive months marked by extreme market events.
The appropriateness of the one-year chosen window is assessed by comparing the SVaR level with the VaR
level. If the VaR/SVaR ratio exceeds the 90% threshold at least three times during a quarter, the
suitability of the window must be reassessed. The range of daily VaR/SVaR values is analyzed periodically
for signals on the need to review the SVaR period.
99%
SVAR
(1
D
AY
)
-
K
EY FIGURES
(
IN
MEUR)
Begin of year
End of year
Minimum
Average
Maximum
2020
1.43
1.80
0.70
1.75
3.37
2021
1.77
0.97
0.92
2.25
3.82
2022
0.98
0.73
0.26
0.86
2.30
Stress test assessment
Methodology
The stress test assessment is one of the main pillars of the market risk management framework, being
complementary to VaR and compensating the limitation of the historical VaR methodology. While the VaR
model considers historical movements of the risk factors occurred in the past, the stress testing environment
embeds theoretical hypothesis or market event-specific scenarios describing large, abrupt changes of the
underlying risk factors. On a daily basis, a range of hypothetical models picturing extreme shocks are mixed
with various historical scenarios and are applied for the entire trading book portfolio of the bank.
A global stress test metric is computed and compared against the approved limit, derived from the market
risk appetite stated in Bank’s strategy.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
115
43. Risk management (continued)
43.2 Market risk (continued)
The various stress test scenarios are subject to review and improvement, the accuracy of the assumptions
used under the active patterns being regularly monitored. The hypothesis validation aims to certify that the
shocks applied are still severe enough and that they model an unlikely event, otherwise timely detecting the
necessity to recalibrate them.
The table below presents the result of applying the stress test methodology on the trading book portfolio.
Stress Test Assessment - Key Negative figures (in MEUR)
Begin of year
End of year
Minimum
Average
Maximum
2020
5.70
11.01
2.25
9.53
14.49
2021
10.85
2.43
0.01
8.68
14.32
2022
2.91
2.78
0.00
2.36
5.70
Foreign exchange risk
The foreign exchange risk is the risk of loss resulting from changes in exchange rates, monitored for all
books. The Group and Bank manages the foreign currency risk by using limits for the open foreign currency
positions both by currency and at the level of global foreign currency position.
The table below indicates the currencies to which the Group and Bank had an exposure as at December 31
st
on its assets and liabilities. The analysis calculates the effect of a reasonably possible movement of the
currency rate against RON, with all other variables held constant, on the income statement and equity. A
negative amount in the table reflects a potential net reduction in income statement or equity, while a positive
amount reflects a net potential increase. An equivalent decrease in each of the below currencies against
RON would have resulted in an equivalent but opposite impact.
The estimated impact below does not include the impact recorded in income statement of the period:
Group
Bank
2022
Currency
Change in
currency rate %
Effect on profit
before tax
Effect on equity
Change in
currency rate %
Effect on profit
before tax
Effect on equity
EUR
+5
(225,724)
(41,868)
+5
(225,580)
(41,868)
Other
+5
(9,021)
(1,705)
+5
(9,018)
(1,705)
Group
Bank
2021
Currency
Change in
currency rate %
Effect on profit
before tax
Effect on equity
Change in
currency rate %
Effect on profit
before tax
Effect on equity
EUR
+5
1,337
1,040
+5
1,799
1,040
Other
+5
(57)
404
+5
(36)
404
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
116
43. Risk management (continued)
43.2 Market risk (continued)
The Group and the Bank statement of financial position structure by currency is presented below:
Group
Bank
December 31, 2022
December 31, 2022
ASSETS
Total
RON
EUR
Other
Total
RON
EUR
Other
Cash and due from Central Bank
7,625,002
5,941,426
1,579,300
104,276
7,624,933
5,941,359
1,579,300
104,275
Due from banks
7,220,963
893,305
5,527,611
800,047
7,204,987
877,328
5,527,611
800,047
Derivatives and other financial instruments held for trading
2,343,377
1,968,547
325,071
49,759
2,337,311
1,962,481
325,071
49,759
Financial assets at fair value through profit and loss
14,262
13,434
829
-
8,132
7,304
828
-
Financial assets at fair value through other comprehensive income
13,439,596
8,739,723
4,517,714
182,159
13,439,596
8,739,723
4,517,714
182,159
Financial assets at amortised cost
39,019,048
26,649,538
11,793,899
575,612
38,272,985
26,260,352
11,437,021
575,612
36,288,342
26,349,858
9,794,586
143,897
35,542,278
25,960,672
9,437,708
143,897
2,730,706
299,679
1,999,312
431,715
2,730,706
299,679
1,999,312
431,715
Financial lease receivables
1,407,394
61,915
1,345,479
-
-
-
-
-
Investments in associates and subsidiares
113,670
113,670
-
-
129,964
129,964
-
-
Goodwill
50,130
50,130
-
-
50,130
50,130
-
-
Current tax assets
23,563
23,563
-
-
23,563
23,563
-
-
Deferred tax asset
496,034
496,034
-
-
478,893
478,893
-
-
Non current assets and other assets
2,088,728
1,844,213
243,690
826
1,952,483
1,713,113
238,869
501
Total assets
73,841,767
46,795,497
25,333,593
1,712,679
71,522,977
46,184,210
23,626,413
1,712,354
LIABILITIES
Due to banks
636,888
494,592
104,226
38,070
636,888
494,592
104,226
38,070
Derivatives and other financial instruments held for trading
1,443,546
1,050,292
385,831
7,423
1,443,546
1,050,292
385,831
7,423
Due to customers
56,660,841
36,523,728
16,335,841
3,801,272
56,915,740
36,719,140
16,395,326
3,801,274
Debt issued and borrowed funds
5,625,488
279,661
5,345,827
-
3,567,262
2,266
3,564,997
-
Subordinated debts
1,238,651
-
1,238,651
-
1,238,651
-
1,238,651
-
Current tax liability
5,595
5,595
-
-
-
-
-
-
Other liabilities
1,270,992
808,115
434,113
28,764
1,143,854
670,069
445,413
28,372
Shareholders' equity
6,959,766
6,959,766
-
-
6,577,036
6,577,036
-
-
Total liabilities and shareholders' equity
73,841,767
46,121,750
23,844,489
3,875,528
71,522,977
45,513,395
22,134,444
3,875,139
Position
673,748
1,489,102
(2,162,851)
-
670,816
1,491,969
(2,162,785)
Position off BS
(678,725)
(1,485,863)
2,164,588
-
(678,725)
(1,485,863)
2,164,588
Position total
(4,977)
3,239
1,737
-
(7,909)
6,106
1,803
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
117
43. Risk management (continued)
43.2 Market risk (continued)
Group
Bank
December 31, 2021
December 31, 2021
ASSETS
Total
RON
EUR
Other
Total
RON
EUR
Other
Cash and due from Central Bank
6,206,356
5,007,707
1,152,945
45,705
6,206,323
5,007,674
1,152,945
45,705
Due from banks
4,537,941
344,039
2,099,967
2,093,936
4,521,357
327,454
2,099,967
2,093,936
Derivatives and other financial instruments held for trading
2,274,924
1,158,528
1,026,348
90,047
2,274,924
1,158,528
1,026,348
90,047
Financial assets at fair value through profit and loss
6,947
6,258
689
-
6,947
6,258
689
-
Financial assets at fair value through other comprehensive
income
19,863,825
13,125,421
6,507,270
231,134
19,863,825
13,125,421
6,507,270
231,134
Financial assets at amortised cost
32,913,875
23,835,074
8,829,246
249,555
32,183,856
23,348,736
8,585,564
249,556
32,913,875
23,835,074
8,829,246
249,555
32,183,856
23,348,736
8,585,564
249,556
Financial lease receivables
1,222,595
76,305
1,146,290
-
-
-
-
-
Investments in associates and subsidiares
107,205
107,205
-
-
158,916
158,916
-
-
Goodwill
50,130
50,130
-
-
50,130
50,130
-
-
Current tax assets
7,484
7,484
-
-
7,484
7,484
-
-
Deferred tax asset
180,089
180,089
-
-
166,173
166,173
-
-
Non current assets and other assets
1,691,926
1,669,053
15,555
7,318
1,575,328
1,560,509
8,041
6,778
Total assets
69,063,297
45,567,293
20,778,311
2,717,695
67,015,263
44,917,282
19,380,824
2,717,156
LIABILITIES
Due to banks
156,810
107,629
27,633
21,548
156,810
107,629
27,633
21,548
Derivatives and other financial instruments held for trading
498,651
440,295
58,356
-
498,651
440,295
58,356
-
Due to customers
52,683,581
32,876,873
16,968,766
2,837,942
52,917,887
33,087,454
16,992,489
2,837,943
Debt issued and borrowed funds
4,056,470
409,779
3,646,691
-
2,230,572
3,737
2,226,835
-
Subordinated debts
495,022
-
495,022
-
495,022
-
495,022
-
Current tax liability
83,963
83,963
-
-
79,979
79,979
-
-
Other liabilities
1,209,895
662,090
509,515
38,290
1,097,005
560,068
499,605
37,332
Shareholders' equity
9,878,905
9,878,905
-
-
9,539,338
9,539,338
-
-
Total liabilities and shareholders' equity
69,063,297
44,459,533
21,705,983
2,897,779
67,015,263
43,818,500
20,299,940
2,896,823
Position
1,107,760
(927,673)
(180,085)
-
1,098,783
(919,116)
(179,668)
Position off BS
(1,134,046)
955,100
178,946
-
(1,134,046)
955,100
178,946
Position total
(26,286)
27,428
(1,139)
-
(35,263)
35,985
(722)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
118
43. Risk management (continued)
43.2 Market risk (continued)
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the
fair values of financial instruments. BRD-Groupe Société Générale manages interest rate risk mainly
through the sensitivity of the net present value (NPV), measured as the sensitivity to a set of interest rate
shocks of the present value of the future principal and interest cash flows of all items in the banking book,
balance sheet and off-balance sheet. This measure is calculated for all currencies to which the Bank is
exposed.
Assets and liabilities are analyzed without a prior allocation of resources to uses. Maturities of outstanding
amounts are determined by taking into account the contractual characteristics of the transactions, adjusted
for the results of customer behavior modelling (in particular for demand deposits, savings and early loan
repayments).
In accordance with the Group’s policy, positions are monitored on a regular basis and appropriate strategies
are used to ensure that they are maintained within the established limits.
The following table demonstrates the sensitivity to a reasonable possible change in interest rates, with all
other variables held constant, of the Group’s and Bank’s banking book.
Group
Bank
December 31, 2022
December 31, 2022
Change in interest
rate (b.p)
Sensitivity (MRON)
Change in interest
rate (b.p)
Sensitivity (MRON)
10
19
10
18
(10)
(19)
(10)
(19)
December 31, 2021
December 31, 2021
Change in interest
rate (b.p)
Sensitivity (MRON)
Change in interest
rate (b.p)
Sensitivity (MRON)
10
12
10
17
(10)
(18)
(10)
(17)
The tables below analyse the Group’s and the Bank’s banking book interest rate risk exposure. The Group’s
assets and liabilities are included at carrying amount and gaps between outstanding assets and liabilities are
determined on the basis of the contractual terms of transactions, models based on clients’ historic behaviour
patterns, as well as conventional assumptions relating to certain balance sheet items.
The Bank’s assets and liabilities are included at carrying amount and categorised by the earlier of
contractual repricing or maturity dates.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
119
43. Risk management (continued)
43.2 Market risk (continued)
Interest rate risk (continued)
Group
December 31, 2022
0-1 months
1-3 months
3-12 months
1-5 years
Over 5 years
Total
ASSETS
Cash and due from Central Bank
2,241,508
1,062,798
1,255,614
2,569,376
495,706
7,625,002
Due from banks
2,166,395
4,552,744
473,718
28,106
-
7,220,963
Derivatives and other financial instruments held for trading
1,903,485
69,600
189,148
35,052
146,092
2,343,377
Financial assets at fair value through profit and loss
119
238
1,070
5,705
7,131
14,262
Financial assets at fair value through other comprehensive income
(2,516,879)
-
1,048,581
6,203,637
8,704,257
13,439,596
Financial assets at amortised cost
12,553,669
12,427,983
2,785,355
8,400,235
2,851,807
39,019,048
12,530,503
12,427,983
2,785,355
7,051,904
1,492,597
36,288,342
23,166
-
-
1,348,331
1,359,210
2,730,706
Financial lease receivables
211,326
543,478
255,890
395,722
979
1,407,394
Investments in associates and subsidiares
698
2,166
8,593
45,829
56,385
113,670
Goodwill
418
836
3,760
20,052
25,065
50,130
Current tax assets
-
23,563
-
-
-
23,563
Deferred tax asset
4,230
8,457
38,058
202,978
242,312
496,034
Non current assets and other assets
49,180
5,779
237,254
1,237,958
558,556
2,088,728
Total assets
16,614,149
18,697,640
6,297,041
19,144,648
13,088,290
73,841,767
Liabilities
Due to banks
636,888
-
-
-
-
636,888
Derivatives and other financial instruments held for trading
1,433,546
10,000
-
-
-
1,443,546
Due to customers
11,384,251
4,003,597
9,875,954
20,200,227
11,196,812
56,660,841
Debt issued and borrowed funds
78,743
4,006,937
346,837
1,192,971
-
5,625,488
Subordinated debts
1,800
1,236,850
-
-
-
1,238,651
Current tax liability
-
5,595
-
-
-
5,595
Other liabilities
698,849
37,980
64,875
332,412
136,877
1,270,992
Total liabilities
14,234,078
9,300,959
10,287,665
21,725,609
11,333,690
66,882,001
Total shareholders' equity
(2,051,618)
-
901,138
3,604,554
4,505,692
6,959,766
Net position
2,380,071
9,396,681
(4,891,762)
(6,185,515)
(2,751,092)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
120
43. Risk management (continued)
43.2 Market risk (continued)
Interest rate risk (continued)
Group
December 31, 2021
0-1 months
1-3 months
3-12 months
1-5 years
Over 5 years
Total
ASSETS
Cash and due from Central Bank
924,903
1,442,490
1,045,325
2,208,777
584,861
6,206,356
Due from banks
2,473,482
1,897,258
151,048
12,553
3,600
4,537,941
Derivatives and other financial instruments held for trading
1,506,590
63,920
300,146
317,986
86,282
2,274,924
Financial assets at fair value through profit and loss
1
-
-
6,946
-
6,947
Financial assets at fair value through other comprehensive income
(368,864)
489,747
3,761,335
6,227,630
9,753,977
19,863,825
Financial assets at amortised cost
10,616,886
12,362,673
3,247,430
5,940,665
746,221
32,913,875
10,616,886
12,362,673
3,247,430
5,940,665
746,221
32,913,875
Financial lease receivables
47,478
317,891
372,746
481,957
2,523
1,222,595
Investments in associates and subsidiares
76
-
10,892
43,569
52,668
107,205
Goodwill
418
836
3,760
20,052
25,065
50,130
Current tax assets
-
-
-
7,484
-
7,484
Deferred tax asset
3,001
6,003
27,013
144,071
-
180,089
Non current assets and other assets
21,998
37,205
201,100
969,418
462,204
1,691,926
Total assets
15,225,969
16,618,022
9,120,796
16,381,109
11,717,402
69,063,297
Liabilities
Due to banks
156,810
-
-
-
-
156,810
Derivatives and other financial instruments held for trading
498,651
-
-
-
-
498,651
Due to customers
12,140,823
3,297,766
8,163,886
18,021,889
11,059,217
52,683,581
Debt issued and borrowed funds
60,862
2,936,834
391,609
667,164
-
4,056,470
Subordinated debts
212
494,810
-
-
-
495,022
Current tax liability
-
83,963
-
-
-
83,963
Other liabilities
488,182
15,449
76,772
467,538
161,953
1,209,895
Total liabilities
13,345,539
6,828,822
8,632,268
19,156,592
11,221,170
59,184,392
Total shareholders' equity
(377,821)
-
3,253,939
3,112,351
3,890,439
9,878,905
Net position
2,258,251
9,789,200
(2,765,410)
(5,887,834)
(3,394,208)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
121
43. Risk management (continued)
43.2 Market risk (continued)
Interest rate risk (continued)
Bank
December 31, 2022
0-1 months
1-3 months
3-12 months
1-5 years
Over 5 years
Total
ASSETS
Cash and due from Central Bank
2,241,440
1,062,798
1,255,614
2,569,376
495,706
7,624,933
Due from banks
2,165,972
4,552,744
473,718
12,553
-
7,204,987
Derivatives and other financial instruments held for trading
1,903,485
69,600
189,148
28,986
146,092
2,337,311
Financial assets at fair value through profit and loss
68
136
610
3,253
4,066
8,132
Financial assets at fair value through other comprehensive income
(2,516,879)
-
1,048,581
6,203,637
8,704,257
13,439,596
Financial assets at amortised cost
12,520,589
12,190,060
2,673,232
8,042,591
2,846,513
38,272,984
12,497,424
12,190,060
2,673,232
6,694,260
1,487,303
35,542,278
23,165
-
-
1,348,331
1,359,210
2,730,706
Investments in associates and subsidiares
1,083
2,166
9,747
51,986
64,982
129,964
Goodwill
418
836
3,760
20,052
25,065
50,130
Current tax assets
-
23,563
-
-
-
23,563
Deferred tax asset
4,846
9,693
43,617
232,624
188,115
478,893
Non current assets and other assets
23,937
24,780
216,727
1,128,481
558,556
1,952,483
Total assets
16,344,960
17,936,374
5,914,755
18,293,538
13,033,352
71,522,977
Liabilities
Due to banks
636,888
-
-
-
-
636,888
Derivatives and other financial instruments held for trading
1,433,546
10,000
-
-
-
1,443,546
Due to customers
11,546,420
4,027,817
9,925,936
20,218,584
11,196,983
56,915,740
Debt issued and borrowed funds
4,337
2,968,440
-
594,485
-
3,567,262
Subordinated debts
1,801
1,236,850
-
-
-
1,238,651
Other liabilities
691,676
33,913
46,575
234,813
136,877
1,143,854
Total liabilities
14,314,668
8,277,020
9,972,511
21,047,882
11,333,860
64,945,941
Total shareholders' equity
(2,084,244)
-
1,676,269
3,104,449
3,880,562
6,577,036
Net position
4,114,536
9,659,354
(5,734,025)
(5,858,793)
(2,181,070)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
122
43. Risk management (continued)
43.2 Market risk (continued)
Interest rate risk (continued)
Bank
December 31, 2021
0-1 months
1-3 months
3-12 months
1-5 years
Over 5 years
Total
ASSETS
Cash and due from Central Bank
924,870
1,442,490
1,045,325
2,208,777
584,861
6,206,323
Due from banks
2,473,051
1,897,258
151,048
-
-
4,521,357
Derivatives and other financial instruments held for trading
1,506,590
63,920
300,146
317,986
86,282
2,274,924
Financial assets at fair value through profit and loss
0
-
-
6,947
-
6,947
Financial assets at fair value through other comprehensive income
(368,864)
489,747
3,761,335
6,227,630
9,753,977
19,863,825
Financial assets at amortised cost
10,604,353
12,212,066
3,116,306
5,509,957
741,174
32,183,856
10,604,353
12,212,066
3,116,306
5,509,957
741,174
32,183,856
Investments in associates and subsidiares
0
-
15,892
63,566
79,458
158,916
Goodwill
418
836
3,760
20,052
25,065
50,130
Current tax assets
-
-
-
7,484
-
7,484
Deferred tax asset
2,770
5,539
24,926
132,938
-
166,173
Non current assets and other assets
14,726
40,780
183,509
874,109
462,204
1,575,328
Total assets
15,157,914
16,152,636
8,602,246
15,369,446
11,733,022
67,015,263
Liabilities
Due to banks
156,810
-
-
-
-
156,810
Derivatives and other financial instruments held for trading
498,651
-
-
-
-
498,651
Due to customers
12,236,715
3,364,012
8,212,721
18,040,051
11,064,388
52,917,887
Debt issued and borrowed funds
412
2,226,665
728
2,766
-
2,230,572
Subordinated debts
212
494,810
-
-
-
495,022
Current tax liability
-
79,979
-
-
-
79,979
Other liabilities
472,075
14,451
72,279
376,246
161,953
1,097,005
Total liabilities
13,364,874
6,179,917
8,285,728
18,419,064
11,226,341
57,475,925
Total shareholders' equity
(401,601)
-
3,222,360
2,986,036
3,732,545
9,539,338
Net position
2,194,641
9,972,719
(2,905,842)
(6,035,653)
(3,225,863)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
123
43. Risk management (continued)
43.3 Liquidity risk
The liquidity risk is associated either with the difficulty of an enterprise to raise necessary funds in order to
meet commitments or with its inability to monetize a financial asset quickly and for an amount close to its
fair value.
The Group manages the exposure to the liquidity risk using a specific framework designed to manage it
both under normal day-to-day conditions and in the event of a potential liquidity crisis. The liquidity risk
management approach starts at the intraday level managing the daily payments flows, forecasting and
managing cash flows, and factoring in the access to central bank monetary policy operations and standing
facilities. It then covers a longer term perspective, comprising the maturity profile of all assets and liabilities
and the funding strategy.
The liquidity risk position, under normal conditions, is measured at consolidated level using the static
liquidity gaps indicator and the two liquidity ratios defined by CRD IV: Liquidity Coverage Ratio (LCR)
and Net Stable Funding Ratio (NSFR). Static liquidity gap is defined as the difference between the expected
future inflows and outflows related to the current transactions (no new business included), determined for
each time bucket and currency based on the contractual maturity of the transactions, considering also
embedded options (e.g. prepayment for loans, term deposits) or, for non-maturing products (the main ones
being: current accounts, fixed assets, other assets, equity, other liabilities), based on a maturity modelled
using historical client behaviour or a conventional maturity. For each budgeting and planning exercise, the
future funding needs are assessed starting from the actual liquidity position and budgeted evolution of assets
and liabilities. When a deficit is expected, funding solutions are assessed and appropriate actions are
planned.
As regards LCR and NSFR, the limits imposed by the regulation in force was respected throughout the
entire year.
The Group performs liquidity risk stress tests on a quarterly basis in order to identify and quantify its
exposures to possible liquidity stresses, analysing potential impacts on the cash flows and liquidity position.
The Group is considering 3 liquidity crisis scenarios: specific to the Group (idiosyncratic), systemic and a
combination of both. The Group maintains a liquidity buffer of unencumbered, high quality liquid assets
as an insurance against a range of liquidity stress scenarios. A contingency funding plan is designed to
protect the stakeholders’ interests and to ensure positive outcome in the event of a liquidity crisis.
The maturity structure of the Group’s and the Bank’s assets and liabilities as of December 31, 2022 and
2021 is as follows:
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
124
43. Risk management (continued)
43.3 Liquidity risk (continued)
Group
December 31, 2022
ASSETS
Cash and due from Central Bank
7,625,002
1,707,235
327,939
1,604,875
3,196,633
788,320
Due from banks
7,220,963
2,166,395
4,552,744
473,718
28,106
-
Derivatives and other financial instruments held for trading
2,343,377
1,903,485
69,600
189,148
35,052
146,092
Financial assets at fair value through profit and loss
14,262
119
238
1,070
5,705
7,131
Financial assets at fair value through other comprehensive income
13,439,596
(2,516,879)
-
1,048,581
6,203,637
8,704,257
Financial assets at amortised cost
39,019,048
1,963,208
1,958,576
6,865,686
15,646,570
12,585,008
36,288,342
1,940,042
1,958,576
6,865,686
14,298,239
11,225,798
2,730,706
23,166
-
-
1,348,331
1,359,209
Financial lease receivables
1,407,394
42,098
175,139
415,567
772,676
1,914
Investments in associates and subsidiares
113,670
698
2,166
8,593
45,829
56,385
Goodwill
50,130
418
836
3,760
20,052
25,064
Current tax assets
23,563
-
23,563
-
-
-
Deferred tax asset
496,034
4,230
8,457
38,058
202,978
242,311
Non current assets and other assets
2,088,728
49,180
5,779
237,254
1,237,958
558,557
Total assets
73,841,767
5,320,187
7,125,036
10,886,310
27,395,195
23,115,039
LIABILITIES
Due to banks
636,888
636,888
-
-
-
-
Derivatives and other financial instruments held for trading
1,443,546
1,433,546
10,000
-
-
-
Due to customers
56,660,841
11,384,251
4,003,597
9,875,954
20,200,227
11,196,812
Debt issued and borrowed funds
5,625,488
78,340
154,681
2,825,797
2,566,670
-
Subordinated debts
1,238,651
1,801
-
-
1,236,850
-
Current tax liability
5,595
-
5,595
-
-
-
Other liabilities
1,270,992
357,614
49,547
116,928
610,027
136,877
Total liabilities
66,882,001
13,892,440
4,223,420
12,818,678
24,613,773
11,333,690
Total shareholders equity
6,959,766
(2,051,618)
-
901,138
3,604,554
4,505,692
Gap
(6,520,636)
2,901,617
(2,833,507)
(823,131)
7,275,657
Cumulative gap
(6,520,636)
(3,619,020)
(6,452,526)
(7,275,658)
(0)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
125
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
126
43. Risk management (continued)
43.3 Liquidity risk (continued)
Group
December 31, 2021
ASSETS
Cash and due from Central Bank
6,206,356
1,285,982
262,591
1,170,956
2,649,013
837,814
Due from banks
4,537,941
2,473,482
1,897,258
151,048
12,553
3,600
Derivatives and other financial instruments held for trading
2,274,924
2,274,924
-
-
-
-
Financial assets at fair value through profit and loss
6,947
-
-
-
6,947
-
Financial assets at fair value through other comprehensive income
19,863,825
18,364,192
40,675
302,411
494,474
662,073
Financial assets at amortised cost
32,913,875
1,254,092
1,097,803
5,360,714
14,789,786
10,411,480
32,913,875
1,254,092
1,097,803
5,360,714
14,789,786
10,411,480
Financial lease receivables
1,222,595
38,279
85,661
372,463
722,490
3,702
Investments in associates and subsidiares
107,205
-
-
10,155
40,619
56,431
Goodwill
50,130
418
836
3,760
20,052
25,065
Current tax assets
7,484
-
-
-
7,484
-
Deferred tax asset
180,089
3,001
6,003
27,013
144,072
-
Non current assets and other assets
1,691,926
21,998
37,205
201,100
969,418
462,204
Total assets
69,063,297
25,716,367
3,428,032
7,599,620
19,856,908
12,462,369
LIABILITIES
Due to banks
156,810
156,810
-
-
-
-
Derivatives and other financial instruments held for trading
498,651
498,651
-
-
-
-
Due to customers
52,683,581
6,529,139
3,472,156
8,972,287
21,223,231
12,486,769
Debt issued and borrowed funds
4,056,470
59,359
158,761
582,177
3,256,174
-
Subordinated debts
495,022
212
-
-
-
494,810
Current tax liability
83,963
-
83,963
-
-
-
Other liabilities
1,209,895
165,220
35,184
124,648
722,890
161,953
Total liabilities
59,184,391
7,409,389
3,750,063
9,679,113
25,202,294
13,143,532
Total shareholders equity
9,878,905
(377,824)
-
3,253,939
3,112,351
3,890,439
Gap
18,684,800
(322,031)
(5,333,431)
(8,457,736)
(4,571,602)
Cumulative gap
18,684,800
18,362,769
13,029,338
4,571,602
0
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
127
43. Risk management (continued)
43.3 Liquidity risk (continued)
Bank
December 31, 2022
ASSETS
Cash and due from Central Bank
7,624,933
1,707,166
327,939
1,604,875
3,196,633
788,320
Due from banks
7,204,987
2,165,972
4,552,744
473,718
12,553
-
Derivatives and other financial instruments held for trading
2,337,311
1,903,485
69,600
189,148
28,986
146,092
Financial assets at fair value through profit and loss
8,132
68
136
610
3,253
4,066
Financial assets at fair value through other comprehensive income
13,439,596
(2,516,879)
-
1,048,581
6,203,637
8,704,257
Financial assets at amortised cost
38,272,984
1,940,992
1,901,072
6,711,969
15,140,332
12,578,619
35,542,278
1,917,827
1,901,072
6,711,969
13,792,001
11,219,408
2,730,706
23,165
-
-
1,348,331
1,359,210
Investments in associates and subsidiares
129,964
1,083
2,166
9,747
51,986
64,982
Goodwill
50,130
418
836
3,760
20,052
25,065
Current tax assets
23,563
-
23,563
-
-
-
Deferred tax asset
478,893
4,846
9,693
43,617
232,624
188,114
Non current assets and other assets
1,952,483
23,937
24,780
216,727
1,128,481
558,556
Total assets
71,522,977
5,231,089
6,912,527
10,302,752
26,018,537
23,058,071
LIABILITIES
Due to banks
636,888
636,888
-
-
-
-
Derivatives and other financial instruments held for trading
1,443,546
1,433,546
10,000
-
-
-
Due to customers
56,915,740
7,532,931
3,624,484
10,551,292
22,797,035
12,409,998
Debt issued and borrowed funds
3,567,262
4,337
-
2,226,330
1,336,595
-
Subordinated debts
1,238,651
1,801
-
-
1,236,850
-
Other liabilities
1,143,854
350,441
45,481
98,628
512,428
136,877
Total liabilities
64,945,941
9,959,943
3,679,965
12,876,250
25,882,908
12,546,875
Total shareholders equity
6,577,035
(2,084,244)
-
1,676,269
3,104,449
3,880,562
Gap
(2,644,610)
3,232,562
(4,249,767)
(2,968,821)
6,630,636
Cumulative gap
(2,644,610)
587,953
(3,661,814)
(6,630,635)
(0)
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
128
43. Risk management (continued)
43.3 Liquidity risk (continued)
Bank
December 31, 2021
ASSETS
Cash and due from Central Bank
6,206,324
1,285,948
262,592
1,170,956
2,649,013
837,815
Due from banks
4,521,357
2,473,051
1,897,258
151,048
-
-
Derivatives and other financial instruments held for trading
2,274,924
2,274,924
-
-
-
-
Financial assets at fair value through profit and loss
6,947
-
-
-
6,947
-
Financial assets at fair value through other comprehensive income
19,863,825
18,364,192
40,675
302,411
494,474
662,073
Financial assets at amortised cost
32,183,856
1,243,477
1,066,351
5,220,479
14,248,575
10,404,974
32,183,856
1,243,477
1,066,351
5,220,479
14,248,575
10,404,974
Investments in associates and subsidiares
158,916
-
-
15,892
63,566
79,458
Goodwill
50,130
418
836
3,760
20,052
25,065
Current tax assets
7,484
-
-
-
7,484
-
Deferred tax asset
166,173
2,770
5,539
24,926
132,938
-
Non current assets and other assets
1,575,328
20,390
40,780
183,509
868,445
462,204
Total assets
67,015,262
25,665,169
3,314,030
7,072,981
18,491,494
12,471,589
LIABILITIES
Due to banks
156,810
156,810
-
-
-
-
Derivatives and other financial instruments held for trading
498,651
498,651
-
-
-
-
Due to customers
52,917,887
6,626,489
3,537,427
9,021,191
21,240,830
12,491,951
Debt issued and borrowed funds
2,230,572
412
20
728
2,229,411
-
Subordinated debts
495,022
212
-
-
-
494,810
Current tax liability
79,979
-
79,979
-
-
-
Other liabilities
1,097,005
149,113
34,186
120,155
631,598
161,953
Total liabilities
57,475,925
7,431,686
3,651,612
9,142,074
24,101,838
13,148,714
Total shareholders equity
9,539,338
(375,999)
(868)
3,218,454
2,965,206
3,732,545
Gap
18,609,483
(336,714)
(5,287,548)
(8,575,551)
(4,409,670)
Cumulative gap
18,609,483
18,272,769
12,985,221
4,409,670
0
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
129
43. Risk management (continued)
43.3 Liquidity risk (continued)
Future undiscounted cash flows
The tables below summarize the maturity profile of the financial liabilities based on contractual
undiscounted repayment obligations.
Group
December 31, 2022
LIABILITIES
Due to banks
636,525
636,525
-
-
-
-
Derivatives and other financial instruments held for
trading
668,889
911,676
(15,860)
(37,841)
(158,519)
(30,567)
Due to customers
57,036,178
11,508,294
4,037,384
9,992,135
20,230,198
11,268,167
Debt issued and borrowed funds
5,862,760
84,900
165,839
2,874,005
2,687,634
50,382
Subordinated debt
1,240,452
3,602
-
-
1,236,850
-
Current tax liability
5,595
-
5,595
-
-
-
Other liabilities except for fair values of derivatives
1,209,895
165,220
35,184
124,648
722,890
161,953
Letters of guarantee granted
6,449,588
6,449,588
-
-
-
-
Financing commitments granted
6,183,371
6,183,371
-
-
-
-
Total liabilities
79,293,253
25,943,176
4,228,142
12,952,948
24,719,052
11,449,936
Group
December 31, 2021
LIABILITIES
Due to banks
156,919
156,919
-
-
-
-
Derivatives and other financial instruments held for
trading
478,743
404,600
5,296
25,531
37,758
5,559
Due to customers
52,955,145
6,558,316
3,505,892
9,085,502
21,248,979
12,556,458
Debt issued and borrowed funds
4,231,071
60,822
165,087
612,418
3,343,048
49,696
Subordinated debt
495,233
423
-
-
-
494,810
Current tax liability
83,963
-
83,963
0
0
0
Other liabilities except for fair values of derivatives
1,115,560
70,885
35,184
124,648
722,890
161,953
Letters of guarantee granted
5,427,857
5,427,857
-
-
-
-
Financing commitments granted
5,834,265
5,834,265
-
-
-
-
Total liabilities
70,778,757
18,514,087
3,795,422
9,848,099
25,352,674
13,268,476
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
130
43. Risk management (continued)
43.3 Liquidity risk (continued)
Future undiscounted cash flows (continued)
Bank
December 31, 2022
LIABILITIES
Due to banks
643,830
637,386
-
6,444
-
-
Derivatives and other financial instruments held for
trading
669,702
911,676
(15,785)
(37,674)
(157,990)
(30,525)
Due to customers
58,154,885
7,695,107
3,650,485
11,029,214
23,211,063
12,569,016
Debt issued and borrowed funds
3,644,028
8,053
-
2,263,431
1,372,545
-
Subordinated debt
1,246,896
3,602
-
6,444
1,236,850
-
Other liabilities except for fair values of derivatives
1,143,854
350,441
45,481
98,628
512,428
136,877
Letters of guarantee granted
6,451,531
6,451,531
-
-
-
-
Financing commitments granted
5,740,595
5,740,595
-
-
-
-
Total liabilities
77,695,321
21,798,390
3,680,181
13,366,487
26,174,895
12,675,368
Bank
December 31, 2021
LIABILITIES
Due to banks
156,920
156,920
-
-
-
-
Derivatives and other financial instruments held for
trading
447,834
404,461
5,040
8,008
16,869
13,456
Due to customers
53,195,328
6,655,856
3,571,214
9,135,817
21,269,135
12,563,304
Debt issued and borrowed funds
2,384,501
602
3,311
22,840
2,308,055
49,694
Subordinated debt
495,233
423
-
-
-
494,810
Current tax liability
79,979
-
79,979
-
-
-
Other liabilities except for fair values of derivatives
1,002,670
54,779
34,186
120,155
631,598
161,953
Letters of guarantee granted
5,441,448
5,441,448
-
-
-
-
Financing commitments granted
5,344,315
5,344,315
-
-
-
-
Total liabilities
68,548,229
18,058,804
3,693,730
9,286,821
24,225,657
13,283,217
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
131
43. Risk management (continued)
43.4 Operational risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes,
personnel and systems, or from external events. It includes the legal risk, the risk related to information
technology and communication and security risk, conduct risk and model risk, but excludes the strategic
risk.
The Group’s operational risk management system was developed and strengthened over the years and
allows:
Ø
identification, analysis and evaluation of operational risks, their control and follow up
Ø
applying measures meant to improve and strengthen the control framework, in order to
prevent/reduce operational risk losses
Ø
ensuring adequate capital requirements for covering exposure to operational risks.
The day to day management of operational risk is the responsibility of employees from each business unit.
The personnel have to be always aware of their responsibilities in connection with identification and
reporting of operational risks and other duties which may arise in relation with the management of
operational risks.
Operational risk management tools put in place at BRD are:
Ø
Historical operational risk losses database
Ø
Key risk indicators (KRI)
Ø
Risk and control self-assessment process (RCSA)
Ø
Scenario analysis
Ø
Managerial Supervision of processes (MS)
Ø
Fraud prevention and detection system
Ø
Committee for New Products, which ensures the assessment of operational risks associated with
new products for Banks’ clients, outsourcing of activities and significant modifications of the
existing products offered to the Bank’s clients
Ø
Crisis management and business continuity plan
Ø
Management of Information Security and IT Risk
In 2022, the operational risk strategy focused on the following axes:
Ø
Continue the enhancement of operational risk culture through new sessions of operational risk
awareness and staff training, including specific session on fraud risk, information security and
business continuity risk;
Ø
Continue the improvement of the operational risk management process and tools by adapting to the
internal and external environment.
BRD – Groupe Société Générale S.A.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the period ended December 31, 2022
(Amounts in thousands RON)
The accompanying notes are an integral part of this financial statements
132
44. Capital management
BRD Group calculates the capital requirements in accordance with Basel 3 principles, implemented in the
European Union law by the capital Directive (CRD IV - 36/2013) , Regulation (CRR – 575/2013), technical
regulatory standards and technical implementation standards issued by the European Banking Authority,
with all subsequent amendments as of date. Locally, the European requirements are also adopted through
National Bank of Romania (NBR) prudential regulations for credit institutions and investment firms: OUG
99/2006 on credit institutions and capital adequacy and NBR Regulation no. 5/2013 regarding prudential
requirements.
All CRR 2 requirements (represented by new provisions of Regulations EU 876/2019) have been
implemented starting 30.06.2021.
Group’s and Bank’s own funds comprises Tier 1 and Tier 2 capital. Two subordinated loans in total amount
of 250 million EUR (received in December 2021 and June 2022) are included as Tier 2 capital.
Tier 1 capital includes CET 1 capital, namely eligible capital, eligible reserves and other comprehensive
income less regulatory deductions.
A summary of the capital requirements indicators is presented below, in million RON:
Group
Bank
2022
2021
2022
2021
Total Tier 1 capital
6,995
6,927
6,714
6,646
Total Tier 2 capital
1,237
495
1,237
495
TOTAL OWN FUNDS
8,231
7,422
7,951
7,141
Total capital requirement
2,711
2,509
2,551
2,368
Credit risk (including counterparty risk)
31,067
28,753
29,150
27,067
Market risk
77
132
76
138
Operational risk
2,526
2,211
2,448
2,125
CVA risk
218
266
218
266
Total risk exposure amount
33,888
31,362
31,892
29,596
Regulatory CAR
24.29%
23.66%
24.93%
24.13%
Tier 1 ratio
20.64%
22.09%
21.05%
22.46%
BRD Group regulatory own funds as of December 31, 2022 amounted to 8,231 million RON (including
current year net result and the impact of quick fix adjustment), compared to 7,422 million RON as of
December 31, 2021 (including the 2021 profit net of dividends paid in amount of 896 million RON).
Note: The Regulatory CAR indicator without the impact of OCI quick fix adjustment is 21.37% (Group)
and 21.83% (Bank) as of December 31, 2022.
The Group and Bank was compliant with the capital adequacy ratios throughout the year.
Annual Board of Directors’ Report
2022
Prepared in accordance with the National Bank of Romania Order no. 27/2010, the Financial Supervisory
Authority Regulation no.5/2018, the National Bank of Romania Regulation no. 5/2013
Contains both Annual Board of Directors’ Report and Consolidated Annual Board of Directors’ Report
C
ONTENTS
1.
THE COMPANY AND ITS SHAREHOLDERS
2.
CORPORATE GOVERNANCE
3.
HUMAN RESOURCES
4.
GROUP ACTIVITY AND RESULTS
5.
RISK MANAGEMENT
6.
CAPITAL MANAGEMENT AND ADEQUACY
7.
INTERNAL CONTROL FRAMEWORK
8.
CONCLUSIONS AND PERSPECTIVES FOR 2023
9.
BOARD OF DIRECTORS’ PROPOSALS
APPENDIX 1: STATEMENT OF COMPLIANCE WITH THE PROVISIONS OF CORPORATE
GOVERNANCE CODE OF BUCHAREST STOCK EXCHANGE (BSE)
APPENDIX 2: NON-FINANCIAL STATEMENT
Note: Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
Fitch
(last rating update: January-2023*)
Rating
Foreign-Currency Short-Term Issuer Default Rating
F2
Foreign-Currency Long-Term Issuer Default Rating
BBB+
Moody's
(last rating update: September-2022**)
Rating
Domestic Currency Short-Term Deposit
Prime-2
Domestic Currency Long-Term Deposit
Baa1
Foreign Currency Short-Term Deposit
Prime-2
Foreign Currency Long-Term Deposit
Baa1
1. T
HE COMPANY AND ITS SHAREHOLDERS
BRD
–
G
ROUPE
S
OCIÉTÉ
G
ÉNÉRALE PROFILE
BRD - Groupe Société Générale (“BRD” or “the Bank”) was set up on December 1
st
, 1990 as an
independent bank with the legal status of a joint-stock company and with the share capital mainly held by
the Romanian State, by taking over the assets and liabilities of Banca de Investitii (the Investment Bank).
In March 1999, Société Générale (“SG”) bought a stake representing 51% of the share capital, increasing
its holding to 58.32% in 2004, through the acquisition of the residual stake from the Romanian State. As at
December 31, 2022, SG was holding 60.17% of the share capital.
Starting 2001, BRD-Groupe Société Générale operates as an open joint-stock company, admitted to trading
on a regulated market, according to the companies’ legislation, banking legislation, capital market
regulations, provisions of the Articles of Incorporation and other internal regulations.
BRD identification data are the following:
Ø
Head Office:
Ø
Phone/Fax:
021.3016100 / 021.3016800
Ø
Sole registration number with the Trade Registry:
361579/10.12.1992
Ø
Fiscal Code:
RO 361579/10.12.1992
Ø
Order number with the Trade Registry:
Ø
Number and date of registration in the Credit Institutions Register:
RB - PJR - 40 –
007/18.02.1999
Ø
Share capital subscribed and paid:
Ø
Regulated market on which the issued securities are traded:
Premium Tier
Ø
The main characteristics of securities issued by the company:
ordinary shares with a nominal
value of 1 RON
E
XTERNAL RATING
As at December 31, 2022, the Bank had the following ratings:
* Fitch affirmed LT IDR at 'BBB+' with Negative Outlook
** Moody's affirmed Bank’s LT and ST foreign currency deposit rating to Baa1/Prime -2 with stable outlook
BRD
G
ROUP
(„G
ROUP
”)
-
-
-
-
S
OCIÉTÉ
G
ÉNÉRALE PROFILE
Société Générale was set up in 1864 as a banking company, registered in France. Its registered office is
located on 29 Boulevard Haussmann, 75009, Paris, France, and its shares are listed on the Paris Stock
Exchange.
Société Générale is one of the largest European financial services groups. Based on a diversified integrated
banking model, the Group combines financial strength and proven expertise in innovation with a strategy
of sustainable growth, and aims to be the trusted partner for its clients, committed to the positive
transformations of the world.
Active in the real economy for over 150 years, with a solid position in Europe and connected to the rest of
the world, Societe Generale has over 117,000 members of staff in 66 countries and supports on a daily
basis 25 million individual clients, businesses and institutional investors around the world by offering a wide
range of advisory services and tailored financial solutions. The Group is built on three complementary core
businesses:
Ø
French Retail Banking
which encompasses the Societe Generale, Crédit du Nord and Boursorama
brands, each offering a full range of financial services with omnichannel products at the cutting
edge of digital innovation;
Ø
International Retail Banking, Insurance and Financial Services
with a presence in emerging
economies and leading specialised businesses;
Ø
Global Banking and Investors Solutions,
which offers recognised expertise, key international
locations and integrated solutions.
The latest credit ratings of Société Générale are available at
https://investors.societegenerale.com/en/financial-and-non-financial -information/ratings/credit-ratings
BRD
S
OCIÉTÉ
G
ÉNÉRALE
SG has been present in Romania since 1980, being the only significant bank from Western Europe that
was present in Romania during the communist era.
In 1999, it takes part in the process of privatization of Banca Romana pentru Dezvoltare and acquires 51%
of the Bank’s share capital.
Starting with this period, BRD lined up its operational procedures and business practices to those of the
parent company.
BRD is part of the international network of Société Générale, managed by the International Retail Banking
and Financial Services division (IBFS) that aims to offer a broad range of products and services to
individuals, professionals and corporates. International Retail Banking operations, Insurance and Financial
Services are building their networks in Africa, Central and Eastern Europe. The specialized equipment
finance and vehicle leasing and fleet management businesses are leaders in Europe and worldwide in their
markets.
KEY
FIGURES
*
CAR
BRD
Starting with January 15
th
, 2001, the Bank’s shares are listed in the Premium category of the Bucharest
Stock Exchange. The shares are included in the BET, BET Plus, BET-XT, BET-XT-TR , BET-BK , BET-TR
and ROTX indexes. The Bank’s shares are ordinary, nominative, dematerialized and indivisible. According
to the Articles of Incorporation, article 17, letter k, the shares of the Bank are traded freely on those capital
markets set by General Shareholders Meeting („AGA”), while complying with the legislation on the trade of
shares issued by bank institutions.
The closing price for BRD share as at December 31, 2022, was of RON 13.00 /share (RON 17.70 /share
at December 31, 2021). On the same date, the market capitalization was RON 9,059.72 million (RON
12,335.16 million at December 31, 2021).
During January – December 2022, neither the Bank, nor its subsidiaries bought back own shares.
As of December 31, 2022 neither the Bank, nor its subsidiaries held own shares.
Evolution of BRD’s share price versus the BET Index and BRD’s volume of shares for the period
December 31, 2014 – December 31, 2022
Source: Bloomberg
D
IVIDENDS
According to the Romanian legislation and the Articles of Incorporation, dividends are paid from the funds
created for this purpose after the approval of the General Shareholders Meeting, within maximum 6 months
from the date of the General Shareholders Meeting for deciding the dividends. In case the General
Shareholders Meeting does not establish the date when dividends are paid, these shall be paid in 30 days
from the date when the decision of the General Shareholders Meeting to establish dividends has been
published in the Official Gazette of Romania, Part IV.
The distribution of dividends is made according to the General Shareholders Meeting’ decision, upon the
Board of Directors’ proposal and depends on the distributable profit and of the future capitalization needs
of the Bank.
The change in the volume of approved and distributed dividends for the last three years is presented below:
*
The BRD’s General Assembly of Shareholders (OGSM) on February 24, 2022 approved as an exceptional
payment, the distribution in the form of dividends of the amount of 1,683,992,828 lei from the result carried
forward for 2019 and 2020. The proposed gross dividend was 2.4164 lei / share. The proposed distribution
rate was 70% of the profit for 2019 and 2020 (including the already distributed amount of 52,197,924 lei).
For the financial year 2021, the OGSM on April 28, 2022 approved a payment of a dividend of 1.2850 RON
per share, corresponding to a payout ratio of 70% of the 2021 net profit of the Bank.
The number of shares remained unchanged in the last 3 years.
D
IVIDEND PAYMENT
The dividends are distributed to the shareholders proportionally to their participation in the share capital.
The dividend income is subject to withholding tax.
Dividends are paid in accordance with the legal provisions and the General Shareholders Meeting’s
resolution regarding profit distribution, dividend setting and the dividend payment procedure made available
to the shareholders on the Bank's website.
Unclaimed dividends are prescribed within 3 years from the payment start date, according to legal
provisions.
R
ESEARCH AND DEVELOPMENT ACTIVITIES
There are no development and research activities performed by the Bank or by the Group.
2.
CORPORATE GOVERNANCE
The BRD-Groupe Société Générale S.A.’s Corporate Governance Model is aligned with that of the parent
company, Société Générale.
The Corporate Governance Model adopted by BRD ensures:
Ø
prerogatives;
Ø
Ø
well as its responsibility of supervising the activity of the Executive Committee;
Ø
of the relevant financial and operational information.
Constantly concerned by the principles of corporate governance, BRD - Groupe Société Générale has
adopted and applied the provisions of Corporate Governance Code of the Bucharest Stock Exchange
(BSE) since 2012. “The statement of compliance with the provisions of Corporate Governance Code of the
BSE as of December 31, 2022” is presented in Appendix 1.
BRD-Groupe Société Générale has its own Corporate Governance Code available to the interested parties
on institutional site in section:
https://www.brd.ro/en/about-brd/shareholders -and-investors/corporate-
governance
.
The corporate governance of BRD-Groupe Société Générale represents an ongoing process in which
integrity, responsibility and transparency are fundamental elements in making correct decisions and setting
goals that contribute to increasing the confidence of shareholders in the company, economic efficiency,
sustainable growth and financial stability.
As at December 31, 2022, Société Générale is the only significant shareholder of the Bank, holding
60.1683% of the share capital.
T
HE
G
ENERAL
S
HAREHOLDERS
M
EETING
The general shareholders meetings are an occasion for the members of the Board of Directors and the
senior management to present to the shareholders the results obtained during their office, based on the
responsibilities entrusted to them.
General shareholders meetings are ordinary and extraordinary. The Ordinary General Shareholders
Meeting is held at least once a year, within no more than 4 months from the end of the financial year, and
the Extraordinary General Shareholders Meeting is held whenever necessary.
The Bank makes the best efforts, in compliance with the legal provisions in the field, to facilitate the
shareholders’ participation at the works of the General Shareholders Meetings, as well as the full exercise
of their rights.
The Ordinary General Shareholders Meeting decides on: the annual financial statements (based on the
reports presented by the Board of Directors and by the financial auditor), the dividend, election/ revocation
of the members of the Board of Directors and of the financial auditor, fixing the minimum duration of the
financial audit contract, the remuneration due to the members of the Board of Directors for the current
financial year, the budget and the business plan for the following financial year.
The Extraordinary General Shareholders Meeting decides on: change of the company duration, increase,
decrease or completion of the share capital by issuance of new shares, change of the headquarters, merger
or division, early dissolution of the Bank, issuance of bonds, conversion of a category of bonds into another
category or into shares, approval by the Bank executive officers’ of the legal papers regarding the
acquisition, alienation, rental, change or transformation into collaterals of the assets in the Bank's
patrimony, the value of which exceeds the limits set forth by the applicable laws, designation of the capital
markets on which the Bank’s shares will be listed and traded, change of the main activity area and main
activity.
The decisions on the amendment of the Articles of Incorporation shall be adopted in accordance with the
principles of competence laid down in the Articles of Incorporation of the Bank.
In order to ensure equal treatment and full and equitable exercise of the shareholders’ rights, the Bank
makes available to them all the information related to the General Shareholders Meeting and to the adopted
decisions, both by mass communication means and in the special section on its own Internet page
(
www.brd.ro
).
The procedures regarding the works of the General Shareholders Meeting are available to shareholders
and other interested parties on the institutional site in section
https://www.brd.ro/en/about-brd/investors-
and-shareholders/gsm-brd/procedure-organizing-and-running-gsm
.
Within the General Shareholders Meeting, dialogue between the shareholders and the members of the
Board of Directors and/or executive management is encouraged. Each shareholder can ask the directors
questions regarding the activity of the Bank.
In 2022, there were three General Shareholders Meetings (two Ordinary General Shareholders Meetings
on February 24, 2022 and April 28, 2022 and one Extraordinary General Shareholders Meeting on April 28,
2022).
A
DMINISTRATION AND MANAGEMENT OF THE BANK
BRD - Groupe Société Générale adopted a unitary management system that is fully consistent with the
principles of good corporate governance, transparency of relevant corporate information, protection of
shareholders and of other categories of concerned persons (stakeholders), as well as of an efficient
operation on the banking market.
The management body, the Board of Directors and the Executive Officers (acting together in the Executive
Committee), operate under rules of organization and functioning clearly defined in the "Directive on the
organization and functioning of the Management Body".
The Management Body promotes high ethical and professional standards and a strong internal control
culture.
The Board of Directors annually assesses the adequacy of the Management Body and its members based
on the reports of the Nomination Committee, prepared in accordance with "The policy of suitability of the
members of the Management Body and persons holding key functions and the policy of induction and
training of the members of the Management Body".
The composition, the size and the skills of the Management Body are well suited for the dimension and the
complexity of the Bank's activity.
The members of the Management Body meet the eligibility conditions and criteria established in the "The
policy of suitability of the members of the Management Body and persons holding key functions and the
policy of induction and training of the members of the Management Body", required for an efficient
administration/management of BRD-Groupe Société Générale:
Ø
with the rules of prudent and healthy banking practices;
Ø
nature, extent and complexity of the banking business and of the entrusted responsibilities, as well
as experience in a management position, acquired in an entity comparable, in terms of size and
activity, to the Bank;
Ø
highly performing administration of the Bank's activity;
Ø
Ø
the statutory bodies.
The selection of candidates for positions within the Management Body is made through a rigorous process
as defined in "The policy of suitability of the members of the Management Body and persons holding key
functions and the policy of induction and training of the members of the Management Body".
The main objective of the selection process is to ensure the suitable candidates for the vacant positions in
the Management Body or to ensure the succession of the existing members.
The selection of the candidates excludes any discrimination on gender, age, ethnicity or any other kind of
discrimination, stipulated by the law.
Criteria such as reputation, theoretical knowledge and practical professional experience in specific areas
of BRD's activities, diversity, ensure a suitable structure of the Management Body.
The Bank recognizes and supports the benefits of the diversity of the members of the Management Body
and considers that it is an essential element in protecting and extending the competitive advantage
considering that, through diversity, maximum efficiency and performance, increasing innovation and
cooperation will be achieved within the Management Body, as well as within the Bank.
In this context, from the moment of the selection process, the aim must be to ensure diversity within the
Management Body from the perspective of educational and professional skills, competencies, ensuring that
the decision-making process of the Management Body is not dominated by any person or small group of
people, in a way that is detrimental to the Bank's interests.
Gender diversity, age and geographical origin are important elements, as they determine different
developments in terms of understanding cultural values, specific aspects of the financial-banking sector
and legislative framework that has an impact on the activity, so as to consciously facilitate the decisional
process regarding the Bank's strategy. The parameters mentioned above must be taken into account in
determining the best component of the Management Body.
In order to ensure diversity within the Management Body and to achieve the established target regarding
the representation of the under-represented gender, the Nomination Committee considers the following
actions:
●
●
●
●
The principle of diversity aims to achieve the goal of gender representation, male or female, poorly
represented. In this sense, the policy also aims to ensure equal opportunities for selection within the
Management Body based on their qualifications and professional experience. In the process of selecting
the members of the Management Body, all candidates will be evaluated based on the same criteria,
regardless of their gender.
Educational and professional training is another important element in order to achieve the diversity of the
Management Body, including from the perspective of collectively understanding all procedural, economic,
legal, financial, risk aspects etc.
In this sense, the existence of balance is pursued so that the members of the Management Body have
theoretical knowledge and practical experience regarding:
●
●
●
implementation;
●
risk, including previous activity / responsibilities in this regard);
●
●
supervision and control mechanisms;
●
on this information and appropriate controls and measures.
The selection of independent directors is subject to compliance with the criteria stipulated by the
Companies' Law no. 31/1990, the NBR Regulation no. 5/2013 on prudential requirements for credit
institutions and by the Bucharest Stock Exchange Code of Corporate Governance.
The exercise of the responsibilities by members of the Management Body is subject to obtaining NBR
approval.
B
OARD OF DIRECTORS
Starting with April 18, 2015, the Board of Directors is composed of 9 members, elected by the General
Assembly of the Shareholders for a 4-year mandate.
The structure of the Board of Directors ensures a balance between executive and non-executive members,
so that no person or limited group of persons can dominate, in general, the decision-making process of the
Board of Directors.
As at December 31, 2022, the Board of Directors includes 3 independent members.
The year 2022 brought changes to the composition of the Board of Directors, as follows:
ü
mandates of Mr. Francois BLOCH as director, for a 4-years period, starting with June 29, 2022 and Mr.
Giovanni Luca SOMA mandate as director, for a 4-years period, starting with October 24, 2022;
ü
of Directors, starting with June 9, 2022;
ü
- the nomination of Mrs. Veronique SCHREIBER LOCTIN, as Interim Member of the Board
Directors of BRD - Groupe Societe Generale S.A. until the first Ordinary General Shareholders
Meeting is held, on the vacant position existent in the Board, following Mrs. Maria Koytcheva
ROUSSEVA’s renunciation to her mandate. At the end of 2022, NBR approved Mrs. Veronique
SCHREIBER LOCTIN nomination as Interim Members of the Board of Directors and her
mandate entered in force starting with January 5, 2023.
- the re-election of Giovanni Luca SOMA as Chairman of the Board of Directors, starting with
October 24, 2022, for 4 years.
Also, pursuant the provisions of NBR Regulation no. 5/2013 on prudential requirements for credit
institutions and EBA Guidelines, the Board of Directors decided on December 7, 2022 to review the
structure of the Committees set up in its support.
MEMBERS
OF
THE
BOARD
OF
DIRECTORS
AS
AT
DECEMBER
31,
2022
Giovanni Luca SOMA
Chairman of the Board of Directors
Member of the Remuneration Committee,
Member of the Audit Committee
Date of birth: August 21, 1960;
Year of the appointment in BRD-Groupe Société
Générale’s Board of Directors: 2014;
Since May 26, 2015, he is Chairman of the Board of
Directors of BRD-Groupe Société Générale;
Latest renewal of the mandate: 2022;
Term of mandate expires in: 2026;
He has no shares in BRD-Groupe Société Générale’s
capital.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates in companies established by the applicable law - he holds one executive mandate and one
non-executive mandate within Société Générale Group.
Biography
He is a graduate of Business Administration, LUISS University in Rome and holds a Master's degree
in Business Administration from the Turin School of Business Administration, an Auditor Diploma and
an Expert Accounting Diploma from the Rome University.
During his career, he acquired a significant expertise in top management positions outside Société
Générale Group (as Head of European Sales and Services for Hyperion Software Group, Managing
Director of GE Capital Insurance Milan, Corporate Sales Director Italy of GE Capital Milan, CEO of Dial
Italy, a subsidiary of Barclays Group, CEO of Hertz Lease Italy, Chairman of the Italian Automobile
Rental Association). Within Société Générale Group, he held the following management positions:
Group Regional Director of ALD Automotive Group - France, Chief Executive Officer of ALD
International, Head of Société Générale Consumer Finance and Operational Vehicle Leasing and Fleet
Management.
Giovanni Luca Soma is currently Head of International Retail Banking for Europe, member of the SG
Group Management Committee.
Jean – Pierre Georges VIGROUX
Independent member of the Board of Directors
Chairman of the Audit Committee
Member of the Remuneration Committee
Date of birth: 31 July 1953;
Year of the appointment in the BRD-Groupe Société
Générale’s Board of Directors: 2016;
Latest renewal of the mandate: 2020;
Term of mandate expires in: 2024;
He has 27,828
shares in BRD-Groupe Société
Générale’s capital.
Information on mandates held
According to the information provided through the statement of affiliation, he fulfils the conditions
regarding the number of mandates established by the law - two non-executive mandates: he holds one
within BRD-Groupe Société Générale and one outside the Société Générale Group.
He is also member of the Management Board of ‘’Fundatia 9’’.
Biography
He graduated ESSEC France. He also studied Financial Audit at the CAFR University.
Until September 2014, Mr. Jean – Pierre Georges Vigroux held various management positions such
as: CEO Mazars Romania (2008-2014), partner responsible for Southeast Europe, Chairman of the
Supervisory Board of Pricewaterhouse Coopers Central and Eastern Europe (2001 -2004 and 2004-
2006), founder and CEO of the Pricewaterhouse Coopers – Romania, member of the Pricewaterhouse
Coopers’s Executive Committee and Board of Directors – Central and Oriental Europe (1996-2001),
Chairman of FIC (2003-2004).
Benoît Jean Marie OTTENWAELTER
Member of the Board of Directors
Chairman of Risk Management Committee
Date of birth: December 28, 1954;
Year of the appointment in the BRD-Groupe
Société Générale’s Board of Directors: 2017;
Latest renewal of the mandate: 2021;
Term of mandate expires in: 2025;
He has no shares in BRD-Groupe Société
Générale’s capital.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law - he holds one non-executive mandate within Société Générale
Group.
Biography
He graduated the “French Ecole Polytechnique” and the “French Ecole Nationale de la Statistique et
de l’Administration Economique (ENSAE)”. He has a vast experience acquired within Groupe Société
Générale, over 34 years, in areas such as risk management, capital markets and treasury and in
interaction with the international banking regulators.
During his career, he held top management positions such as: Group Chief Risk Officer, Member of
the Executive Committee at Société Générale Group (2009-June 2016), Deputy then Co-Head of the
Corporates, Institutions and Advisory Division, Member of the Group Management Committee at
Société Générale Corporate and Investment Banking Paris (2004-2009), Head of Fixed Income,
Currencies and Commodities Division of Société Générale Corporate and Investment Banking Paris
(2001-2004), Deputy Head then Head of Treasury and Foreign Exchange of Société Générale Capital
Markets Division Paris (1994-2000), Chief Administrative and Financial Officer then Head of
Derivatives Department of Société Générale Strauss Turnbull London (1990-1994), Back-office
manager in Société Générale Paris (1988-1990).
Other positions occupied: within the French Ministry Of Economy And Finance (1979 -1988), Professor
of Statistics and Econometrics, Director of Graduate Studies at Ecole Nationale de la Statistique et de
l’Administration Economique (1985-1988), Economic Forecaster at INSEE - French National Statistical
Office (1981-1985), Researcher in Econometrics, Research Unit at INSEE - French National Statistical
Office (1979-1981).
François BLOCH
Executive Member of the Board of Directors
Date of birth: March 31, 1967;
Year of the appointment in the BRD-Groupe Société
Générale’s Board of Directors: 2018;
Latest renewal of the mandate: 2022;
Term of mandate expires in: 2026;
He has no shares in BRD-Groupe Société Générale's
capital.
Information on mandates held
According to the information provided through the statement of affiliation, he fulfils the conditions
regarding the number of mandates in companies established by the applicable law - he holds one
executive mandate and one non-executive mandate within Société Générale Group.
He is also member of the Board of Directors of Council of Banking Employers in Romania and
Treasurer, member of the Board of Directors of Foreign Investors Council and co-coordinator of
Financial Services and Technology and Innovation Task Forces.
He was member of the Board of Directors of Romanian Banking Association until May 27, 2021.
Biography
He is bachelor of the Ecole Nationale de la Statistique et de l'Administration Economique, Paris, in
1990. Mr. François Bloch made his entire career within Société Générale and he held the following
positions: Broker, then Head of the brokerage department on derivatives markets of Société Générale
Elsässische Bank, Frankfurt (1990-1993); Deputy Head, then Head of the SG's subsidiary, FIMAT
Banque, Zweigniederlassung Frankfurt (1993 -1997); Deputy Head of Risks, then Head of Risks,
FIMAT International Banque Paris (1997-2000); General Manager, FIMAT USA Inc. (2000-2002);
Deputy Chief Executive Officer - Member of the Board of Directors, FIMAT International Banque (2002-
2007); Head of Strategy and Integration, Newedge (2008-2009) and Non-executive Member of the
Board of Directors, Newedge Group (brokerage subsidiary of Société Générale) (2010-2012); Head of
Credit Risk on Financial Institutions and Country Risks department, Société Générale (2009-2012).
Between 2012 and the end of October 2016 he has held the positions of First Vice-President, then First
Deputy Chairman of the Management Board, Member of the Management Board, and until July 2017,
Member of the Board of Directors, Rosbank PAO.
Between 2012 and 2016 he exercised also the following directorships in Société Générale Group:
Member of the Board of Directors, LLC Rusfinance Bank (subsidiary of Rosbank, specialized in car
and point of sales financing), Member of the Board of Directors, Commercial Bank Deltacredit Joint
Stock Company (subsidiary of Rosbank, specialized in mortgage loans), Member of the Board of
Directors, Société Générale Strakhovanie (subsidiary of Société Générale, non - life insurance),
Member of the Board of Directors, Société Générale Strakhovanie Zhizni (subsidiary of Société
Générale, life insurance).
Since December 21, 2016, he holds the position of CEO of BRD - Groupe Société Générale SA.
Since July 1, 2017, he is member of the Société Générale Group Management Committee.
Also, Mr. François Bloch is BRD’s Compliance Officer, person responsible for coordinating the
implementation of internal policies and procedures for the application of ''Law No. 129/2019 for the
prevention and combating of money laundering and terrorist financing'' and of the ''NBR Regulation no.
2/2019 on preventing and combating money laundering and terrorism financing''.
Liliana IONESCU – FELEAGA
Independent Member of the Board of Directors
Chairman of the Remuneration Committee
Member of the Audit Committee
Member of the Nomination Committee
Date of birth: October 31, 1969;
Term of mandate as interim independent member of
BRD-Groupe Société Générale’s Board of Directors;
December 20, 2018 – April 18, 2019;
Year of the appointment as Independent member of
BRD-Groupe Société Générale’s Board of Directors:
2019;
Term of mandate as Independent member expires in:
2023;
She has no shares in BRD-Groupe Société
Générale's capital.
Information on mandates held
According to the information provided through the statement of affiliation, she fulfils the conditions
regarding the number of mandates established by the law - one non-executive mandate within BRD-
Groupe Société Générale.
She is also member of ASE’s Board of Directors and Member of the Board of Directors and Vice-
President of Romanian Chamber of Financial Auditors.
Biography
She graduated from the Bucharest University of Economic Studies, Finance and Accounting (ASE).
Starting 2003 she is University Professor Doctor and starting 2005, she is PhD supervisor. She has
also an International Management Degree obtained at Toulouse University.
She has a vast academic experience (over 29 years in Bucharest University of Economic Studies -
ASE). Currently Mrs. Feleaga is Dean of Accounting and Management Information Systems Faculty,
member of the ASE’s Board of Directors, member of Chamber of Financial Auditors of Romania,
Member of International Association for Accounting Education and Research.
Bogdan-Alexandru DRĂGOI
Independent Member of the Board of Directors
Chairman of the Nomination Committee
Member of the Risk Management Committee
Date of birth: May 27, 1980;
Year of the appointment in the BRD-Groupe Société
Générale’s Board of Directors: 2019;
Term of mandate expires in: 2023;
He has no shares in BRD-Groupe Société Générale's
capital.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law – he holds one executive mandate outside Société Générale Group
and two non-executive mandates – one within BRD-Groupe Société Générale and one outside Société
Générale Group.
Biography
He graduated from the Tufts University, Fletcher, Boston, Massachusetts, specialization International
Relations and Economics, graduated Magna cum Laudae. Is member of Golden Key Honor Society,
has Order of the Star of Romania – rank of Knight and Sovereign Order of the Knights of Malta –
Mare Cruce pro Merito Melitensi.
He has 20 years’ experience in areas such as finance, capital market and banks. He has also
experience in relation with public state authorities.
Currently, he is Chairman of the Board of Directors of SIF Banat - Crișana (starting March 2015) and
CEO (starting July 2015).
Through his previous positions, he acquired experience and expertise in different areas of activity
(Presidential Adviser – The Administration of the President of Romania, May 2012 - December 2014;
Ministry of Public Finance, February 2012 - May 2012; Secretary of State – Ministry of Public Finance,
January 2009 - February 2012; CEC Bank – Member of the Board, April 2009 - February 2012;
EximBank – President of Interministerial Committee for Financing, Warranties and Insurance (CIFGA),
January 2009 - February 2012; Fondul Proprietatea – Member of the committee for selecting the
manager of Fondul Proprietatea, March 2008 - October 2009; President of the Committee of the
representatives of Fondul Proprietatea SA, September 2010 - February 2012; European Investment
Bank – Member of the Board, January 2009 - February 2012; Council of Europe Development Bank –
Member of the Board, January 2009 – February 2012; General Director, Economic Dept. – Bucharest
Municipality, November 2007 - June 2008 etc.).
Valerie Marcelle Paule VILLAFRANCA
Member of the Board of Directors
Member of Nomination Committee
Date of birth: July 1, 1970;
Year of the appointment as member of BRD-
Groupe Société Générale’s Board of Directors:
2020;
Term of mandate expires in: 2024;
She has no shares in BRD-Groupe Société
Générale's capital.
Information on mandates held
According to the information provided through the statement of affiliation, she fulfils the conditions
regarding the number of mandates established by the law - one non-executive mandate within BRD-
Groupe Société Générale.
Biography
She graduated Classe préparatoire aux grandes écoles, Lycée du Parc, Lyon (France) and has a
Master degree in Finance from Paris IX Dauphine University and another Master in business
administration with a specialization in Finance from Bordeaux Business School.
She has an experience of 27 years as strategy and business consultant of which 24 years in top
management positions such as Director - Head of Risk and Compliance practice for WESA region -
Western Europe, South America and Africa in Boston Consulting Group (01/03/2014–17/03/2018),
Managing Director - EMEA (Europe, Middle East and Africa) Head of Risk Management practice in
Accenture (01/10/2010–28/02/2014), Managing Director - Founder and Global Head of Aon
(01/05/2006–30/09/2010), Senior Manager in the Risk Management Practice of Ernst & Young, Paris
(01/05/2002–31/03/2006), Manager in the Risk Management practice of Arthur Andersen, Paris
(01/09/2000–30/04/2002), Manager in the business consulting practice - Head of Treasury services of
Arthur Andersen, Paris (01/09/1998–31/08/2000).
Currently she is Group Head KYC Transformation, CPLE/KTP Société Générale.
Aurore Brigitte Micheline GASPAR
Member of the Board of Directors
Member of the Risk Management
Committee
1
Date of birth: October 27, 1978;
Year of the appointment as member of BRD-Groupe
Société Générale’s Board of Directors: 2021;
Term of mandate expires in: 2025;
She has no shares in BRD-Groupe Société Générale's
capital.
Information on mandates held
According to the information provided through the statement of affiliation, she fulfils the conditions
regarding the number of mandates established by the law - one executive mandate and one non-
executive mandate within Société Générale Group.
Biography
She has a master’s degree from EM Lyon, specialization Finance, Accounting, Economy, marketing.
She has 20 years experience in banking field over which 13 years in management positions such as:
Managing Director, General Inspection of Société Générale (January 2009 to February 2012), Deputy
Head of Payment and Cash Management department delivering services to corporate clients from
professionals to large corporates of Société Générale (February 2012 to June 2013), Chief of staff of
1
Since December 7, 2022
2 Deputy CEO of Société Générale (June 2013 to April 2016), Deputy CEO – SG Equipment Finance
US (April 2016 to November 2017), Deputy CEO – Boursorama - subsidiary of Société Générale and
the 1
st
Since January 3
rd
, 2022, she is Deputy Head of French Retail Banking, member of the Group Société
Générale Management Committee. Also, she is Member of the Board of Directors of Sogecap
(subsidiary of Société Générale, specialized in insurance) and Shine.
A
TTRIBUTIONS AND RESPONSIBILITIES OF THE
B
OARD OF
D
IRECTORS
The main competences of the Board of Directors, including those that cannot be delegated to members of
the executive management, are set by law, by the Articles of Incorporation, Internal Regulations of the
Bank, the “Directive on the management of approval of limits for loans and commitments”, and also by the
Directive ‘’Regulation of organization and functioning of the Management Body’’. In cases permitted by the
law, the General Shareholders Meeting may delegate other attributions to the Board of Directors as well.
The Board of Directors sets the main business and development directions of the Bank and supervises the
activity of the Bank and of the executive management, and also has the ultimate responsibility for the
operations and the financial strength of the Bank. The Board of Directors decides on the accounting and
financial control systems and approves the financial planning.
The Board of Directors approves the Bank’s business and risks management strategy, and makes sure
that the activity of the executive management complies with the approved strategy and policies.
The Board of Directors approves the organisational structure of the Bank, the risk management policy, the
general remuneration policy of the employees, directors and officers of the Bank.
M
EETINGS OF THE
B
OARD OF
D
IRECTORS
The Board of Directors meets whenever necessary, but at least once every 3 months.
The notices of the Board of Directors’ meetings specify the place, date and the draft agenda for the meeting,
and no decision can be made regarding unexpected issues, except for emergency cases and provided they
are ratified by the absent members at the next meeting.
Minutes are drafted for each meeting and include the names of the participants, the order of the
deliberations, the decisions made, the number of votes cast and the separate opinions.
On February 10, 2016, Mrs. Flavia Popa – Corporate Secretary was nominated as Secretary of the Board
of Directors.
A
CTIVITY OF THE
B
OARD OF
D
IRECTORS IN
2022
In 2022, 31 meetings of the Board of Directors took place, and the decisions of the Board were generally
made with unanimity of votes.
The Directors attended to the Board of Directors' meetings as follows:
Ø
Benoît Jean Marie Ottenwaelter (Member), Mr. Jean-Pierre Georges Vigroux (Independent
Member), Mrs. Liliana Feleaga (Independent Member), Mrs. Valerie Marcelle Paule Villafranca
(Member) and Mrs. Aurore Brigitte Micheline GASPAR
(Membru)
attended to all the Board's
meetings (31);
Ø
Ø
renunciation to the mandate (15 Board's meetings).
On the Board of Directors’ agenda, the following subjects were included: the financial statements, 2021
Sustainability Report, Audit Plan for 2022, Financial Markets Compliance Report for 2021 and the control
plan for 2022, the report regarding the internal control for 2021, approval of the Liquidity Risk Management
Framework, Remuneration Policy, 2025 BRD Strategy (Horizons 2025), Risks’ assessment for 2022, Risk
Appetite Framework, Risk Appetite Statement, Business and Risks Management Strategy for 2022-2024,
Internal Capital and Liquidity Adequacy Assessment Process (ICLAAP), Report on Transparency and
Disclosure Requirements, Annual Report of Compliance Function for 2021 and Strategy for 2022-2023,
BRD Contribution to Société Générale Group Recovery Plan 2022, the main axes for the Bank's
transformation, changes in the Bank's management body, annual reports on adequacy of the members of
the management body and the key functions, changes in the structure of the committees set up to support
the activity of the Board of Directors, modifications in internal regulations in its specific power, changes in
the organizational structure, calls of the shareholders' meetings organized in 2022 and all the notes related
to the items on the agenda, changes of the secondary object of activity, quarterly compliance reports,
Interest Rate Risk Management Policy outside the trading book, the action plan related to the review of the
Non-Retail Early Warning System (EWS), the action plan related to the review of the Credit Conversion
Factor (CCF) used in for IFRS 9, 2021 Safeguarding Annual Activity Report- MiFID 2.
During its meetings, the Board of Directors is regularly updated on the economic, monetary and financial
environment, on the evolution of the regulations in force, Bank's financial and commercial results, significant
risks, on the main events that took place within BRD and on the activity of committees set up to support the
activity of the Board of Directors: the Audit Committee, Risks Management Committee, Nomination
Committee and Remuneration Committee.
C
OMMITTEES SET UP IN SUPPORT OF THE BOARD OF DIRECTORS
In order to develop and maintain good practices of business administration, the Board of Directors set up
four committees that assist it in performing its attributions. The structure, the organisation and operation
rules as well as the attributions of these committees are set and defined in the Committee Directive set up
to support the Board of Directors.
A
UDIT
C
OMMITTEE
As at December 31, 2022, the Audit Committee consisted of 3 non-executive directors, of which 2 are
independent. The members of the Audit Committee were: Mr. Jean-Pierre Georges Vigroux (Independent
Chairman), Giovanni Luca Soma (Member) and Liliana Ionescu - Feleaga (Independent Member).
The members of the Audit Committee have the experience required for their specific attributions within the
committee.
The Audit Committee meets on a quarterly basis or whenever necessary.
The Audit Committee assists the Board of Directors in performing its responsibilities in terms of internal
control and financial audit. To this effect, the Audit Committee makes recommendations to the Board of
Directors regarding the strategy and policy of the credit institution in the field of internal control and financial
audit. The Audit Committee’s responsibilities are presented in the Bank's Corporate Governance Code
available to the interested parties on institutional site in section:
https://www.brd.ro/en/about-
brd/shareholders-and-investors/corporate-governance
.
In 2022, 9 meetings of the Audit Committee took place, in which there were analysed the activity and reports
of internal control and conformity, internal audit and external audit. The attendance was of 100%.
After each meeting, minutes were drafted, specifying the aspects that required improvements, as well as
recommendations for their application.
R
EMUNERATION
C
OMMITTEE
As at December 31, 2022, the Committee consisted of 3 non-executive directors, of which 2 are
independent directors. The members were: Liliana Ionescu – Feleaga (Independent Chairman), Giovani
Luca Soma (Member) and Mr. Jean-Pierre Georges Vigroux (Independent member). The Remuneration
Committee meets annually, or whenever necessary. In 2022, 5 meetings of the Remuneration Committee
took place. The attendance was of 100%.
In order to perform the attributions entrusted, the Remuneration Committee analyses the Bank's
remuneration policy which it submits to the Board of Directors for approval; it submits proposals regarding
the individual remuneration of non-executive directors and the additional individual compensation of the
directors entrusted with specific functions within the Board as well as the individual remuneration of the
officers; it supervises directly the remuneration of the coordinators of the risks’ management and
compliance functions; and it supervises the application of the principles of the staff remuneration policy and
informs the Board of Directors in this respect.
The Remuneration Committee responsibilities are presented in the Bank's Corporate Governance Code
available to the interested parties on institutional site in section:
https://www.brd.ro/en/about-
brd/shareholders-and-investors/corporate-governance
.
R
ISKS
M
ANAGEMENT
C
OMMITTEE
The Committee consisted of 3 non-executive directors. As at December 31, 2022, the members were: Mr.
Benoît Jean Marie Ottenwaelter (Chairman), Mr. Bogdan-Alexandru Drăgoi (Independent Member) and
Mrs. Aurore Brigitte Micheline Gaspar (Member)
2
.
The year 2022 brought changes to the composition of the Risks Management Committee, as follows:
ü
ü
December 7, 2022, after the last Risks Management Committee meeting in 2022.
The Risks’ Management Committee meets on a quarterly basis or whenever necessary.
In 2022, 4 meetings of the Risks’ Management Committee took place.
The attendance was as follows:
Ø
Management Committee's meetings (4 meetings);
Ø
organised until her renunciation to the mandate (2 meetings).
At the meetings of the Risks’ Management Committee may participate, as permanent guests, the members
of the Executive Committee, Chief Financial Officer, Risk Piloting Pole Executive Officer/Risk Deal Flow
Pole Executive Officer, Retail Distribution Executive Officer, Top Corporates Executive Officer/Sales
Manager Top Corporates, DPF Executive Officer, BIS Director and Corporate Secretary.
The Risks’ Management Committee assists the Board of Directors in defining the global risks strategy of
the Bank and the risk appetite and assists the Board of Directors in overseeing the implementation of such
strategy.
Its objective is the management of significant risks, risks with high impact on the assets and/or image of
the Bank (credit risk, market risk, liquidity risk, operational risk and reputational risk), as well as the risks
associated to the outsourced activities.
The Risks’ Management Committee’s responsibilities are presented in the Bank's Corporate Governance
Code available to the interested parties on institutional site in section:
https://www.brd.ro/en/about-
brd/shareholders-and-investors/corporate-governance
.
N
OMINATION
C
OMMITTEE
As at December 31, 2022, the Committee was composed of 3 non-executive directors of the Board of
Directors: Mr. Bogdan-Alexandru Drăgoi (Chairman), Liliana Ionescu -Feleaga (Independent Member) and
Valerie Marcelle Paule Villafranca (Member).
The Nomination Committee meets half-yearly or whenever necessary.
In 2022, 5 meetings of the Nomination Committee took place.
2
Since December 7,2022
In exercising its powers, the Nomination Committee identifies, makes proposals and submits for approval
by the Board of Directors, the nominees to fill positions within the management body; is involved in
formulating the policy on the selection, evaluation and sequencing of the management body members,
which it submits to the Board of Directors for approval; it assesses periodically and at least once a year the
structure, size, composition and performance of the management body and makes recommendations to
the Board of Directors on any modifications which it considers necessary.
The Nomination Committee’s responsibilities are presented in the Bank's Corporate Governance Code
available to the interested parties on institutional site in section:
https://www.brd.ro/en/about-
brd/shareholders-and-investors/corporate-governance
.
E
XECUTIVE
M
ANAGEMENT
The management and the coordination of the current activity of the Bank is delegated by the Board of
Directors to the executive officers.
The executive officers of the Bank are elected by the Board of Directors, among directors or from outside
the Board, and act together in the Executive Committee.
The term of mandate is of 4 years and can be renewed.
The Executive Committee is composed of the CEO and seven Deputy CEOs. The Executive Committee is
led by the CEO.
The year 2022 brought changes to the composition of the Executive Committee, as follows:
Ø
on June 29, 2022;
Ø
Treasury starting with September 1, 2022;
Ø
The Board of Directors, held on June 9, 2022 decided the nomination of Mrs. Maria Koytcheva
ROUSSEVA as Deputy CEO Global Corporates and Mr. Etienne Jean LOULERGUE as Deputy
CEO Finance and Treasury. NBR approved the nominations and the mandates entered in force
starting with October 4, 2022;
Ø
starting with December 16, 2022;
M
EMBERS OF THE
E
XECUTIVE
C
OMMITTEE AS
OF
D
ECEMBER
31,
2022
François BLOCH
CEO
Year of the appointment as CEO: 2016;
Latest renewal of the mandate: 2020;
Term of mandate expires in: 2024;
Year of the appointment as Compliance Officer:
2019.
Compliance Officer, person responsible for coordinating the implementation of internal policies and
procedures for the application of ''Law No. 129/2019 for the prevention and combating of money
laundering and terrorist financing'' and of the ''NBR Regulation no. 2/2019 on preventing and combating
money laundering and terrorism financing''
Structures coordinated: General Secretariat, Compliance Department, Human Resources Department
and Internal Audit Department.
Member of various Committees set up to support the Executive Committee activity: Risk Retail
Committee, Internal Control Committee, Pricing Committee, Project Review Committee, Career
Committee, Communication Committee, Innovation Committee, Customer Board Committee, Data
Governance Committee, Benchmarks and Market Conduct Oversight Committee, Crisis Committee and
Chairman of Assets and Liabilities Management Committee, Compliance Committee and Climate,
Environmental and Social Change Committee.
Other information: please see the section “Board of Directors” of the present Report.
Alexandru-Claudiu CERCEL-DUCA
Deputy CEO - Financial Markets
Date of birth: February 17, 1968;
Year of the appointment as Deputy CEO: 2008;
Term of mandate expires in: 2025;
He has 1,030 shares in BRD-Groupe Société Générale's
capital.
Coordinated the Financial Markets Pole including the following structures Financial Markets Division,
Securities Division, Financial Markets Solutions and Governance Division, Markets AI Hub, Markets’
Research Service Unit.
Member of
various Committees set up to support the Executive Committee activity
: Assets and Liabilities
Management Committee, Internal Control Committee, Pricing Committee, Project Review Committee,
Career Committee, Communication Committee, Innovation Committee, Customer Board Committee,
Crisis Committee, Data governance Committee, Compliance Committee, Climate, Environmental and
Social Change Committee and Chairman of Benchmark Indices and Market Conduct Oversight
Committee.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law- one executive mandate within BRD-Groupe Société Générale.
Biography
Graduated the Economic Studies Academy - Cybernetics Faculty, in 1992, as well as various
management and leadership training courses organized both by Société Générale and other banking
institutions: Nomura Bank (London), Bank of America (San Francisco), or the Montreal University and
London Business School. He graduated the Executive Master of Business Administration (EMBA) -
ASEBUSS Bucharest / University of Washington, USA. Between 1992 and 1993, he was a sales
manager in the field of communications products. He has worked within BRD-Groupe Société Générale
since 1993, and occupied the positions of Treasury Officer, FX technical analyst, FX trader, Treasury
Deputy Manager, Market Operations Manager and Executive Officer of Financial Markets.
Mihai Tiberiu SELEGEAN
Deputy CEO Legal & Administrative
Date of birth: July 23, 1975;
Year of the appointment as Deputy CEO: 2019;
Term of mandate expires in: 2023;
He has no shares in BRD-Groupe Société Générale's
capital.
Structures coordinated: Legal department, Logistic Division, Security Division, Real Estate Management
and Transversal Activities Department, Personal Data Protection Cell
Member of various Committees set up to support the Executive Committee activity: Internal Control
Committee, Project Review Committee, Career Committee, Communication Committee, Innovation
Committee, Customer Board Committee, Crisis Committee, Data governance Committee, Climate,
Environmental and Social Change Committee and Chairman of Safety and Occupational Health
Committee and of Follow-Up Committee.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law- one executive mandate within BRD-Groupe Société Générale.
Biography
He graduated from Law School – University of Bucharest and has a Master degree in International
Business Law from Central European University, Budapest. He has an extensive experience in various
areas in the legal field: Expert at Council of Europe, Strasbourg (2006-2009) being in charge with the
assessment of the state of the reforms for the judiciary and with the creation/reforming/improvement of
work for institutions in charge with the training of judges and prosecutors; Deputy Director (July 2003-
January 2004) and then Director of the National Institute of Magistracy (2004-2008), coordinating the
training of future and sitting judges and prosecutors in the field of European Convention on Human
Rights (ECHR) (2002-present), etc.
He is also author of different publications in legal field.
From January 2017 to June 2019 he was Member of the Supervisory Board of the Euro Bank S.A.
In April 2008, he joined BRD - Groupe Société Générale by taking over the position of Legal Executive
Director. NBR approved him in this quality in 2015.
Philippe Yves Henri Pierre Marie
THIBAUD
Deputy CEO Risks
Date of birth: February 5, 1968
Year of the appointment as Deputy CEO: 2020
Term of mandate expires in: 2024;
He has no shares in BRD-Groupe Société Générale's
capital.
Structures coordinated : Risk Piloting Pole, Risk Deal Flow Pole and the Special Credit Management
Department.
Member of various Committees set up to support the Executive Committee activity: Assets and Liabilities
Management Committee, Risk Retail Committee, Internal Control Committee, Crisis Committee, Project
Review Committee, Career Committee, Communication Committee, Innovation Committee, Customer
Board Committee, Data Governance Committee, Compliance Committee, Climate, Environmental and
Social Change Committee and New products Committee – Co-Chairman.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law- one executive mandate within BRD-Groupe Société Générale and
two non -executive mandates outside Société Générale Group.
Biography
He graduated from Université Paris I - Panthéon Sorbonne, has a diploma from Ecole Normale
Supérieure de Cachan, qualification on Aggregation Economics and Management and also a diploma
from Université Paris XI – Val de Marne Créteil - Postgraduate (DEA) Management.
Mr. Thibaud has 22 years of experience in risk management and credit analysis field.
During his career, Mr. Thibaud acquired a significant expertise in various fields of risk management:
credit risk, operational risk, market risks, experience in all markets from retail to very large CIB clients,
LOD2 as well as LOD1 positions held in France as well as in The Netherlands, management of large
teams.
Mr. Thibaud held the following positions in banking field: Deputy Head of Risk France with Société
Générale, Paris (January 2018-August 2019), Head of Risk North of France at Société Générale, Paris
/ based in Lille (September 2014-December 2017), Co-Head of Credit Société Générale, Paris CIB –
France (March 2008-August 2014), Relationship Manager, CIB - The Netherlands at Société Générale,
Amsterdam branch (September 2001-February 2008), Credit Manager at GE Access –European
headquarters (May 2000-August 2001).
He also has academic expertise as Allocataire Moniteur Normalien (Lecturer / Researcher) at the
Université Paris XII, Université Paris I Pantheon-Sorbonne and at the Institut Universitaire de
Technologies de Sceaux (September 1994-August 1996), Teacher of Accounting and Management,
Training co-coordinator of the Chartered Accountant Preparation at Ecole Nationale de Commerce de
Bessieres (September 1996-April 2000).
In September 1
st
, 2019, he joined BRD - Groupe Société Générale as Advisor of BRD’s CEO.
Mirela Virginia MEDELEAN
Deputy CEO Projects and Operations
Date of birth: September 14, 1971
Year of the appointment as Deputy CEO: 2021
Term of mandate expires in: 2025;
She has 20,000 shares in BRD-Groupe Société
Générale's capital.
Structures coordinated: Business Solutions Center Pole; Infrastructure & Production Operations
Department, Information Security Division, Strategy Consulting and Support Division, Business Process
Performance Division, Operations Pole; Financial Market Services Division, Business Intelligence
Center Department.
Member of various Committees set up to support the Executive Committee activity: Internal Control
Committee, Crisis Committee, Project Review Committee, Carrier Committee, Communication
Committee, Innovation Committee, Customer Board Committee, Data Governance Committee,
Compliance Committee, Climate, Environmental and Social Change Committee.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates in companies established by the applicable law - one executive mandate within BRD Groupe
- Société Générale.
Biography
She graduated from West University of Timisoara, Economic Sciences Faculty, specialization:
Accounting and Management of Information System and has a Master of Economic Science, Business
evaluation and diagnosis specialization.
Mrs. Mirela Virginia MEDELEAN has 27 years experience in various fields of banking activity, of which
over 19 years in management positions such as: Business Analysis Deputy Director/Projects and
Organization Department (July 2003 – August 2005), Deputy Director/Projects and Organization
Department (August 2005 – Oct. 2008), Network Systems and Processes Director/ Network
Administration Department (Oct. 2008 - Dec.2011), Deputy Director/ Human Resources Department
(Jan. 2012 – June 2016), Director/Business Intelligence Center Department (June 2016 – Nov 2019),
Human Resources Department/ Executive Director (Nov.2019-July 2020), Business Intelligence Center
Director (July, 2020 to Sept. 2020), Projects and Operations Director (Sept. 2020 - June 2021).
She also has academic expertise as University assistant within West University of Timisoara, Economic
Sciences Faculty, since 1995 to 1998.
Maria Koytcheva ROUSSEVA
3
Deputy CEO Global Corporates
Date of birth: April 24, 1972
Year of the appointment as Deputy CEO: 2022
Term of mandate expires in: 2026;
She has no shares in BRD-Groupe Société Générale's
capital.
Coordinated the Global Corporates Pole including the following structures: Environmental Social and
Positive Impact Financing Division, Corporates Transversal Management Center, Top Corporates
Coverage Division, SME Coverage Department, Corporate Marketing & Sales Management
Department, Corporates Credit Group Department, Structured Finance Division, Corporate Finance
Division, Global Transaction Banking Department.
Member of various Committees set up to support the Executive Committee activity: Assets and Liabilities
Management Committee, Internal Control Committee, Pricing Committee, Project Review Committee,
Career Committee, Communication Committee, Innovation Committee, Customer Board Committee,
Crisis Committee, Data governance Committee, Compliance Committee, Climate, Environmental and
Social Change Committee.
Information on mandates held
According to the information provided through the statement of affiliation, she has no executive and
non-executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates in companies established by the applicable law - one executive and one non-executive
mandate within BRD Group.
Biography
She graduated from University of National and World Economy, Sofia, Bulgaria, specialization
International Economic Relations and she has a master’s degree from Leipzig University, Germany,
specialization Business studies.
She has 23 years experience in banking field over which 20 years in management positions such as:
Head of Multinational Corporates at HVB Bank Biochim, Bulgaria (April 2002 – October 2005); Head of
Corporate and Investment Banking at Societe Generale Expressbank, Bulgaria (November 2005 –
October 2011); Deputy CEO/ Deputy Chairman of the Management Board, Head of Corporate and
Financial Markets at Societe Generale Expressbank, Bulgaria (November 2012 – June 2015); CEO/
Chairman of the Executive Board at Societe Generale Bank Serbia (July 2015 – July 2019); Member of
the Supervisory Board at Ohridska Banka, Societe Generale Group (February 2012 – December 2019);
Member of the Board of Directors at SKB Banka Slovenia, Societe Generale Group (May 2018 –
December 2019), Member of the Board of Directors at Rusfinance Bank LLC, Rosbank Group (August
27, 2019 -March 1st, 2021), First Deputy CEO/ First Deputy Chairman of the Management Board at
PJSC Rosbank, Societe Generale Group (August 21, 2019 - Aprilie 29, 2022), Member of the Board of
Directors of Societe Generale Insurance LLC and Societe Generale Life Insurance LLC (September 18,
2019 – May 31, 2022).
3
Starting with October 4, 2022
From July 26, 2021 to June 9, 2022 she was Member of the Board of Directors of BRD-Groupe Société
Générale S.A.
ETIENNE JEAN LOULERGUE
4
Deputy CEO Finance/Treasury
Date of birth: July 28, 1973
Year of the appointment as Deputy CEO: 2022;
Term of mandate expires in: 2026;
He has no shares in BRD-Groupe Société Générale's
capital.
Structures coordinated: Financial Department, Level 2 Financial Control Service, Acquisitions Division,
Cash Administration Department.
Member of various Committees set up to support the Executive Committee activity: Assets and Liabilities
Management Committee, Internal Control Committee, Pricing Committee, Project Review Committee,
Career Committee, Communication Committee, Innovation Committee, Customer Board Committee,
Crisis Committee, Data governance Committee, Climate, Environmental and Social Change Committee.
Information on mandates held
According to the information provided through the statement of affiliation, he has no executive and non-
executive positions in not-for-profit institutions and fulfils the conditions regarding the number of
mandates established by the law- one executive mandate and two non-executive mandates as follows:
one non-executive mandate within BRD Group and one non-executive mandate outside Société
Générale Group.
Biography
He graduated from Ecole Nationale Superieure de l’Aeronautique et de l’Espace and has a Master
degree in audit and one in accounting and financing.
He has 17 years experience in banking field, in large credit institution, occupied positions such as BRD’s
Finance Department Executive Director (July 2020 – October 3, 2022), Advisor of BRD’s Deputy CEO
Finance Treasury (August 2019 –July 2020), Deputy Executive Director for Strategy and Finances at
Komercni Banka (July 2015 –August 2019), Project manager for the development of finance activities
in shared service centers to Société Générale (September 2014 - June 2015), Head of IFRS
consolidation for the international banking business line at Société Générale (July 2010 -August 2014),
Controlling Manager of Banque de Financement et d'Investissement at Société Générale (March 2005
– June 2010).
He has also experience in insurance as Non-executive Chairman of Audit Committee of Komercni
Pojistovna (January 2018 - August 2019) and audit as Audit Manager (September 1999 – February
2005) at Ernst & Young.
In the non –financial sector he has experience as Non-executive and independent member of the
Board of Directors of NEVA Aerospace (September 2017 and August 2019).
Starting July 16, 2022 he is member of the Supervisory Board of CIT ONE SA.
In August 2019, he joined BRD - Groupe Société Générale by taking over the position of Advisor of
BRD’s Deputy CEO Finance Treasury.
4
Starting with October 4, 2022
In July 2020, he received the NBR approval as Finance Department Executive Director, position
occupied until October 3, 2022.
Since October 4, 2022, he holds the position of Deputy CEO Finance/Treasury
A
TTRIBUTIONS AND RESPONSIBILITIES
The executive officers are in charge of taking all the measures in relation to the company’s management,
within the limits of the company's object of activity and in compliance with the powers exclusively reserved
by law or by the Articles of Incorporation to the Board of Directors and the General Shareholders Meeting.
Each executive officer is vested with all the powers to act on behalf of the Bank and to represent it in the
relationships with third parties, in any circumstances related to the activities that they coordinate, in
compliance with the legal provisions, the Articles of Incorporation and the Internal Regulations of the Bank.
Within the limit of the powers and responsibilities set forth by the Board of Directors, the executive officers
act jointly, organised in the Executive Committee, for a series of activities / operations specific to the activity
of the Bank, detailed in the Articles of Incorporation, in the Internal Regulations of the Bank, the “Directive
on the management of approval limits for loans and commitments” and in the Directive ''Regulation of
organization and functioning of the management body''.
M
EETINGS OF THE
E
XECUTIVE
C
OMMITTEE
The meetings of the Executive Committee are held at least once every two weeks, or any time the activity
of the Bank requires it.
In 2022, 127
meetings of the Executive Committee took place.
The decisions of the Executive Committee are made with votes “FOR” of at least half of the members of
the Executive Committee. The CEO shall have the casting vote in case of tie of votes.
Voting cannot be delegated within the meetings of the Executive Committee.
The minutes of the meeting are signed by the executive officers who attended the meeting immediately
after their drafting.
The Executive Committee provided the Board of Directors, regularly and comprehensively, detailed
information about all the major aspects of the Bank's activity, including risk management, potential risk
assessment and compliance matters, measures taken and recommended, irregularities found while
performing its attributions. Any major event is communicated immediately to the Board of Directors.
C
OMMITTEES SET UP IN SUPPORT OF THE
E
XECUTIVE
C
OMMITTEE
The committees set up to support the Executive Committee assist it in performing its attributions on various
business lines, particularly on the operational activity of the Bank. The members of these committees are
the members of the Executive Committee and the management of the structures impacted.
The most important committees are:
I
NTERNAL
C
ONTROL
C
OMMITTEE
It is a permanent consultative committee, which has as main task to analyse the adequacy of the internal
control framework, including business continuity and crisis management as regards organizing /
functioning, by analysing the results obtained and the deficiencies found in the internal control activity. In
order to fulfil its mission, the main themes subject to debate in the committee are operational risks, activity
continuity and crisis management, managerial supervision, managerial supervision of accounts, audit,
conformity and reputational risk, IT security, deficiencies found in the supervision reports / minutes of the
authorities, protection of personal data.
A
SSETS AND
L
IABILITIES
C
OMMITTEE
It is a permanent consultative committee which assists the Executive Committee in performing its
attributions related to the management of assets and liabilities structure, liquidity and funding sources
management, structural risks management (interest rate risk and foreign exchange risk in the banking book)
and capital management.
C
OMMITTEE FOR
N
EW
P
RODUCTS
It is a permanent consultative committee that ensures the identification, the analysis and the reliable
measurement of risks associated to new products, offered to the Bank's clients, including material changes
of the existing products.
P
RICING
C
OMMITTEE
It is a permanent consultative committee whose mission is to analyse and propose measures to the Bank's
decisional bodies on pricing policy and strategy (commissions and fees, interest rates) regarding the Bank's
products, taking into consideration the budgetary targets, the competitive environment, the commercial
strategy and market developments.
R
ISK
R
ETAIL
C
OMMITTEE
It is a committee whose mission is to formalize the measures proposed by Bank's structures in order to
improve the Bank's retail lending activities.
C
USTOMER BOARD
It is a permanent consultative committee dedicated to customer experience, which aims to ensure at the
level of the whole Bank the efficiency of the process of improving the quality of the experiences offered to
the clients, from the perspective of the feedback received from the clients.
C
OMPLIANCE
C
OMMITTEE
It is a permanent consultative committee whose main mission is to analyze the way in which the compliance
risk is managed, including the presentation of the deficiencies found in the compliance control activity.
C
LIMATE
,
E
NVIRONMENTAL AND
S
OCIAL
C
HANGE
C
OMMITTEE
It is a permanent consultative committee whose main mission is to carry out strategic CSR analyzes by
reporting to the Bank's objectives, in order to present to the Management Committee the measures for
implementing the CSR strategy in this area. This mission includes making proposals for setting the Bank's
objectives, adopting the relevant regulatory framework, monitoring the Bank's commitments,
communication and any other topics related to environmental, climate and social issues.
O
THER COMMITTEES
: Crisis Committee, Safety and Occupational Health Committee, Projects Review
Committee, Follow-up Committee, Career Committee, Communication Committee, Innovation Committee,
Data Governance Committee and Benchmarks and Market Conduct Oversight Committee.
BRD
-
G
ROUPE
S
OCIÉTÉ
G
ÉNÉRALE
’
S SHARES HELD BY THE MEMBERS OF THE
B
OARD OF
D
IRECTORS AND OF
THE
E
XECUTIVE
C
OMMITTEE AS AT
D
ECEMBER
31,2022:
Name
Number of shares
Jean – Pierre Georges VIGROUX
Mirela Virginia MEDELEAN
27,828
20,000
Alexandru - Claudiu CERCEL - DUCA
1,030
TOTAL
R
IGHTS OF SHAREHOLDERS
BRD-Groupe Société Générale respects the rights of its shareholders and ensures equal treatment for all
of them.
V
OTING RIGHT
The Bank's shares are indivisible and confer equal rights to their holders, each share entitling to one vote
in the General Shareholders Meeting.
General Assemblies are called by the Board of Directors.
The notice of meeting is sent at least 30 days before the date set, in compliance with the legal provisions
regarding the publicity and notification of the Financial Supervisory Authority - Financial Instruments and
Investments Sector and of the Bucharest Stock Exchange ("BVB").
The shareholders can attend the General Assemblies personally, through a representative or they can vote
by correspondence. Forms of power of attorney and vote by correspondence are made available to the
shareholders in the special section on the Bank's own Internet page.
The procedures regarding the works of the General Assembly of the Shareholders are available to
shareholders and other interested parties on the institutional site.
R
IGHT TO DIVIDENDS
Each share of the Bank, held by a shareholder at the registration date (set according to the specific
regulations and approved by the General Shareholders Meeting) entitles the shareholder to dividends for
the prior financial year, in the quantum and conditions established by the General Shareholders Meeting.
The Dividend Policy is available to shareholders and other stakeholders on institutional site in Corporate
Governance section:
https://www.brd.ro/en/about-brd/investors -and-shareholders/corporate-
guvernance/dividend-policy.
The dividend policy reconfirms the engagement of the Board of Directors to offer shareholders the
opportunity to obtain a return for the invested capital and for the Bank the opportunity for a sustainable
development.
R
IGHT TO INFORMATION
BRD makes sure its shareholders have access to relevant information, so that they may exercise all their
rights in an equitable manner. The communication strategy of the Bank relies on the following principles:
Ø
Ø
Ø
BRD-Groupe Société Générale sets up and maintains a dedicated structure managing the relation with
investors and other stakeholders.
Shareholders / investors may send their requests to the Bank through e-mail or over the telephone, at the
contact data displayed on the institutional site. The relevant information is published on the Bank's internet
page, both in Romanian and in English.
For the information of shareholders and investors, the Bank sets at the beginning of the year a financial
reporting calendar, which it sends to the Bucharest Stock Exchange and to the Financial Supervisory
Authority. The quarterly financial reporting is prepared according to International Financial Reporting
Standards as adopted by the European Union - and in compliance with the regulations specific to the capital
markets.
In order to communicate on its financial results, BRD-Groupe Société Générale organizes meetings/ live
audio webcasts with financial analysts, investment consultants, brokers and investors. These meetings
during which the results of the Bank are presented, are an opportunity for Bank’s management and the
financial market analysts to exchange opinions. The same policy of transparency has been adopted
regarding the communication with the rating agencies and with capital markets institutions. In 2022, BRD
Group organised 4 live audio webcasts for presenting its financial results.
2023 financial calendar
Publication of the preliminary financial results December 31, 2022
February 8, 2023
Presentation of the preliminary financial results for the year 2022 and
for Q4 2022 broadcast through a live audio webcast
February 9, 2023
General Assembly of Shareholders
April 27, 2023
Publication of the Annual Report 2022 – financial results as of
December 31, 2022
April 27, 2023
Communication of results for Q1 2023
May 12, 2023
Communication of results for 1
st
August 3, 2023
Communication of results for Q3 2023
November 3, 2023
3. H
UMAN RESOURCES
K
EY FIGURES
2022
Ø
5,833
active employees in BRD, with:
●
896
external recruitments
●
1,179
functional mobility
●
18.0%
12.4%
voluntary turnover.
The number of active employees of the Group as of 2022 end was 6,126 (2021 end: 6,408), while the
number of active employees of the Bank as of 2022 end was 5,833 (2021 end: 5,974). Active employees
are those present at work (excluding maternity leave and long - term sick leave).
In 2022, the Human Resources Department (HR) continued to deliver projects and actions in line with the
strategic HR axes: career management, managerial development, employee engagement, efficiency and
communication.
B
USINESS SUPPORT AND CONTINUOUS IMPROVEMENT
During 2022, the Human Resources Department continued to support business by sustaining the evolution
of the business model. The purpose of the Bank was to ensure efficient and dynamic structures, in order to
better respond to the needs of the clients (increased focus on remote banking) and to maximize the results
obtained. Among the main projects are: optimizing the structure of the different departments at the Head
Office level, territorial reorganizations at the network level (relocations and mergers of agencies) and
providing support for special projects (e.g. outsourcing transport and cash management) etc.
C
AREER
M
ANAGEMENT
Throughout 2022 the Human Resources Department has continued to have individual meetings with the
employees in order to identify their potential as well as their career evolution expectations, according to
their competencies and skills. Also, meetings were held with all the new employees to effectively
accompany them during the on boarding process.
Approximately 1200 employees changed their position as a result of the Bank’s internal mobility policy,
changes that required specific trainings for each role, with different learning methods.
900 persons were recruited in 2022 from outside the Bank, the majority being within the Network for
covering the vacancies, extending the commercial capacity and reaching the sales objectives of the Bank,
but also niche positions within headquarter, with focus on IT domain as a support to omni-channel and
digital strategy.
90% of our employees have graduate studies and 10%, undergraduate studies.
T
RAINING
&
R
ISK
A
WARENESS
In a challenging and changing business environment, continuous skills development is the right way to go
to support the Bank's short and medium-term goals.
The 2022 training strategy aimed at developing both commercial skills, technical skills (according to the
business strategy), managerial development skills, and specific regulations’ knowledge through risk
management and compliance courses for BRD employees. The diversified training offer covered the
training needs of the collaborators, in a format adapted to all profiles (juniors, seniors, experts / specialists),
correlated with the support and development of the competencies aimed for each role, in a mix of theoretical
and experiential learning with direct involvement of the participant in the choice of training actions,
identifying his training needs together with his manager.
In order to adapt to the rapid changes in the business environment, strategic workforce planning projects
have been implemented in retail and corporate areas. Employee skills are a major asset of the Bank's
success. Our aim is to promote the permanent adaptation of employees' skills to the rapid changes in our
environment and to allow them to access motivating career paths. At the same time, the e-learning project
developed together with CPBR (Romanian Board of Banking Employers), with the representatives of the
Trade Unions (through Federation of Insurance and Banking Trade Unions) and the 4 member banks (BCR,
Raiffeisen, ING and Unicredit) was continued. Its main objective is to develop the skills of employees so
that we can adapt more easily to the labour market changes and the digital future. The course catalogue in
the new platform focuses on 3 major topics that address digital technology:
Ø
Ø
digital perspective);
Ø
collaboration tools such as video conferencing, distance learning, etc.).
During 2022, the training courses continued to be adapted to the distance / online interaction format.
The main axes of development were:
Ø
cooperation with Société Générale Group (“Code of Conduct”, “Information security”, “Market
abuse”, “Fatca”, “Anti bribery and corruption”, “Environmental risk management", "Anti-money
laundering", etc.) and local e-learning (SSM – health and safety at work, “Physical security events”,
“GDPR”), increasing the number of case studies presented during virtual/ face-to-face trainings;
Ø
the area of ESG (Environment, Social Impact, Governance) through e-learning training using
training platforms as well as through courses organized in physical format, Climate Fresk
workshops (over 200 participants in 2022);
Ø
o
information about the Bank, BRD values, basic knowledge regarding compliance, credit
risks, as well as HR issues regarding training, career management;
o
products and applications, related risks, behavioral skills, and the development of specific
business skills, through an experiential approach to learning Business
Ø
well as for the corporate segment.
These trainings are modular programs, on levels of knowledge and expertise, adapted to the roles
in the organization (both for managerial functions and for operational teams), having different
degrees of complexity and covering as main directions: offer, financial and risk analysis, skills -
sales, customer portfolio management, communication, and negotiation.
There are training programs dedicated to each business-line, curricula developed and updated
according to the commercial requirements expressed and regulatory developments, with business
guests - bank specialists on various topics, along with internal trainers.
Ø
sales and negotiation techniques, stress management, conflict management, teamwork, feedback
- a tool for development and performance, how to make a team meeting more attractive, hybrid
management, etc.) which were delivered in 2022 by the development of the webinars & coaching
sessions program dedicated to employees, starting from the need to stay connected to each other:
"We Connect", and for managerial roles through the "Rise-up" program.
Ø
ü
ü
E
MPLOYEE ENGAGEMENT AND IMPACT ON THE EDUCATIONAL ENVIRONMENT
In 2022 BRD continued employee’s engagement with impact in educational environment, being one of the
strategic axes.
W
ORK
/
LIFE BALANCE
In order to ensure a balance between professional and personal life, the Human Resources Department
continued the projects:
Ø
under a series of agreements.
Ø
anti-tobacco webinar, nutrition and workplace ergonomics, together with our medical services
partner. In 2022, the hybrid way of working was implemented, a mix of office work and remote work.
Furthermore, depending on the needs of our colleagues, we will continue to improve the current
way of working to support the balance between the professional and personal life of the employees.
R
EMUNERATION
P
OLICY AND
P
RACTICES
The BRD Remuneration Policy and Practices respects:
Ø
Regulation 2/2022, CRD V, delegated Regulation (UE) 923/2021, MiFID II, Volker
Ø
Ø
The Remuneration Policy is approved by the Board of Directors of BRD upon recommendation of the
Remuneration Committee.
BRD
Ø
of the Bank, as well as its control framework;
Ø
Financial Markets and investment advice, sound and prudent management of the risks related to
sustainability is also considered starting with March 2021;
Ø
Bank's risk tolerance level. The Bank encourages a prudent behavior (avoiding excessive risks);
Ø
and competitive remuneration subject to strictly complying with the powers and performance;
performance is assessed in a multiannual framework;
Ø
accumulated knowledge, personal development, contribution to the team's performance etc.
Ø
female staff members, for performing the same work or work of equal value.
The Bank ensures a correct and competitive remuneration, by strictly complying with competences and
performances, with 2 components correctly proportioned:
Ø
Ø
Fixed remuneration - reflects the relevant professional experience and organisational responsibility,
according to the employee's job description as part of the employment terms. Fixed remuneration
represents a sufficiently high proportion of the total remuneration to allow the application of a fully flexible
policy on the components of variable remuneration, including the possibility of not paying any of its
components.
Variable remuneration - reflects a sustainable and risk-adjusted performance as well as the performance
that exceeds the necessary performance to fulfill the duties provided for in the employee's job description
as part of the employment terms.
Variable remuneration:
Ø
component distribution mechanisms do not guarantee the granting of sums over several years.
Thus, the variable remuneration is subject to a fair annual review process;
Ø
employment and can only be granted in the first year of employment and when the Bank has a
sound and solid capital base. BRD personnel is not overly dependent on bonuses;
Ø
Ø
Ø
Ø
Ø
do not reward failure or misconduct.
The Bank may decide to reduce or not even grant the variable remuneration if it cannot be supported in
accordance with the overall financial situation of the Bank, of the structure in which the activity is carried
out and the employee concerned.
The variable remuneration is considerably reduced if the Bank records a poor or negative financial
performance, taking into account both the current remuneration as well as the reductions in payments
related to the sums due, as previously determined, including malus or clawback agreements signed. Up to
100% of the variable remuneration is subject to malus or clawback signed agreements.
For different types of jobs, it is possible to use different schemes for granting the variable remuneration.
There is a maximum limit defined for the variable component, which may not exceed 100% of the fixed
component of the total remuneration.
For sales staff, commercial objectives are set to take into account the rights and interests of the customers,
so that:
Ø
Ø
over other products/ services such as products/ services which are more profitable for the institution
or for an employee, to the detriment of the consumer.
The special principles applicable to the categories of identified staff are:
Ø
Ø
including the deferred part thereof only if the variable remuneration can be supported in accordance
with the Bank's overall financial situation and if it can be justified in accordance with the
performance of the Bank, the structure in which the activity is carried out and the individual
concerned.
Ø
to the fulfillment of the minimum performance requirements.
Ø
is deferred for a period of at least 4 years. For identified staff, at least 50% of any variable
remuneration shall consist of shares equivalent, which are subject to an appropriate retention
policy, designed to harmonise the incentives with the Bank's long-term interests.
Ø
to counteract the risk alignment effects stipulated in the personnel remuneration agreements are
prohibited. One may insure the currency risk hedging using derivative instruments.
Financial data for 2022, according to the disclosure requirements covered by Art. 450 (h), EU Regulation
575/2013, will be published at a later date, on the Bank's website.
R
EMUNERATION OF THE MEMBERS OF THE
B
OARD OF
D
IRECTORS AND EXECUTIVE
C
OMMITTEE
a) Remuneration of the members of Executive Committee (including CEO)
Remuneration is composed of monthly fix remuneration and variable annual remuneration granted as
performance bonus. For management expatriate staff there are granted some benefits according to Société
Générale’s policy, in order to facilitate their living with families in Romania.
b) Remuneration of the members of the Board of Directors
For 2022, the Ordinary General Shareholders Meeting approved an individual remuneration for the non-
independent non-executive directors amounting to EUR 1,800/ month (gross amount, RON equivalent) and
for the independent non-executive directors amounting to EUR 3,600/ month (gross amount, RON
equivalent) including 19.9% for the contributions’ transfer.
Also, the Ordinary General Shareholders Meeting approved the general limit for the directors’ and members’
of the Executive Committee remunerations, including additional remunerations, for 2022, to amount to RON
20 million, gross amount (tax transfer compensation is included). The limit is the same as for 2020 and
2021.
4. G
ROUP ACTIVITY AND RESULTS
E
CONOMIC AND BANKING ENVIRONMENT IN
2022
Counting among the best performing EU member states, the Romanian economy expanded by +4.8% in
2022 vs. 2021, exceeding the market outlooks, still slowing down from the increase registered in 2021
(+5.8% y/y vs 2020). The main driver for 2022 GDP growth remained household consumption which added
+3.4pp to the 4.8% expansion, but H2 2022 marked the incipient shift towards investment driven growth
which brought + 2.2pp contribution. Net exports re-entered in negative territory and subtracted -0.8pp from
the GDP growth (exports +3.5%, imports +4.3%).
Reaping the benefits of the breadth and intensity of monetary policy tightening, receding problems in global
value chains and the unusually warm winter coupled with energy savings, inflationary pressures started to
abate toward the end of 2022. Annual inflation printed at 16.4% in December 2022, witnessing the first
notable slowdown (from 16.8% in November, the highest level since autumn 2003), given the lower fuel
prices. Inflation went further down to 15.1% yoy in January 2023. Nevertheless, this level is far from the
upper bound of the NBR target range (2.5% ± 1 ppt). The downtrend was also visible at regional level, with
Euro area annual inflation reaching 9.2% in December 2022 (down from 10.1% in November), the first
contraction in prices since June 2021, as energy price surge softens. In 2022, the economy experienced
both strong cost inflation pressures from the external environment and demand pressures from the
domestic economy. Energy and food prices remain the leading driver, but other components also rose
swiftly.
On a medium to longer run, the approval of National Recovery and Resilience Plan in September 2021 by
European Commission with the first tranche of grants (EUR 1.8 bn) disbursed in December 2021 should
support further growth of the economy. Additional pre-financing (EUR 1.9 bn) was granted in January 2022,
after the targets and milestones for Q4 2021 were reached. On 15th of September 2022, the European
Commission endorsed a positive preliminary assessment of Romania's first payment request for a financing
request, amounting to EUR 1.8 bn in grants and EUR 800 million in loans. At 2022 end, Romania submitted
a 2
nd
EUR 1.1 bn in loans), based on the fulfilment of 51 milestones related to first two quarters of 2022, covering
several reforms and investments in various fields. The next payment request, worth EUR 3.1 bn, shall be
submitted to the EC in the spring of 2023 and its disbursement will be contingent on the fulfilment of 55
milestones, related to the last two quarters of 2022.
The two main worldwide shocks, the COVID-19 outbreak and the war in Ukraine, and their overlapping
consequences, as well as the difficult structural transformations they have sparked, aggravated existing
policymakers' trade-offs, such as fighting inflation and ensuring economic recovery/employment. Following
these events, in order to support the economy, NBR made extensive use of the policy toolkit to tame
inflationary pressures, carefully calibrating the dosage in order to smoothen the macro-financial impact of
the changing rate environment. Amid larger and lengthier inflation pressures from global cost shocks,
amplified by geopolitical context, NBR performed ten monetary policy rate hikes, 575 bps in total, since the
start of the tightening cycle in October 2021. The increase of 25 bps to 7%, in January 2023, in line with
market expectations, indicated the end of the rate hiking cycle as was also suggested by the maintaining
of the key rate level at 7%, at the meeting from February 2023.
In order to enable the good functioning of the money market, under tensions induced by the war in Ukraine,
on March 9
th
, 2022, NBR came back to the measures taken in premiere at the beginning of COVID 19
pandemic and purchased RON-denominated government securities on the secondary market (RON 367
million, followed by only RON 37 million purchased in May 2022). Nevertheless, in March, in a context of
higher cash withdrawals on the background of war developments and tightened market liquidity needed to
contain surging inflation, NBR started to provide liquidity through Lombard facility to the banking system,
the peak being reached in August 2022 (daily average of RON 13.7 bn). Liquidity conditions improved over
the last three months of the year, with liquidity surplus increasing to almost RON 11 bn in December from
RON 5.5 bn in November.
In September, European Commission (EC) approved two state aid schemes previously notified by
Romania:
o
emission costs. The scheme will cover part of the higher electricity prices arising from the impact
of carbon prices on electricity generation costs (so-called ‘indirect emission costs') incurred
between 2021 and 2030.
o
EUR 4 billion Romanian scheme to support companies in the context of Russia's invasion of
Ukraine. Under this measure, the aid will take the form of: (i) loan guarantees with a maximum
budget of EUR 3.6 billion (approximately RON 17.8 billion), and (ii) direct grants with a maximum
budget of EUR 390 million (approximately RON 1.9 billion) to compensate parts of the costs due
under the guaranteed loans.
In order to mitigate the negative socio-economic impact of surging energy costs, the Romanian Government
adopted several supporting measures throughout 2022, among which: a cap on electricity and gas prices
for households and some companies until April 2023 (prolonged further in 2023 until March 2025) and
supporting package for low-income households and key industries with a total value of RON 17.3 billion
(approximately 1.4% of GDPe), out of which 52% shall benefit of EU funding.
In terms of banking activity, the pace of the annual growth rate of gross loans outstanding decelerated
towards end of year, reaching +11.9%* YoY at December 2022 end (vs. +18.9%* YoY at June 2022 end
and +18.2%* at September 2022 end), given the steep upward trend of interest rates. Nevertheless,
average lending dynamic outpaced 2021 performance, underpinned mostly by strong corporate financing
(+18.8%* YoY at December 2022 end) and, to a smaller degree, by households (+4.1%* YoY at December
2022 end). The decelerating rate of growth of loans to individuals throughout 2022 was visible for both
housing (+5.4%* YoY at December 2022 end vs +12.2%* YoY at January 2022 end) and consumer loans
(+2.0%* YoY at December 2022 end vs +4.3%* YoY at January 2022 end). Deposits growth rate (+9.1%*
y/y) slowed down, influenced by individuals component (+5.7%* YoY at December 2022 end compared to
+8.1%* YoY at January 2022 end) as saving capacity seems to be hampered by the strong inflationary
pressures. This trend was counterbalanced by the advance on the corporate segment (+13.0%* YoY at
December 2022).
The ratio of non-performing loans for the banking system (according to European Banking Authority
definition) continued its annual decrease reaching 2.65% at December 2022 end versus 3.35% at
December 2021 end.
The Romanian banking system is well capitalized, as reflected by the capital adequacy ratio of 21.5% as
of September 2022 end (versus 23.3% as of December 2021 end). As regards liquidity, the banking system
has also a solid position, with a Liquidity Coverage Ratio of 188% as of September 2022 end (decreasing
vs December 2021 end level of 239%, but remaining high).
(*) Variation at constant exchange rate
Source: BRD Research
RON bln
Dec-20
Dec-21
Dec-22
vs. Dec-21
Retail
21.7
22.7
23.4
2.9%
21.1
22.0
22.5
2.4%
0.6
0.7
0.9
17.7%
Non-retail
8.0
10.2
12.9
26.7%
2.6
3.4
4.8
42.9%
5.3
6.8
8.1
18.7%
Total net loans
29.6
32.9
36.3
10.3%
Financial lease receivables
1.1
1.2
1.4
15.1%
Total net loans, including leasing
30.7
34.1
37.7
10.4%
C
OMMERCIAL ACTIVITY
As at December 31, 2022, the Bank had 460 branches (31.12.2021: 499 branches), ensuring the
distribution of its products and services throughout the whole country.
The equipment rate for individuals rose on intensified commercial relationships. It reached 4.62 at
December 31, 2022 compared to 4.58 at December 31, 2021.
The digital adoption continues to grow and more than 1 million customers chose the mobile banking
application, YouBRD, to be their everyday financial instrument (1.07 mn users at December 2022 end vs.
730k at December 2021 end, +46% YoY).
On its way to a fully digitalized customer journey, BRD achieved strong progress: the 100% online credit
card issuance flow accessible on BRD website and via the online banking application, YouBRD, and the
instant payments solution offered to individuals customers (24/7 accessible in YouBRD).
BRD held a market share of 10.2% of total assets at December 31, 2022.
The structure of the customers’ net loans at Group level evolved as follows:
Net loans’ outstanding (including leasing) reached RON 37.7 billion, with a double-digit growth by 10.4%
versus December 31, 2021, reflecting the intense lending activity across the board.
BRD marked a record level of new housing loans production (+58% YoY) and the second best year for new
consumer loans, with almost RON 7.5 billion new loans being granted in total to individuals in 2022.
Lending activity to corporate segment delivered an impressive result (+26.7% YoY) building on an
outstanding performance on SME segment (+43% YoY) and a notable increase of loans granted to large
companies (+18.7% YoY), while leasing activity also printed high (+15.1% YoY). BRD continued to be an
active participant in the IMM INVEST program, offering support to over 2,000 eligible SMEs, the total value
of loans approved under this program reaching RON 2 billion in 2022, +69% compared to 2021.
BRD innovated and enlarged its offer of services with a new specialized division, Euromentor, developed
to accompany entrepreneurs and corporates in accessing EU funds.
2022 results re-confirmed that BRD is highly committed to finance the sustainability transitions, by
integrating the ESG principles into its lending activity. The value of new sustainable finance transactions in
2022 reached EUR 215 million, marking important progress towards the achievement of the EUR 1 billion
strategic objective of sustainable financing by the end of 2025.
The customers’
deposits
Deposit base was further consolidated, with corporate deposits up by +17.2% YoY. Retail deposits
advanced (+3.1% YoY) in a tight liquidity and competitive context.
For the evolution of the main components of the net banking income please refer to “Financial results”
section.
S
UBSIDIARIES
’
BRD
S
OGELEASE
IFN
SA
As of December 31, 2022, net outstanding of leasing financing granted by BRD Sogelease increased by
+15.1% year-on-year to RON 1,407 million. New leasing production increased to RON 1,014 million in
2022, +24% YoY. BRD Sogelease delivered a dynamic lending activity throughout full year 2022, with
demand driven by SME’s and large corporates active in sectors as construction, logistics and transportation,
agriculture, manufacturing and healthcare. BRD Sogelease results reconfirmed the importance of financial
leasing as an efficient and accessible financing solution offered by BRD Group for SME companies in
Romania.
BRD
F
INANCE
IFN
SA
At the end of December 2022 the value of the net loan portfolio was of RON 431 million vs. RON 528 million
at December 2021 end, the new production continuing on a downward trend mainly due to auto segment,
which is severely impacted by the delays in the components delivery registered globally. In this context the
strategy was focused on the limitation of operating expenses and a stepwise reduction in cost of risk. Net
result was stable vs 2021 despite the drop in net banking income.
BRD
A
SSET
M
ANAGEMENT
SA
BRD Asset Management is one of the most important actors on the Romanian UCITS market, with a market
share of 17.97%* and RON 3.13 billion assets under management at the end of December 2022. BRD
Asset Management now offers investment solutions to more than 118 thousand clients across its 12
investment funds. In 2022, 4 new funds have been lunched: BRD Orizont 2035, BRD Orizont 2045, BRD
Oportunitati and BRD Euro Simplu. The first two known as TDF’s (target date funds), are a novelty on the
local market.
* market share computation based on total open-end funds assets under management
F
INANCIAL POSITION ANALYSIS
The below financial position analysis is made based on the separate and consolidated financial statements
prepared according to the International Financial Reporting Standards, for the period ended December 31,
2022 and the comparative periods.
F
INANCIAL POSITION
–
Total assets at December 31, 2022 increased by 6.9% for the Group and 6.7% for the Bank versus 2021
end.
The asset structure is presented below:
T
HE GROUP
T
HE BANK
L
OANS AND ADVANCES TO CUSTOMERS
The net loans’ outstanding registered a strong performance year-on-year, with a double-digit growth
(around 10% for both Bank and the Group), reflecting good commercial performance translated into broad
lending activity, as detailed above.
C
ASH
,
C
ENTRAL
B
ANK AND LOANS AND ADVANCES TO CREDIT INSTITUTIONS
Cash and current accounts with the Central Bank and loans and advances to credit institutions increased
by 38.2% versus December 2021 end, for both the Bank and the Group, mainly driven by both higher cash
and current accounts with the central bank and placements at credit institutions. These items represented
approximately 20% of total assets for both the Group and the Bank at end of December 2022.
The minimum compulsory reserve held with the National Bank of Romania accounted for 28% of this
aggregate at December 31, 2022 (34% at December 2021 end) at Group level. It amounted to RON 4,118
million, up by 12.6% vs December 31, 2021, mainly linked to increasing customers’ deposits as detailed
above. The level of RON and FX minimum reserve requirements for liabilities with residual maturity of less
than 2 years are at 8% and 5% respectively, unchanged from May 2015 for RON and from November 2020
for FX.
O
THER FINANCIAL INSTRUMENTS
Other financial instruments include financial assets at fair value through other comprehensive income,
treasury bills at amortised cost, financial assets at fair value through profit and loss, derivatives and other
financial instruments held for trading, investments in associates and subsidiaries.
These items amounted to RON 18.6 billion at December 2022 end and represented almost 25% of Group
assets. They decreased by 16.2% compared to December 2021 end, driven by the decrease in government
Liabilities and shareholders equity
(RONm)
Dec-20
Dec-21
Dec-22
% total
vs. Dec-21
Amounts owed to credit institutions
1,941
4,708
7,501
10.2%
59.3%
Amounts owed to customers
49,958
52,684
56,661
76.7%
7.5%
Other liabilities
1,887
1,793
2,720
3.7%
51.8%
Shareholders equity
9,772
9,879
6,960
9.4%
-29.5%
Total liabilities and shareholders equity
63,558
69,063
73,842
100.0%
6.9%
Liabilities and shareholders equity
(RONm)
Dec-20
Dec-21
Dec-22
% total
vs. Dec-21
Amounts owed to credit institutions
206
2,882
5,443
7.6%
1.9x
Amounts owed to customers
50,152
52,918
56,916
79.6%
7.6%
Other liabilities
1,805
1,676
2,587
3.6%
54.4%
Shareholders equity
9,472
9,539
6,577
9.2%
-31.1%
Total liabilities and shareholders equity
61,635
67,015
71,523
100.0%
6.7%
bonds portfolio, partly on lowering market value in a context of surging yields, and lower derivatives and
other financial instruments held for trading.
T
ANGIBLE AND INTANGIBLE ASSETS
The tangible and intangible assets accounted for approximately 2% of the total assets with land and
buildings representing the largest part of the item.
The total value of investments during 2022 was RON 268 million for the Bank and RON 269 million for the
Group, compared to RON 211 million for the Bank and RON 213 million for the Group in 2021. There is
no capitalized research and development expenditure.
F
INANCIAL POSITION
–
L
IABILITIES
The comparative statement of liabilities is as follows:
T
HE GROUP
T
HE BANK
A
MOUNTS OWED TO CUSTOMERS
The Group, as well as the Bank, further consolidated and diversified its already solid savings base. At
December 2022 end, amounts owed to customers increased by 7.5% for the Group and by 7.6% for the
Bank and accounted for 76.7% of the total liabilities and shareholders’ equity at Group level and for 79.6%
at Bank level. The increase was mainly driven by significant corporate deposits advance on extensive
deposit collection of large corporate customers while resources from retail were influenced by a tight
liquidity and competitive context, however, still printing a growth of 3%.
A
MOUNTS OWED TO CREDIT INSTITUTIONS
Amounts owed to credit institutions represent interbank deposits, borrowings from the parent and
International Financial Institutions, and stood at 10.2% of the total liabilities and shareholders’ equity for the
Group and 7.6% for the Bank at December 31, 2022.
BRD Group’s borrowings from Société Générale totalled RON 6.5 billion (9.8% of liabilities) at December
2022 end. Among these, are included 3 senior non-preferred loans in amount of EUR 720 million (EUR 450
million received in December 2021, EUR 150 million in June 2022, respectively EUR 120 million in
December 2022, all with an initial term of 3 years and a call option at 2 years) and 2 subordinated loans in
amount of EUR 250 million (EUR 100 million drawn in December 2021, respectively EUR 150 million in
June 2022, both with an initial term of 10 years and a call option at 5 years).
S
HAREHOLDERS
’
Shareholders’ equity decreased by 29.5% for the Group and by 31.1% for the Bank compared to December
31, 2021, mainly on dividend distribution (for 2019-2021 results) and lower revaluation reserves of debt
instruments accounted at fair value through other comprehensive income, in the context of surging yields.
The structure of the shareholders’ equity evolved as follows:
T
HE GROUP
T
HE BANK
L
IQUIDITY POSITION
Both the Bank and the Group maintained a balanced structure of resources and placements and a solid
liquidity level over the analysed period.
The net loan to deposit ratio increased to 62.4% at December 31, 2022 versus 60.8% at December 31,
2021 for the Bank, and to 66.5% at December 31, 2022 versus 64.8% at December 31, 2021 for the Group
(loans at Group level include financial leasing receivables). The extensive lending activity was the driving
force behind the evolution.
RONm
2020
2021
2022
22/'21
Net banking income 3,088
11.7%
- net interest income 2,087 2,084 2,370 13.7%
- net commissions 711 744 754 1.4%
- other banking income 290 269 334 24.5%
Operating expenses
9.2%
- staff expenses
8.5%
- non-staff expenses
10.1%
Operating profit 1,500
1,500
1,715
14.3%
Net cost of risk
n.a.
Gross result 1,147 1,646 1,620 -1.6%
Net result 963 1,319 1,337 1.4%
Profit attributable to equity
holders of the parent
RONm
2020
2021
2022
22/'21
Net banking income 2,927 2,930 3,289 12.3%
- net interest income 1,957 1,953 2,239 14.6%
- net commissions 674 706 719 1.9%
- other banking income 296 271 330 22.1%
Operating expenses
9.8%
- staff expenses
9.7%
- non-staff expenses
10.0%
Operating profit
1,445
1,436
1,648
14.8%
Net cost of risk
n.a.
Gross result 1,132 1,595 1,555 -2.5%
Net result 952 1,279 1,286 0.5%
2022
The comparative income statement of the Group for the period 2020 - 2022 is presented below:
The comparative income statement of the Bank for the period 2020 - 2022 is presented below:
BRD Group 2022 net banking income reached RON 3,459 million, higher with +11.7% compared to 2021.
The macroeconomic environment was marked by strong inflationary pressures, an accelerated upward
trend of market interest rates and increased volatility. Given the very dynamic commercial activity and the
effect of interest rates context, net interest income advanced by +13.7% on a yearly basis, being tempered
by the significantly increased remuneration of customers’ deposits.
Net fees and commissions were up +1.4% compared to 2021 amid increased volume of transactions and
dynamic health insurance production, counterbracing the lower revenues from asset management activity
and e-banking commissions given the migration of retail customers to the free of charge mobile application,
YouBRD. Other revenues had a very positive evolution (+24.5% vs 2021) on a strong momentum of
financial markets activity.
Inflation pressure on operating expenses was visible throughout the year, but costs’ increase was limited
by a maintained rigorous spending discipline. Overall operating expenses increased by +8.3% compared
to 2021, if excluding the higher contribution to Guarantee and Resolution Funds. Staff expenses (+8.5%
y/y) were influenced largely by the price effect of wage increase and other benefits adjustments within the
collective labor agreement (especially meal tickets) and exceptional inflation premium, supporting our
employees in managing the higher cost of living. The evolution of other costs notably mirrors higher
expenses on external services, elevated energy prices and increased IT&C related expenses supporting
the visible digitization of our customers’ journey.
Gross operating income reached RON 1,715 million (+14.3% compared to 2021) and cost to income ratio
improved on positive jaws effect (50.4% in 2022 vs 51.6% in 2021).
The asset quality remains solid, with NPL ratio
5
December 2021) and end of year NPL coverage rate
6
cost of risk registered RON 95 million charge (vs. RON 146 million release in 2021) linked to the
macroeconomic context, while the non-performing portfolio showed sustained recoveries and a low level of
new defaults.
Given all the above, BRD Group net profit amounted RON 1,337 million compared to RON 1,319 million in
2021, with ROE reaching 15.9% (13.4% in 2021). Return on assets stood at 1.9% in 2022 (vs. 2% in 2021).
The Bank recorded similar trends, with a net result of RON 1,286 million versus RON 1,279 million in 2021.
Neither Bank’s, nor the Group’s revenues depend on a single or group of connected customers; hence
there is no risk that the loss of a customer might significantly affect the income level.
Subsequent events
The Extraordinary General Shareholders’ Meeting approved on its meeting held on 16
th
an envelope of EUR 300 million, for one/several loans that can be eligible as Additional Tier 1 instruments,
in accordance with EU Regulation no 575/2013 on prudential requirements for credit institutions and
investment firms. The Loans shall be perpetual (including call options for the issuer), denominated in EURO
or RON, having a fixed or variable interest rate, an annually or semi-annually frequency, through one or
several drawings, until the maximum ceiling is reached. The envelope has a preventive purpose, answering
regulatory ratios in case of need.
AWARDS
2022
ü
Best ROA, Best ROE, awarded by Piata Financiara
ü
Best NPL dynamic, awarded by Piata Financiara
ü
Excellency in financing environment projects, awarded by Green Report
ü
Leader in green finance, awarded by Capital
ü
ü
awarded by Global Finance for 7 years, and last 7 years in a row respectively
ü
awarded by ARIR
5
6
5. R
ISK MANAGEMENT
Risk management within BRD is based on an integrated concept that takes into account the statutory and
regulatory norms as defined and required by the National Bank of Romania and European Supervisory
Bodies, the risk management standards of Société Générale, together with the best practices accepted by
the banking industry.
R
ISK MANAGEMENT OBJECTIVES AND
R
ISK
A
PPETITE SETTING
Risks are managed within a continuous process of identification, assessment, monitoring, reporting and
control, considering risk limits, approval authorities, segregation of duties and other risk mitigation
techniques.
The main objectives of the Bank’s risk management strategy are:
Ø
controlled manner, with due consideration for the stated risk appetite
Ø
system for risks’ analysis, measurement, monitoring, reporting and mitigation
Ø
activities of BRD group entities
Ø
Ø
In order to identify all the risks (financial and non-financial) to which BRD is exposed and which are inherent
to its activity, a comprehensive risk assessment exercise is performed on an annual basis. Therefore, the
Bank’s risk management strategy focuses on the following categories of risks identified as significant, any
of which could adversely affect its business, results of operations and financial situation:
Ø
Ø
Ø
Ø
Ø
Ø
Ø
Ø
Ø
Climate and environmental risks have been identified as factors that may aggravate existing risk categories.
Based on the results of the risk assessment exercise and with due consideration for its strategic objectives,
the Bank defines the risk appetite framework and the risk appetite statement.
The risk appetite represents the aggregate level and types of risk that BRD is willing to assume within its
risk capacity, in line with its business model, to achieve its strategic objectives. The risk appetite statement
sets the Bank’s approach towards taking on and managing risks and is structured along two dimensions:
quantitative and respectively qualitative. At aggregate level, the risk appetite is defined by reference to the
main strategic dimensions -
Profitability, Capital Adequacy, Creditworthiness, Liquidity and Leverage
the basis of the annual strategic planning, in order to ensure alignment of risk, capital and performance
targets, which allows the Bank to:
Ø
Ø
Ø
The aggregate risk appetite is further cascaded down to material risk categories and where appropriate, to
business segments. The qualitative statements are defined to complement the quantitative part of the risk
appetite, setting the overall tone for BRD’s approach to risk taking.
Key risk indicators and corresponding quantitative measures are defined by considering the risk profile,
size and complexity of activities performed by the Bank. Their evolution is regularly monitored over the year
in order to detect any events that may result in unfavorable developments on the risk profile.
R
ISK MANAGEMENT GOVERNANCE
The Group’s risk management governance is based on the following dimensions:
Ø
Ø
of risk culture, throughout the entire organizational structure, from the Board of Directors down to
operational teams
Ø
Ø
accurate, comprehensible and meaningful manner
Ø
procedures
Risk governance relies on the three lines of defense model, which ensures the identification of the functions
within the Bank responsible to address and manage the risks, while reinforcing segregation of duties
between various control functions.
The
first line
management of the risks arisen in conducting their daily activities, taking into account the Bank’s risk
appetite and its policies, procedures and controls.
The
second line
responsible for further identifying, measuring, monitoring, and reporting risks, ensuring compliance with
internal and external requirements and providing support to the business/operational functions in executing
their duties. The second line functions, which perform the management of significant risks, are as follows:
Ø
with credit risk, market risk and operational risk and oversee the evolution of all significant risks
within BRD
Ø
and FX risk in banking book), strategic risk and excessive usage of leverage effect risk. As
coordinator of the budgeting and capital planning processes, it ensures that the liquidity, capital
and business strategy are consistent with the risk appetite statement
Ø
Center Pole and Information Security Division manage IT risks (as components of operational risk)
Ø
Although the responsibility for the management of risks within the Bank is shared between the
structures of the second line of defense (as mentioned above), Risk Management Structures perform
the role of the centralized risk management function, by delivering the Bank’s wide holistic view on all
risks, ensuring that the risk strategy is complied with.
The
third line
and objective assurance on the quality and effectiveness of the Bank’s internal control system, the first and
second lines of defense and the risk governance framework. The Internal Audit function reports to and
operates under the mandate of the Board of Directors.
Risk management within BRD is governed by the management body, which is and assisted by specialized
committees in accomplishing its risk management and control responsibilities.
Board of Directors
The Board of Directors approves the risk and business strategy of BRD, sets the risk appetite and tolerance
levels and ensures that the Executive Committee properly transposes them at operational level.
Audit Committee
The Audit Committee plays a crucial role in the assessment of the quality of the internal control. It is
responsible for examining the internal framework for risk monitoring to ensure its consistency and
compliance with procedures, laws and regulations in force.
Risk Management Committee
The Risk Management Committee advises the Board of Directors on risk management in order to
develop, implement and update a solid internal governance framework, in accordance with local
regulations and policies of the Societe Generale Group.
Nomination Committee
The Nomination Committee advises the Board of Directors regarding the selection, monitoring and
succession of the members of the management body and the evaluation of the adequacy of key function
holders.
Remuneration Committee
The Remuneration Committee advises in elaborating and supervising the implementation of the Bank's
remuneration policy.
Executive Committee
The Board of Directors delegates the day to day management of BRD to the Executive Committee. The
Executive Committee is responsible for the implementation of the strategies approved by the Board of
Directors and ensures that a proper organization and informational flows are in place.
Main specialized committees assisting the Executive Committee
The
liabilities structure, of liquidity and funding sources, structural risks (interest rate risk and foreign exchange
risk in banking book) and of the Bank’s capital base.
The
Crisis Committee
and organization to face such situations.
The
products, new activities or outsourced activities or their significant changes, are correctly identified,
analyzed and assessed.
The Internal Control Committee
activities are carried out from an organizational / functional perspective, the results obtained and the
deficiencies found in internal control activities.
The Retail Risk Committee
has as main objective the analysis of the measures proposed by relevant
structures in order to improve the performance of retail lending activity and the monitoring of the associated
risk indicators.
The Projects’ Review Committee
The Data Governance Committee’s
mission is to analyze the data governance activity, mainly concerning
implementation of the data governance strategy and data quality.
The Price Committee’s
measures regarding the pricing policy and strategy (commissions, interest) of the Bank's products, taking
into account budgetary objectives, competitive environment, the Bank's commercial strategy and market
evolution
The Compliance Committee
management, including the presentation of the deficiencies identified during compliance control activity.
The Climate change, Environmental and Social Committee’s
(Corporate Social Responsibility) analyses by relating to the Bank’s objectives in order to present the
measures for implementing the CSR strategy (including climate change and environmental topics).
M
AIN RISK FACTORS
Challenging macroeconomic context
Banking business is highly sensitive to changes in financial markets and economic conditions. Nowadays,
the macroeconomic environment is a very challenging one, on the background of mutually interacting
factors such as: the invasion of Ukraine by Russia, the energy crisis, the significant increase of inflation,
the evolution of financing costs, the uncertainty regarding COVID-19 pandemic. All these elements, in
conjunction with the already existing vulnerabilities in the financial system, led to a readjustment of growth
forecasts, influencing in the same time the consumers and investors’ confidence.
Although the dynamic of the non-performing loan portfolio provides grounds for optimism, the evolution of
credit risk in the period ahead is tightly linked to the persistence of an unfavorable macroeconomic
environment.
Climate related and environmental risks
Environmental, social and governance (ESG) risks are defined as risks stemming from the current or
prospective impacts of ESG factors on counterparties or invested assets of financial institutions. ESG risks
are seen as aggravating factors to the traditional categories of risks and are likely to impact the banks’
activities in the short-, medium- and long-term.
In the coming period, the impact of climate change and the efforts undertaken at European level for the
transition to a green economy will have a growing influence on the financial system. Addressing risks
stemming from climate change and environmental degradation may be one of the main challenges for
banks in the years to come, as they are envisaged to play a more active role in supporting the transition to
a more sustainable economy.
Unpredictability and uncertainty of legal framework
The uncertainty and lack of predictability of legal changes could have an adverse effect on financial
institutions by putting pressure on liquidity, solvency and profitability.
Financial institutions are subject to a more and more extensive supervisory and regulatory framework (for
instance, various EBA guidelines, CRD VI, CRR 3, etc), while adaptation to such changes requires
significant resources that could affect the banks’ performance. Additionally, a new set of regulations arose
as a result of the high-level commitment to tackle climate change (e.g. CSRD - Corporate Sustainability
Reporting Directive, ESRS - European Sustainability Reporting Standards, EU Taxonomy, SFDR -
Sustainable Finance Disclosure Regulation, ESG Pillar 3 package). The high impact of the implementation
of the sustainable finance regulatory framework and the increase in non-financial reporting obligations, in
a relatively short timeframe, sets an additional challenge for banking institutions.
Highly competitive environment, undergoing digital transformation
The Bank operates in an environment subject to intense competition both from banking and emerging non-
banking actors (FinTechs), changing business models, translating in increasing risk to market shares and
margins. Competition refers to digital transformation, the speed of answering to the customers’ requests,
evolving products and services, innovation, reputation, price, technology infrastructure and data
management. Along with digital transformation, it is imperative for credit institutions to also manage the
associated risks may be exposed to (e.g. cyber risk, data leakage risk, etc.).
In addition, certain sectors of the financial services industry have become more concentrated, considering
the mergers and acquisitions of institutions involved in a broad range of financial services. Such changes
could result in the Group’s remaining competitors benefiting from greater capital resources or other
advantages, such as the ability to offer a broader range of products and services, which may enhance their
competitive position.
C
REDIT
R
ISK
M
ANAGEMENT
Credit risk management is regulated through a set of internal documents, which transpose local and EU
regulations, SG Group policy and risk management best practices in the internal framework.
Some of the main principles employed in managing credit risk are presented below:
Ø
Ø
credit competencies and approval limits; credit approval authorities are assigned to individuals
according to their qualifications, experience and training
Ø
borrowers as well as the purpose and structure of the credit, in-depth analysis of sources of
repayment and risk mitigation through requests for collaterals or guarantees
Ø
Ø
limits on single-name, economic sectors, geographical/regions, transactions/products, credit risk
mitigation techniques (defined in line with the Bank’s risk appetite)
Ø
Ø
processes
Ø
Ø
objective indicators
Ø
Ø
Directors
Ø
BRD’s exposure to credit risk is derived from its commercial, treasury and trading activities, the commercial
activities representing the core business of the Bank.
Exposures on sovereign risk are concentrated on the Romanian State and consist of the portfolio of treasury
bills and bonds, placements with the Central Bank for liquidity purposes (including the minimum reserve
requirements) and the guarantees received from the Romanian State for governmental programs.
Undertaking of credit risk is part of the Group’s risk management strategy based on its risk appetite. Société
Générale’s credit policy is based on the principle that approval of any credit risk undertaking must be based
on sound knowledge of the client and the client’s business, an understanding of the purpose and structure
of the transaction and the sources of repayment of the debt. Credit decisions must also ensure that the
structure of the transaction will minimize the risk of loss in the event the counterparty default.
C
REDIT RISK MITIGATION TECHNIQUES
BRD has a cash flow based lending approach, meaning the Bank expects debt to be serviced primarily
through the future cash flow/income generated by the debtor. Collateralization, in the form of collateral
(funded credit protection) or guarantee (unfunded credit protection), is accepted merely to mitigate credit
risk and it cannot serve as a substitute for the borrower’s ability to meet obligations.
The Bank accepts the following main types of securities:
Ø
Ø
instruments)
Ø
issued by guarantee funds and Eximbank, sovereign guarantees, endorsements)
Mortgages are the most frequent type of accepted collaterals. Nevertheless, the collateral structure is
further diversified subject to the type of financing (e.g. for working capital financing, receivables and
inventories are accepted as customary collateral).
Risk department is responsible for approving the operational procedures for regular valuation of guarantees
and collaterals.
Real estate collaterals
The market value of real estate collaterals is estimated by certified internal or external evaluators. The
valuation is performed in accordance with the International Valuation Standards and ANEVAR Standards
and Recommendations. To be noted that real estate valuations have to be verified by the competent units,
independently from the credit approval process.
The Bank uses the following valuation methods for real estate: market approach and income approach.
Revaluation is performed yearly in case of commercial/ industrial/ agricultural real-estate and plots of land
and at least once every 3 years, for residential real estate. Higher frequency reevaluation is performed
when the real estate market displays a significant negative evolution. BRD monitors the risks associated
with the valuation activity via implemented internal controls.
Guarantees
The credit risk mitigation effect of guarantees is closely linked to the guarantor’s creditworthiness and the
secured amount must be reasonably proportionate to the economic performance capabilities of the
protection provider.
The main guarantor for BRD’s clients is the Romanian State, which intervenes to sustain credit activity by
national wide guarantee programs implemented through the intermediation of Guarantee Funds
(FNGCIMM or FGCR) or Eximbank, main exposure of this type being generated by Prima / Noua Casa
program. Another category of guarantors is represented by commercial banks (local or foreign), issuing
LGs in favor of BRD clients. BRD’s indirect exposures on each guarantor are assessed using the same
principles as for direct credit exposures of BRD.
Residual risk management
The Bank systematically manages the residual risk (that could materialize in situations when credit risk
mitigation techniques are less efficient than expected) through the collateral policy (prudent validity,
acceptance and eligibility criteria), regular revaluation of the collaterals, regular monitoring through specific
risk indicators and capital requirement as residual risk is embedded in the methodologies developed as
part of ICAAP Policy.
Detailed information on credit risk is found in Note 43.1 to the consolidated and separate financial
statements as of the year ended December 31, 2022.
L
IQUIDITY RISK AND
F
UNDING RISK
Liquidity and funding risk is defined as the risk of not being able to meet expected and unexpected, current
and future cash flow or collateral requirements when they fall due and at a reasonable price.
The Group manages the exposure to the liquidity risk using a specific framework designed to manage it
both under normal day-to-day conditions and in the event of a potential liquidity crisis.
The liquidity risk management approach starts at the intraday level managing the daily payments flows,
forecasting and managing cash flows, and factoring in the access to central bank monetary policy
operations and standing facilities. It then covers a longer term perspective, comprising the maturity profile
of all assets and liabilities and the funding strategy.
BRD maintains a liquidity buffer of unencumbered, high quality liquid assets as an insurance against a
range of liquidity stress scenarios. A contingency funding plan is designed to protect the stakeholders’
interests and to ensure positive outcome in the event of a liquidity crisis.
In terms of governance, the Board of Directors establishes the liquidity risk appetite and tolerance, reviews
and approves the liquidity risk strategy and liquidity risk management framework at least on an annual basis
and ensures that Executive Committee manages liquidity risk effectively.
The Executive Committee, assisted by Assets & Liabilities Committee (ALCO), develops the liquidity
strategy and designs the liquidity risk management framework in accordance with the liquidity risk appetite
and tolerance in order to ensure that the Bank maintains sufficient liquidity, continuously reviews
information on the liquidity position of the Bank and reports to the Board of Directors on a regular basis,
implements the liquidity risk strategy and ensures that appropriate controls, procedures and information
flows are in place to support the strategy implementation and follow-up.
The liquidity risk position, under normal conditions, is measured at consolidated level using the static
liquidity gaps indicator which is defined as the difference between the expected future outflows and inflows
related to the current transactions (no new business included), determined for each time bucket and
currency based on the contractual maturity of the transactions, or, for non-maturing products, based on a
maturity modeled using historical client behavior or a conventional maturity.
For each budgeting and planning exercise, the future funding needs are assessed starting from the actual
liquidity position and budgeted evolution of assets and liabilities. When a deficit is expected, funding
solutions are assessed and appropriate actions are planned.
BRD performs liquidity risk stress tests on a quarterly basis in order to identify and quantify its exposures
to possible liquidity stresses, analyzing potential impacts on the cash flows and liquidity position. BRD
employs two stress test methodologies, one for a 30 days horizon with focus on the short term survival of
the Bank in a time of liquidity crisis and the other for a 6 month horizon, assessing the Bank’s resilience
and ability to continue to function in times of prolonged stressed liquidity conditions. The Bank also
implemented a reverse stress test scenario which assesses what assumptions could be considered in order
to challenge the viability of the institution, starting from a pre-defined outcome such as a breach of the
minimum required level for the Liquidity Coverage Ratio as it is considered within the Recovery Activation
Dashboard.
Detailed information on liquidity risk is found in Note 43.3 to the consolidated and separate financial
statements as of the year ended December 31, 2022.
I
NTEREST RATE RISK AND FOREIGN EXCHANGE RISK IN THE BANKING BOOK
(
STRUCTURAL RISKS
)
Structural exposure to interest rate and foreign exchange rate risks encompasses all exposures resulting
from commercial activities, their hedging and the proprietary transactions of the Group.
The interest rate and exchange rate risks pertaining to trading activities are monitored separately and
excluded from the structural risk measurement and management scope.
The general principle is to reduce structural interest rate and exchange rate risks to the greatest extent
possible. The interest rate and foreign exchange risks incurred both by the commercial activities and
proprietary activities (transactions regarding the shareholders’ equity, investments and issues of bonds)
are hedged, to the extent possible, on an individual basis or by means of macro-hedging techniques, the
remaining part is maintained within pre-established limits at prudent levels.
The interest rate risk is managed through two metrics: balance sheet sensitivity to yield curve shifts and
net interest income sensitivity. Balance sheet sensitivity is defined as the variation in the net present value
of future principal and interest cash flows of all items in the banking book, balance sheet and off-balance
sheet for two steering scenarios of +/- 10 bps parallel shift in the yield curve and for two stressed scenarios
of +/-100bps parallel yield curve shifts. A set of limits is applied to balance sheet sensitivity and the
compliance with those limits is monitored by ALCO on a monthly basis. The gaps between outstanding
assets and liabilities are determined on the basis of the contractual terms of transactions, models based on
clients’ historic behavior patterns, as well as conventional assumptions relating to certain balance sheet
items. Net interest income sensitivity indicator is calculated quarterly and presented to ALCO, but even
though a set of limits is in place for this indicator, the main steering indicator remains balance sheet
sensitivity.
Detailed information on interest rate risk is found in Note 43.2 to the consolidated and separate financial
statements as of the year ended December 31, 2022.
M
ARKET RISK IN TRADING BOOK
Market risk is defined as the risk of registering losses in on and off-balance sheet positions arising from
unfavorable movements of market parameters (FX rates, interest rates, share prices etc.).
Market risk management is integrated within Bank’s and Group’s risk management, BRD pursuing market
risks on a prudent approach, the objective being to ensure profitable market activities but undertaking risk
levels and capital needs as low as possible. Bank’s trading portfolio represents a small weight of Bank’s
total risk exposure and contains highly liquid instruments which are traded with good rated counterparts.
Market risk management is carried out according to the below principles:
Ø
Ø
Ø
for all products or activities generating market risk in trading book
Ø
Ø
Ø
the approved limits
Ø
market risk evolutions
Detailed information on market risk is found in Note 43.2 to the consolidated and separate financial
statements as of the year ended December 31, 2022.
O
PERATIONAL RISK
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes,
personnel and systems, or from external events. It includes legal risk, risk related to information technology
and communication and security risk, conduct risk and model risk, but excludes the strategic risk.
The Group’s operational risk management system was developed and strengthened over the years and
allows:
Ø
Ø
prevent/reduce operational risk losses
Ø
The day to day management of operational risk is the responsibility of employees from each business unit.
The personnel have to be always aware of their responsibilities in connection with identification and
reporting of operational risks and other duties which may arise in relation with the management of
operational risks.
Operational risk management tools put in place at BRD are:
Ø
Ø
Ø
Ø
Ø
Ø
Ø
new products for Banks’ clients, outsourcing of activities and significant modifications of the existing
products offered to the Bank’s clients
Ø
Ø
In 2022, the operational risk strategy focused on the following axes:
Ø
awareness and staff training, including specific session on fraud risk, information security and
business continuity risk
Ø
the internal and external environment.
6. C
APITAL MANAGEMENT AND ADEQUACY
C
ONSOLIDATION PERIMETER
The basis for calculation of own funds is the consolidated prudential perimeter.
As BRD is parent credit institution in Romania and, at the same time, subsidiary of Société Générale, BRD
Group consolidation perimeter for prudential purposes is defined in accordance with Regulation (EU) No
575/2013 (CRR), Part One, Title II, Chapter 2, Section 3.
The consolidated entities for prudential scope are identified based on the criteria as per Articles 4 (1) (3),
(16) to (27), 18 and 19 of CRR. According to Article 4 of CRR, entities consolidated in the prudential
reporting must have one of the following types of activity: credit institution, investment firm, ancillary
services undertaking and/or other financial institution.
In contrast, in accordance with BRD Group‘s IFRS financial statements, all entities controlled directly or
indirectly (including non-financial entities, insurance companies, etc.) are fully consolidated. Additional
exclusion of subsidiaries from prudential consolidation perimeter is based on criteria from Article 19 of CRR.
Non-consolidated subsidiaries are included in the prudential consolidated statements based on equity
method.
Based on the above, the prudential consolidation perimeter of BRD Group includes the parent company
BRD - Groupe Société Générale S.A and two fully consolidated subsidiaries:
Ø
Ø
O
WN FUNDS
BRD Group regulatory own funds as at December 31, 2022 amounted to RON 8,231 million (including
current year net result and the impact of OCI quick fix adjustments) compared to RON 7,422 million as at
December 31, 2021 (including the 2021 profit net of dividends paid in amount of RON 896 million).
Starting 2021 end, BRD applied the temporary treatment of unrealized gains and losses measured at fair
value through other comprehensive income, quick fix adjustment (art. 468 of Regulation (EU) 575/2013 as
amended by Regulation (EU) 873/2020 as regards certain adjustments in response to the COVID-19
pandemic), based on which institutions may remove from the calculation of their Common Equity Tier 1
items 40% (70% during 2021) of the amount of unrealized gains and losses accumulated since 31
December 2019 accounted for as ‘fair value changes of debt instruments measured at fair value through
other comprehensive income’ in the balance sheet, corresponding to exposures to central governments, to
regional governments or to local authorities. From 1
st
the recognition of other comprehensive income reserve in own funds ceased its validity.
BRD Group regulatory own funds as at December 31, 2022 consist of common equity capital (CET1) and
Tier 2 instruments.
Common Equity Capital (CET1) is formed of:
Ø
accounted until December 31, 2003. As at December 31, 2022, the share capital amounted to RON
696.9 million, unchanged versus previous periods. The hyperinflation adjustment amounted to
RON 1,819 million.
Ø
o
retained earnings arising from IFRS implementation adjustments.
o
risk, representing reserves established by the law and share based payment reserves.
Ø
value of debt instruments at fair value through other comprehensive income and from re-
measurement of defined benefit liability arising from the post-employment benefit plan. As
mentioned above, starting 2021 end, BRD applies the temporary treatment of unrealized gains and
losses measured at fair value through other comprehensive income, according to art. 468 of
Regulation (EU) 575/2013.
Regulatory deductions from CET 1 applicable as at December 31, 2022 essentially involved the following
elements:
Ø
876/2019 are deducted 100% from CET 1 (as compared to previous periods when intangible assets
accounting value was fully deducted from CET 1). Under this current approach, the positive
difference between the prudential and the accounting amortisation becomes fully deducted from
the CET 1 capital, while the residual portion of the carrying value of the software prudently valuated
is risk weighted at 100%. Goodwill is fully deducted from CET 1 capital.
Ø
cover losses or risks.
As at December 31, 2022, Tier 2 instruments consist of two subordinated loans concluded with the parent,
EUR 250 million in total (RON equivalent 1,237 million).
C
APITAL REQUIREMENTS
From a regulatory perspective, capital requirements cover:
Ø
Ø
Ø
Ø
The calculation of credit risk capital requirement takes into account the transactions’ risk profile and is
computed according to the standardized approach (CRR Part 3, Title 2, Chapter 2) using the Financial
Collateral Comprehensive Method and information regarding credit assessments performed by external
credit assessment institutions (ECAI). All CRR2 requirements have been implemented starting from June
2021.
The capital requirement for general position risk is calculated using the Maturity-based method.
Capital requirement for credit valuation adjustment is determined using the standardized method.
The capital requirement for operational risk is calculated according to the CRR, Part 3, Title 2, Chapter 4,
using advanced measurement approaches (AMA). BRD, as a member of the Société Générale Group, uses
AMA to measure operational risk since 2008 based on the SG internal methodology and calculation. The
allocation of operational risk capital requirements to the sub-consolidated entities is based on net banking
income and history of operational risk losses.
On top of the total regulatory ratio of 8% set by Art 92 from CRR, starting 2016, based on NBR requirements,
BRD Group maintains additional own funds to cover risks resulting from internal assessment and SREP
(supervisory review and evaluation process). In 2022 this requirement represented 5.87% of RWA (4.59%
during 2021). Thus, the TSCR (total SREP capital requirements) for BRD Group is 13.87% for 2022
(12.59% for 2021).
Overall capital requirements (OCR) represent the total of SREP requirements and capital buffers, namely:
Ø
buffer is mandatory and fully effective from 1 January 2019 and amounts to 2.5% of total RWA.
Ø
system-wide risk is building up, capped at 2.5% of total RWA. According to NBR Order 6/2021
amending the NBR Order 12/2015, the level of countercyclical buffer for credit exposures in
Romania is 0.5% (from 0% previously), starting October 17, 2022.
Ø
Romania, may be subject to an O-SII Capital Buffer of up to 2% of the total RWA. BRD was
identified as O-SII by NBR and O-SII Capital Buffer is 1% starting with 1 January 2016 until
December 2021 end. Based on a new calibration methodology, starting 1 January 2022 the O-SII
Capital Buffer for BRD is 1.5% of total RWA.
Ø
with the aim of supporting the adequate management of credit risk and enhancing banking sector
resilience to unanticipated shocks, amid unfavourable structural circumstances. The buffer is
applied to all exposure and is calibrated at 0% - 2%, depending on the level of the non-performing
loans ratio and the coverage ratio. The systemic risk buffer applicable for BRD is 0%. Following the
release of NBR Regulation 2/2022 amending Regulation 5/2013, transposing CRD V, the
requirement for structural buffers will be the sum of O-SII buffer and Systemic Risk Buffer.
M
INIMUM REQUIREMENT FOR OWN FUNDS AND ELIGIBLE LIABILITIES
(MREL)
According to Bank Recovery and Resolution Directive (BRRD), the banks should have the loss-absorbing
and recapitalization capacity necessary to help ensure that, in, and immediately following a resolution,
those institutions can continue to perform critical functions (criticality assessed from the perspective of
impact on the markets) without putting taxpayers’ funds, meaning public funds, or financial stability at risk.
Therefore it was regulated a requirement for own funds and eligible liabilities (MREL) for all credit
institutions and investment firms through BRRD1 (Directive 2014/59) transposed in Romanian legislation
through Law 312/2015, and BRRD2 (Directive 2019/879) transposed in local legislation through Law
320/2021.
BRD received in April 2022 the notification of MREL, according to BRRD2, determined by the resolution
authority considering its consolidated situation. This requirement is set currently at the level of 25.22% of
TREA (total risk exposure amount) and 5.90% of LRE (leverage exposure), to be complied with by 1
January 2024, subject to an intermediate target of 22.23% of TREA and 5.90% of LRE at 1 July 2022. On
top of the above, combined buffer requirement should be respected (4.5% of TREA, starting 17 October
2022). BRD shall ensure a linear build-up of own funds and eligible liabilities towards the requirements.
As the resolution strategy for Société Générale is Single Point of Entry, with upstream of losses to the
resolution entity (Société Générale SA), the total MREL should be satisfied with own funds and a new
category of debt (senior not preferred, SNP), ranking above own funds and subordinated that is not AT1 or
T2, but below senior preferred. The SNP should be concluded with the parent (Art. 45 f (2) BRRD2).
BRD concluded three senior non-preferred loans with the parent, of EUR 720 million in total, as presented
below:
-
EUR 450 million, initial term of three years (received in December 2021)
- EUR 150 million, initial term of three years (received in June 2022)
- EUR 120 million, initial term of three years (received in December 2022).
RON m
2021
2022
2022 w/o
OCI quick
fix impact
2021
2022
2022 w/o
OCI quick
fix impact
Tier 1 capital
6,646
6,714
5,818
6,927
6,995
6,098
Tier 2 capital
495
1,237
1,237
495
1,237
1,237
Total own funds
7,141
7,951
7,055
7,422
8,231
7,335
Risk weighted assets
Credit risk (including counterparty risk)
27,067
29,150
29,577
28,753
31,067
31,495
Market risk
138
76
76
132
77
77
Operational risk
2,125
2,448
2,448
2,211
2,526
2,526
Credit valuation adjustment (CVA) risk
266
218
218
266
218
218
Total risk exposure amount (TREA)
29,596
31,892
32,320
31,362
33,888
34,316
Regulatory Capital Adequacy Ratio
24.13%
24.93%
21.83%
23.66%
24.29%
21.37%
Tier 1 ratio
22.46%
21.05%
18.00%
22.09%
20.64%
17.77%
Eligible liabilities (senior non preferred loans)
3,562
3,562
Total own funds and eligible liabilities
11,794
10,897
MREL (% of TREA)
34.80%
31.76%
Bank
Group
The summary of the BRD Group and Bank capital adequacy is presented below:
Note: Own funds at December 31, 2022 end include full net profit of the year 2022
L
EVERAGE
R
ATIO
The leverage ratio reached 8.4% (including current year net result and OCI quick fix adjustment) as at 31
December 2022 at Group level, which is well above the 3% minimum requirement enforced based on
Regulation 2019/876 amending CRR starting with June 2021.
The sustainable level of leverage ratio results from the strong capital base, namely high level Common
Equity Tier 1 capital and Tier 2 capital, and a balance-sheet structure specific to the universal bank business
model with core focus on retail activities.
I
NTERNAL
C
APITAL ADEQUACY ASSESSMENT PROCESS
(ICAAP)
In accordance with Article 148 of the Emergency Ordinance no. 99/2006 on credit institutions and capital
adequacy, as subsequently amended and NBR Regulation no. 5/2013 on prudential requirements for credit
institutions, BRD has in place a process for internal assessment of capital adequacy to risks.
The Bank performs periodically an evaluation of internal capital adequacy to risks by comparing the
available own funds with internal capital requirements. The general framework for ICAAP is updated
annually and the capital adequacy monitoring is performed on a quarterly basis.
A risk assessment is performed annually, and involves the evaluation of all risks to which the Bank may be
exposed and the identification of the significant risks.
The internally evaluated capital requirement is determined using „Pillar 1 plus” approach, where the capital
requirements for the following risks are added to the regulatory capital requirements:
Ø
to foreign currency lending to unhedged borrowers and risks arisen from applying less
sophisticated approaches
Ø
Ø
Ø
Ø
For the purposes of the internal capital adequacy assessment, the available own funds are considered
equal to the regulatory own funds.
Based on the Business and Risk Strategy and on the Risk Appetite, the Bank makes projections of the own
funds and capital requirements on a three years horizon in order to ensure their adequacy, both in normal
course of business and under stress situations.
7. I
NTERNAL CONTROL FRAMEWORK
Internal Control System relies on the three lines of defense model, which reinforces segregation of duties
between various control functions.
The
first line
of the Bank’s structures (located both in the Network and Headquarters) which are primarily responsible for
the ongoing management of the risks arisen in conducting their daily activities, taking into account the
Bank’s risk appetite and its policies, procedures and controls.
All Bank’s structures (including structures acting as control functions) are responsible with performing the
first level controls. They represent all measures implemented at operational level, in order to ensure the
conformity, validity and security of the performed operations (controls on operational activity and controls
on accounts).
The responsibility for the implementation and operation of first level controls is with the management of all
Bank’s structures (both in first and second line of defense), by the continuous management of risks arising
from their daily activities, as per internal normative framework, but also for the implementation of first-level
controls and by taking the necessary corrective measures in all cases where deficiencies are identified as
a result of the processes or of the carrying out of the control.
Business Integrity Support (BIS) coordinates and harmonizes the managerial supervision by providing
support to operational management in its implementation. BIS centralizes the results of managerial
supervision controls and submits them to the Executive Committee, Risk Management Committee and
Internal Control Committee, if the case.
In a manner similar to BIS, General Accounting Division through the dedicated team, coordinates and
assists the Bank's structures in the managerial supervision of accounts.
The
second line
functions that oversee risks, they ensure that risks are identified, measured, monitored and reported,
according to internal and external requirements, and provide support to operational structures in meeting
their risk management tasks.
Risk Management Function is responsible for overseeing risk identification, evaluation, monitoring, and
reporting activities, independently of operational and support structures. It has the mission to support the
Bank's structures in managing the risks arising from their day-to-day activities. Deputy CEO in charge of
Risk (Chief Risk Officer) is the Coordinator of the Centralized Risk Management function and reports to the
management body, as well as to relevant committees, all the results / conclusions / recommendations for
improving the risk management function. Details regarding Risk Management Function and structures
involved are presented in the chapter regarding risk management governance.
As part of the risk management function, BRD has in place a Level 2 control structure that has the
responsibility to ensure a better internal control system efficiency by evaluating the quality of the level 1
control. This assessment addresses controls to prevent operational risks generated by the activities and
processes within BRD Group. Level 2 control has the following responsibilities:
Ø
Evaluating the design of Level 1 controls / control procedures to ensure that there is a proper
framework for monitoring and controlling operational risks related to activities
Ø
Evaluating the performance of these controls to ensure that all operational risks and anomalies
have been identified by the first level of control, and that there are appropriate remedial actions and
that they are implemented
Compliance Function is an internal control function independent of the other control functions. Its staff has
no attributions that fall within the scope of the activities they are to monitor and control and must not be in
any conflict of interest from the point of view of compliance responsibilities. The compliance function is
coordinated by the Director of the Compliance Department, who is the coordinator of the compliance
function at Bank level, being hierarchically subordinated to the Bank's CEO.
The
third line
and objective assurance on the quality and effectiveness of the Bank’s internal control system, the first and
second lines of defense and the risk governance framework. Internal audit function reports to and operates
under the mandate of the Board of Directors.
The main instruments implemented at BRD level for ensuring an efficient internal control system are:
Ø
instructions, work procedures) and their periodic review
Ø
apply working procedures adapted to the nature and volume of activity, taking into account all risk
types
Ø
and organizational structures, including appropriate segregation of duties at all organizational
levels, in order to prevent assignment of conflicting responsibilities
Ø
risks
Ø
Ø
Ø
management level, who should address the issues promptly
Ø
The internal control framework described above is applicable to the financial reporting processes and
provides reasonable assurance on the reliability of financial reporting, compliance with applicable laws and
regulations, as well as with the internal policies and procedures.
It is the Board of Directors’ assessment that the Group has adequate internal control and risk management
arrangements in place with regard to the Group’s risk profile and strategy.
8. C
ONCLUSIONS AND PERSPECTIVES FOR
2023
2022 was a very particular year, with the unfolding of dramatic geopolitical evolutions since the beginning
of the war in Ukraine. In conjunction with already elevated inflationary pressures, these evolutions have
made their mark on the global economic environment. The business environment in Romania has been
fairly well protected thanks to the actions of European and national authorities and the resilience of
companies, which indicates that the economic system has reached a rather advanced degree of maturity.
Overall, Romanian economy expanded by 4.8% compared to 2021, counting among the best performing
EU member states.
In this context, BRD remained a truly committed, trustworthy and effective partner of Romania’s economy
and of its customers. The value of new loans granted to individuals reached almost RON 7.5 billion, marking
a record level for the housing loan production and the second best year for the new consumer loans.
Lending to corporates registered an excellent dynamic with outstanding loan portfolio growth reaching 26%
versus 2021 end, underpinned also by the active participation in IMM Invest program. In addition, BRD
strong commitment in supporting sustainability transitions continued to firmly materialize, with almost RON
1.1 billion sustainable financing transactions concluded in 2022.
The digital journey of customers continued to be further enhanced, with important deliveries such as the
launch of instant payments and 100% online credit card issuance. The digital adoption increased and BRD
mobile app, YouBRD has already surpassed the significant milestone of 1 million users.
Benefiting on a solid commercial activity, the net banking income increased on a yearly basis, being
underpinned by net interest income advance and the strong momentum of financial markets activity.
Despite significant inflationary pressures, costs’ increase was limited by maintaining a rigorous spending
discipline, while further supporting the digital transformation roadmap. The asset quality remained solid,
with a low NPL ratio and a comfortable coverage. All the above translated into a high level of profitability
for the full year.
BRD confirms its solidity and determination to continue to responsibly fulfil its mission as a leading bank in
Romania. In addition, BRD continues its investments in essential areas for the future of Romanian society,
like education, science & technology, culture, sport, environment, remaining a committed partner for both
its clients and the society.
Further details on the Bank’s perspectives and objectives are presented in the budget for 2023 which is
submitted for approval to the General Assembly of Shareholders.
9. B
OARD OF DIRECTORS
’
1) Considering the present report, we submit for the approval of the General Assembly of the
Shareholders of BRD the separate and consolidated financial statements prepared according to
the International Financial Reporting Standards as adopted by the European Union, for the period
ended December 31, 2022, made of:
-
-
-
-
-
-
2)
No dividend from 2022 profit shall be proposed for approval by General Shareholders Meeting.
This proposal is in consistency with the strong recommendations of prudence from National
Committee for Macroprudential Oversight and National Bank of Romania. Considering that the high
risk of volatility persists and the temporary treatment of unrealized gains and losses of financial
instruments measured at fair value through other comprehensive income (“quick fix relief”) is no
longer applicable starting 1
st
lending capacity while respecting on a permanent basis, including in severely adverse conditions
the regulated ratios.
3) Discharge of the Board of Directors.
Giovanni LUCA SOMA
François BLOCH
Chairman of the Board of Directors
Chief Executive Officer
Etienne LOULERGUE
Deputy Chief Executive Officer
A
PPENDIX
1:
S
TATEMENT OF
C
OMPLIANCE WITH THE PROVISIONS OF CORPORATE
GOVERNANCE CODE OF
B
UCHAREST STOCK EXCHANGE
(BSE)
PROVISION
COMPLY WITH
PARTIAL
COMPLY
WITH
DO NOT
COMPLY
WITH
REASON FOR FAILURE
TO COMPLY WITH
Section A – Responsibilities
A.1. All companies should have internal
regulation of the Board which includes
terms of reference/responsibilities for
Board and key management functions of
the company, applying, among others,
the General Principles of Section A.
X
A.2. Provisions for the management of
conflict of interest should be included in
Board regulation. In any event, members
of the Board should notify the Board of
any conflicts of interest which have
arisen or may arise, and should refrain
from taking part in the discussion
(including by not being present where
this does not render the meeting non-
quorate) and from voting on the adoption
of a resolution on the issue which gives
rise to such conflict of interest.
X
A.3. The Board of Directors or the
Supervisory Board should have at least
five members.
X
A.4. The majority of the members of the
Board of Directors should be non-
executive. At least one member of the
Board of Directors or Supervisory Board
should be independent, in the case of
Standard Tier companies. Not less than
two non-executive members of the Board
of Directors or Supervisory Board should
be independent, in the case of Premium
Tier Companies. Each member of the
Board of Directors or Supervisory Board,
as the case may be, should submit a
declaration that he/she is independent at
the moment of his/her nomination for
election or re-election as well as when
any change in his/her status arises, by
demonstrating the ground on which
he/she is considered independent in
character and judgement in practice and
according to the following criteria:
A.4.1. Not to be the CEO/executive
officer of the company or of a company
controlled by it and not have been in such
position for the previous five years.
A.4.2. Not to be an employee of the
company or of a company controlled by
it and not have been in such position for
the previous five (5) years.
A.4.3. Not to receive and not have
received additional remuneration or
other advantages from the company or
from a company controlled by it, apart
from those corresponding to the quality
of non-executive director.
A.4.4. Is not or has not been an
employee of, or has not or had not any
contractual relationship, during the
previous year, with a significant
shareholder of the company, controlling
more than 10% of voting rights or with a
company controlled by it.
A.4.5. Not to have and not have had
during the previous year a business or
professional relationship with the
X
company or with a company controlled
by it, either directly or as a customer,
partner, shareholder, member of the
Board/Director, CEO/executive officer or
employee of a company having such a
relationship if, by its substantial
character, this relationship could affect
his/her objectivity.
A.4.6. Not to be and not have been in the
last three years the external or internal
auditor or a partner or salaried associate
of the current external financial or
internal auditor of the company or a
company controlled by it.
A.4.7. Not to be a CEO/executive officer
in another company where another
CEO/executive officer of the company is
a non-executive director.
A.4.8. Not to have been a non-executive
director of the company for more than
twelve years.
A.4.9. Not to have family ties with a
person in the situations referred to at
points A.4.1. and A.4.4.
A.5. A Board member’s other relatively
permanent professional commitments
and engagements, including executive
and non-executive Board positions in
companies and not-for-profit institutions,
should be disclosed to shareholders and
to potential investors before appointment
and during his/her mandate.
X
A.6. Any member of the Board should
submit to the Board, information on any
relationship with a shareholder who
holds directly or indirectly, shares
representing more than 5% of all voting
rights. This obligation concerns any kind
of relationship which may affect the
position of the member on issues
decided by the Board.
X
A.7. The company should appoint a
Board secretary responsible for
supporting the work of the Board.
X
A.8. The corporate governance
statement should inform on whether an
evaluation of the Board has taken place
under the leadership of the chairman or
the nomination committee and, if it has,
summarize key action points and
changes resulting from it. The company
should have a policy/guidance regarding
the evaluation of the Board containing
the purpose, criteria and frequency of the
evaluation process.
X
A.9. The corporate governance
statement should contain information on
the number of meetings of the Board and
the committees during the past year,
attendance by directors (in person and in
absentia) and a report of the Board and
committees on their activities.
X
A.10 The corporate governance
statement should contain information on
the precise number of the independent
members of the Board of Directors or of
the Supervisory Board.
X
A.11. The Board of Premium Tier
companies should set up a nomination
committee formed of non-executives,
which will lead the process for Board
appointments and make
recommendations to the Board. The
majority of the members of the
X
nomination committee should be
independent.
Section B - Risk management and
internal control system
B.1 The Board should set up an audit
committee, and at least one member
should be an independent non-
executive. The majority of members,
including the chairman, should have
proven an adequate qualification
relevant to the functions and
responsibilities of the committee. At least
one member of the audit committee
should have proven and adequate
auditing or accounting experience. In the
case of Premium Tier companies, the
audit committee should be composed of
at least three members and the majority
of the audit committee should be
independent.
X
B.2. The audit committee should be
chaired by an independent non-
executive member.
X
B.3. Among its responsibilities, the audit
committee should undertake an annual
assessment of the system of internal
control.
X
B.4. The assessment should consider
the effectiveness and scope of the
internal audit function, the adequacy of
risk management and internal control
reports to the audit committee of the
Board, management’s responsiveness
and effectiveness in dealing with
identified internal control failings or
weaknesses and their submission of
relevant reports to the Board.
X
B.5. The audit committee should review
conflicts of interests in transactions of the
company and its subsidiaries with related
parties.
X
B.6. The audit committee should
evaluate the efficiency of the internal
control system and risk management
system.
X
B.7. The audit committee should monitor
the application of statutory and generally
accepted standards of internal auditing.
The audit committee should receive and
evaluate the reports of the internal audit
team.
X
B.8. Whenever the Code mentions
reviews or analysis to be exercised by
the Audit Committee, these should be
followed by cyclical (at least annual), or
ad-hoc reports to be submitted to the
Board afterwards.
X
B.9. No shareholder may be given undue
preference over other shareholders with
regard to transactions and agreements
made by the company with shareholders
and their related parties.
X
B.10. The Board should adopt a policy
ensuring that any transaction of the
company with any of the companies with
which it has close relations, that is equal
to or more than 5% of the net assets of
the company (as stated in the latest
financial report), should be approved by
the Board following an obligatory opinion
of the Board’s audit committee, and fairly
disclosed to the shareholders and
potential investors, to the extent that
such transactions fall under the category
X
of events subject to disclosure
requirements.
B.11. The internal audits should be
carried out by a separate structural
division (internal audit department) within
the company or by retaining an
independent third-party entity.
X
B.12. To ensure the fulfilment of the core
functions of the internal audit
department, it should report functionally
to the Board via the audit committee. For
administrative purposes and in the scope
related to the obligations of the
management to monitor and mitigate
risks, it should report directly to the chief
executive officer.
X
Section C - Fair rewards and
motivation
C.1. The company should publish a
remuneration policy on its website and
include in its annual report a
remuneration statement on the
implementation of this policy during the
annual period under review.
The remuneration policy should be
formulated in such a way that allows
stakeholders to understand the
principles and rationale behind the
remuneration of the members of the
Board and the CEO, as well as of the
members of the Management Board in
two-tier board systems. It should
describe the remuneration governance
and decision-making process, detail the
components of executive remuneration
(i.e. salaries, annual bonus, long term
stock-linked incentives, benefits in kind,
pensions, and others) and describe each
component’s purpose, principles and
assumptions (including the general
performance criteria related to any form
of variable remuneration). In addition, the
remuneration policy should disclose the
duration of the executive’s contract and
their notice period and eventual
compensation for revocation without
cause.
The remuneration report should present
the implementation of the remuneration
policy vis-à-vis the persons identified in
the remuneration policy during the
annual period under review.
Any essential change of the
remuneration policy should be published
on the corporate website in a timely
fashion.
X
Section D - Building value through
investors’ relations
D.1. The company should have an
Investor Relations function - indicated,
by person (s) responsible or an
organizational unit, to the general public.
In addition to information required by
legal provisions, the company should
include on its corporate website a
dedicated Investor Relations section,
both in Romanian and English, with all
relevant information of interest for
investors, including:
D.1.1. Principal corporate regulations:
the articles of association, general
shareholders’ meeting procedures.
D.1.2. Professional CVs of the members
of its governing bodies, a Board
X
member’s other professional
commitments, including executive and
non-executive Board positions in
companies and not-for-profit institutions;
D.1.3. Current reports and periodic
reports (quarterly, semi-annual and
annual reports) – at least as provided at
item D.8 – including current reports with
detailed information related to non-
compliance with the present Code;
D.1.4. Information related to general
meetings of shareholders: the agenda
and supporting materials; the procedure
approved for the election of Board
members; the rationale for the proposal
of candidates for the election to the
Board, together with their professional
CVs; shareholders’ questions related to
the agenda and the company’s answers,
including the decisions taken;
D.1.5. Information on corporate events,
such as payment of dividends and other
distributions to shareholders, or other
events leading to the acquisition or
limitation of rights of a shareholder,
including the deadlines and principles
applied to such operations. Such
information should be published within a
timeframe that enables investors to
make investment decisions;
D.1.6. The name and contact data of a
person who should be able to provide
knowledgeable information on request;
D.1.7. Corporate presentations (e.g. IR
presentations, quarterly results
presentations, etc.), financial statements
(quarterly, semi-annual, annual), auditor
reports and annual reports.
D.2. A company should have an annual
cash distribution or dividend policy,
proposed by the CEO or the
Management Board and adopted by the
Board, as a set of directions the company
intends to follow regarding the
distribution of net profit. The annual cash
distribution or dividend policy principles
should be published on the corporate
website.
X
D.3. A company should have adopted a
policy with respect to forecasts, whether
they are distributed or not. Forecasts
means the quantified conclusions of
studies aimed at determining the total
impact of a list of factors related to a
future period (so called assumptions): by
nature such a task is based upon a high
level of uncertainty, with results
sometimes significantly differing from
forecasts initially presented. The policy
should provide for the frequency, period
envisaged, and content of forecasts.
Forecasts, if published, may only be part
of annual, semi-annual or quarterly
reports. The forecast policy should be
published on the corporate website.
X
D.4. The rules of general meetings of
shareholders should not restrict the
participation of shareholders in general
meetings and the exercising of their
rights. Amendments of the rules should
take effect, at the earliest, as of the next
general meeting of shareholders.
X
D.5. The external auditors should attend
the shareholders’ meetings when their
reports are presented there.
X
D.6. The Board should present to the
annual general meeting of shareholders
a brief assessment of the internal
controls and significant risk management
system, as well as opinions on issues
subject to resolution at the general
meeting.
X
D.7. Any professional, consultant, expert
or financial analyst may participate in the
shareholders’ meeting upon prior
invitation from the Chairman of the
Board. Accredited journalists may also
participate in the general meeting of
shareholders, unless the Chairman of
the Board decides otherwise.
X
D.8. The quarterly and semi-annual
financial reports should include
information in both Romanian and
English regarding the key drivers
influencing the change in sales,
operating profit, net profit and other
relevant financial indicators, both on
quarter-on-quarter and year-on-year
terms.
X
D.9. A company should organize at least
two meetings/conference calls with
analysts and investors each year. The
information presented on these
occasions should be published in the IR
section of the company website at the
time of the meetings/conference calls.
X
D.10. If a company supports various
forms of artistic and cultural expression,
sport activities, educational or scientific
activities, and considers the resulting
impact on the innovativeness and
competitiveness of the company part of
its business mission and development
strategy, it should publish the policy
guiding its activity in this area.
X
APPENDIX
2:
NON-FINANCIAL
STATEMENT
This non-financial statement represents only a very brief description of the BRD approach on sustainability
and corporate social responsibility. A detailed description of BRD activity shall be presented in a separate,
dedicated sustainability report drafted in accordance to Romanian legislation regarding the non-financial
reporting: National Bank of Romania (NBR) Order No. 7/2016, Financial Supervisory Authority (ASF)
Regulation No. 5/2018, the Ministry of Public Finance (MPF) Order No. 2844/2016 and the Ministry of Public
Finance (MPF) Order No. 3456/2018 as well as Global Reporting Standards (GRI).
I. DESCRIPTION OF THE ACTIVITY
Details on chapter 4 of the Report – Group Activity and Results.
II.
CORPORATE SOCIAL RESPONSIBILITY
As part of Société Générale Group which is a signatory to the United Nations (UN) Global Compact since
2003, BRD Group is fully committed to integrate these principles relating to human rights, working
conditions and the fight against corruption in all its activities and to actively promote the principles within
the value chain. Furthermore, BRD Group supports and contributes meeting the UN Sustainable
Development Goals (SDGs), recognizing their importance in addressing the biggest societal challenges of
the world.
In the following years, BRD Group wants to increase its contribution to these global objectives and establish
more actions trough which will better contribute to their achieving.
Through the Corporate Social Responsibility (CSR) policy established since 2020, BRD reinforces its
assumed role in society: a reliable partner for its employees, customers and suppliers that the Group
support to achieve their dreams and goals and a factor of progress for the economy, the environment and
the future Romanian society. Through the CSR policy the BRD supports development, innovation and
sustainability for both the Bank and its internal and external stakeholders. In developing and implementing
its CSR policy, BRD builds on seven values and principles and the above mentioned UN SDGs.
The 7 BRD Values and Principles
1. Client first - Trustworthy partners for our customers
2. Integrity - Always do the right thing
3. Care - We care about our people
4. Team spirit - We are One Team built on mutual trust
5. Innovation - We believe in simplicity
6. Responsibility - We lead by example and courage
7. Commitment - We hold ourselves, with professionalism, to the highest standards
For BRD, mitigating climate change is one of the most important global objectives to which we can
contribute considering the financing products and solution we can offer to support the transition to a low-
carbon and less-intensive resource consumption economy in line with the objectives of the European Green
Deal, the Paris Climate Change Agreement and the EU climate targets.
As a consequence, SG Group become a stronger supporter and a direct contributor to the main international
initiatives that fight against climate change and encourage climate change mitigation measures. Thus, in
2017, SG adopted the Principles for Positive Impact Finance (UNEP -FI) and became a supporter of the
recommendations of TCFD. In 2019, SG Group adhered to the Katowice commitment to align financing
portfolios with global climate objectives and joined, as the first French bank, the Climate Bonds Partner
Programme, an international network of financial actors working with Climate Bonds to shift investment
towards a low-carbon and climate resilient economy. In the same year, SG Group signed the Poseidon
Principles that promote low carbon emissions for the global shipping industry, by integrating climate
objectives into portfolio management and bank lending decisions. Starting 2020, the Group is aligned with
the Paris Agreement and helped found the Net Zero Banking Alliance in April 2020. As part of the SG
Group, BRD Group supports and acknowledges all these international initiatives, striving to contribute to
the achievement of these ambitious objectives. In addition to the fight against climate change, BRD Group
also supports other environmental issues, such as biodiversity. SG Group has implemented a special cross-
sector policy on biodiversity conservation, which applies to all Group banking and financial operations and
involves procedures for reviewing dedicated transactions (for which the underlying asset is known and fit
in the perimeter of evaluations) and customers. As a direct consequence, Environmental and Social (E&S)
standards apply to all activities carried out by the Bank. The principles of sustainable financing with a
positive impact are based on BRD’s vision and commitments in the field of CSR. Beyond the E&S risk
assessment activities, the Bank is committed to promoting sustainable investments and financing with a
positive impact.
Implementation of the CSR policy
In order to implement the CSR policy and ensure a follow-up of its performance within BRD, the structures
of the Bank directly involved in the interaction with stakeholders fulfill the attributions presented below. In
this sense, each structure has the freedom and responsibility to detail the stated principles as well as how
to inform the partners of these principles according to the specifics of its own activity in the normative
documents that regulate its activity. The obligations of the bank’s structures for the implementation of the
CSR policy are the following:
●
related to CSR policy in relation to employees, customers, suppliers and other third parties;
●
as to partners, to the principles of positive impact financing taking into account the principles of
the Bank’s CSR policy; communicates to the Communication Division the relevant information on
the actions taken to implement the CSR policy and their results, upon request and within the
deadlines set by SEGL (General Secretariat);
●
progress. In addition to the above, the following structures fulfill specific attributions related to the
implementation of CSR policies at the level of the Bank.
The General Secretariat (SEGL) - Corporate Affairs Division
●
structures involved in this activity and in consultation with the Climate Change, Environmental and
Social Change Committee;
●
with specialized bodies and plays the role of interface with the outside world in CSR issues;
●
necessary, the reports requested by the SG regarding the CSR activities carried out at BRD level;
●
by the Bank with external suppliers;
●
progress on CSR related topics;
●
obligations by other Bank structures;
●
the management; Together with the Communication Division, it communicates to internal and
external stakeholders the carried-out CSR projects and their results;
●
transposing the specific steps that the Bank takes in order to achieve the CSR objectives;
●
group - CSR Team - responsible for monitoring and evaluating how the principles of CSR are
implemented. The CSR Team meets whenever necessary.
The General Secretariat (Communication Division) implements the Bank’s CSR policy in relation to
the categories of stakeholders in its area of responsibility, as follows:
●
implements the policy of sponsorship and support of communities;
●
to the Bank. These will take into account: the field of activity of the organization and the purpose of
the project, the size and history of the organization, the history of the relationship between the Bank
and the organization, the financial value of the projects;
●
the CSR projects carried out and their results. Provides the Corporate Affairs Division support in
the drafting of the Sustainability Report.
Human Resources Department (DRU)
●
in CSR projects carried out within the communities in which the Bank operates and in collaboration
with its partners among NGOs, sports and / or cultural associations, etc.
Environmental Social and Positive Impact Financing Division (ESPIF)
●
and in structuring sustainable financing transactions with a positive impact. BRD is planning to draft
a specific sustainability strategy in the next period in order to take into account the latest
developments in the field, the general strategy of the bank and stakeholders’ expectations. In
addition, in order to strengthen the general approach of the group in this field of sustainability, there
are other initiatives at the level of each entity.
Climate Change, Environmental and Social Committee is a permanent consultative committee whose main
mission is to carry out strategic CSR analysis by reporting to the Bank’s objectives, in order to present to
the Management Committee, the measures for implementing the CSR strategy in this area.
The mission includes making proposals for setting the Bank’s objectives, adopting the relevant regulatory
framework, monitoring the Bank’s commitments, communication and any other topics related to
environmental, climate and social issues. The committee was established in 2021 and is chaired by the
CEO.
The Committee discussed as follows: ESG roadmap, CNSM Report on Green Finance, UNEP FI Report
on testing the applicability of EU Taxonomy to core banking products, EU Taxonomy preparation,
programmes meant to prepare BRD for the new and/or upcoming legislation in the area of sustainability,
CSR disclosure, etc. In order to implement the CSR Group policy and to ensure a follow-up of its
performance, there are more structures established at the Bank level.
Group Commitments and CSR topics
As part of Société Générale Group, BRD conduct its business with the utmost respect for the values
under:
ü
ü
ü
ü
and Development);
ü
ü
In addition, Société Générale has shown its proactive commitment since 2000 to the following
public or private initiatives:
ü
ü
ü
principles relating to human rights, working conditions and the fight against corruption;
ü
ü
ü
ü
February 2019);
ü
ü
Consumer Goods Forum) to fight tropical deforestation;
ü
Institutions”, launched during COP21;
ü
United Nations, and the International Labour Organization’s Global Business Charter on
ü
Disability
ü
2017: Adoption of the Principles for Positive Impact Finance (UNEP-FI);
ü
(TCFD);
ü
ü
international network of financial actors working with Climate Bonds to shift investment towards a
low-carbon and climate resilient economy.
ü
industry, by integrating climate objectives into portfolio management and bank lending decisions.
ü
ü
ü
Working Group, Sustainable STEEL Principles
III.
Throughout its activities, the Bank aims to build customer relationships based on trust, responsibility and
ethics. As a bank, BRD contributes to the sustainable economic, social and environmental development of
the economy in which it operates. Being responsible and ethical means responding quickly to customers’
needs while protecting the long-term interests of all stakeholders, through strict compliance with the
applicable rules.
Customer satisfaction is subject to periodic studies. Société Générale conducts annual group-level surveys
for each subsidiary, the main segments of clients (individuals, small business and corporate clients), to
evaluate the level of satisfaction in terms of customer-bank interaction. These polls show us both general
satisfaction and detailed satisfaction with each interaction with the Bank. In addition, we evaluate the extent
to which clients recommend us as a company, level measured through the NPS (Net Promoter Score)
indicator.
In 2022, the NPS score at the individual customer level was 56 and at the small business customer, level
was 57. Both values place us in the top 5 among major credit institutions: 4th place in the top if we refer to
individuals and 2nd place in the top for small business.
Regarding corporate clients, with yearly turnover greater than 1 mil euro, NPS score for 2022 shows also
a high level of general satisfaction. Its value of 65 for 2022 and 58 for 2021 are a recognition of the
permanent BRD effort to meet customer expectations. The fact that in 2022 we rank first among main
competitors, for a market segment with complex business needs, is a strong motivation for further
improvements, in order to preserve a top position for customer satisfaction.
For retail, an important aspect to be mentioned is that, according to clients involved in customer satisfaction
surveys, compared to its main competitor, BRD is the bank that registered the highest improvement of its
relation with clients during the pandemic.
This initiative has been supplemented, starting with Q4 2018 with continuous studies to evaluate individuals
and small business clients’ satisfaction following their interactions with different touchpoints of the Bank.
These feedbacks are collected in real-time (max 48 H) and they help us to act promptly in order to try to
transform the discontented clients into satisfied clients. In addition, we carry out other punctual studies and
pre-post surveys testing new products launched to adapt as much as possible the offer to our clients' needs.
We have also contact point with customers and dedicated services that respond to the questions, claims
and suggestions: call centre (MyBRD Contact) with dedicated line for emergencies, on line on social media
(Facebook), dedicated email and address to write to Customer Relations Department We also have a
dedicatd chat and contact form on the website .
The term for responding to a complaint depends on its complexity.
If the Bank's response does not fully meet the customer's request, the client is informed in writing of its right
to address the competent authorities or to resort to alternative dispute resolution mechanisms (CSALB
Alternative Dispute Resolution Centre, The Alternative Dispute Resolution Entity in the NonBanking
Financial Sector - SAL-FIN, etc.).
In 2022, we handled 9,487 complaints, suggestions and requests at the relevant department level within
the Bank.
During 2022, BRD remained in the top 3 most important contributor to CSALB, as a result of its focus on
amicably resolving disputes in which the Bank is involved in customer relations.
BRD is one of the banks that has built a commercial and empathetic relationship with CSALB, being strongly
involved in supporting this alternative dispute resolution approach.
BRD Groupe Société Générale has proven, in recent years, not only that it understands the role of the
conciliation procedure, but also its willingness to effectively help its customers, and to assist in identifying
real solutions to the needs of consumers who turn to CSALB. The BNR annual reports on CSALB's activity
particularly appreciate the involvement of the bank's top management but also of the team directly involved
(SEGL/Quality Department) in supporting CSALB's activity, including in the line of communication & PR
and financial education projects.
CLIENT SATISFACTION
2020 2021 2022
Response time following a complaint (days)
30
30
30
Ombudsman response time in case of disagreement (CSALB)
(days)
90
90
90
Number of mediation requests
154
222
164
Cases handled by the ombudsman (CSALB)
154
222
164
Cases handled by the ombudsman (CSALB), decision issued
51
70
40
IV.
RESPECT FOR HUMAN RIGHTS
Société Générale is guided by the following conventions, standards and initiatives:
●
the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights
and the International Covenant on Economic, Social and Cultural Rights;
●
the Fundamental Conventions of the International Labour Organization (ILO), which cover, in
particular, the elimination of forced labour and child labour, discrimination in employment as well
as the freedom of association and the effective recognition of the right to collective bargaining;
●
the United Nations Guiding Principles on Business and Human Rights;
●
OECD Guidelines for Multinational Enterprises;
●
the United Nations Global Compact.
The Bank is determined to act with integrity and in compliance with the applicable laws in all its activities.
Several policies developed at the Société Générale Group level include provisions that directly or indirectly
uphold human rights.
A notable example is the Code of Conduct, in which BRD undertakes to respect human rights and to comply
with the rules laid down by the ILO. The same applies to policies and processes developed by BRD in
connection with its obligations to combat money laundering, terrorist financing and corruption.
BRD is committed to maintain and improve the systems and processes that enable it to ensure that human
rights are respected in its operations and its human resources management, in its supply chain, and in its
products and services.
CULTURE AND PROFESSIONAL CONDUCT
BRD has adopted the conduct and cultural directory lines and rules of Société Générale Group. The trust
invested by BRD clients, shareholders and partners into the Bank and the personnel of the Bank, represents
the fundament for building and preserving a long-term successful relationship.
The Code of Conduct gathers a set of strict rules and guidelines that aim to promote the values of BRD
and Société Générale Group, at internal level and in relation with stakeholders involved in Bank’s activity.
These values promote: moral integrity and honesty, professionalism and transparency, respect for
implemented legislation and internal regulations, avoiding of conflicts of interest, impartiality and non-
discrimination, ensuring confidentiality, prevention and fight against corruption, anti-money laundering
and anti-financing of terrorist acts, social responsibility.
All BRD employees continued and completed e-learning sessions regarding culture and professional
conduct. Code of Conduct is available and applicable for all employees, including relevant and affiliated
people, for initiated people and for BRD employees in charge with Bank’s activity on financial markets.
Given the above, BRD has not registered any major incident pertaining to aspects related to human rights,
the fight against corruption and anti-bribery activities. A more detailed description of the actions taken in
each of those areas is provided below in the respective section of the report.
FIGHT AGAINST CORRUPTION
Société Générale Group conducts its business ethically and in compliance with all applicable laws,
including laws prohibiting corruption, bribery and influence peddling in all countries in which it operates.
BRD, as part of the Société Générale Group, has adhered to the Société Générale Group's anti-corruption
code, principles and rules. Any act of bribery or influence peddling is strictly prohibited in BRD.
As part of the projects initiated at Société Générale Group level in the field of anti-corruption and in line
with the Group's standards, the Bank continued to strengthen its governance framework on anti-corruption
/ ABC (Anti-Bribery and Corruption) governance and to develop the regulatory framework by issuing or
revising new regulations and strengthening specific processes. Dedicated ABC governance structures
and specific roles in this area continued their work during 2022 and strengthened their perimeter, including
through dedicated reporting at the Bank's management level.
The review of the internal regulatory framework in the area of ABC also continued, and a number of
initiatives to strengthen it (internal regulations, controls, IT applications, etc.) have already been
implemented and finalised, in line with Société Générale Group standards.
At BRD level, there are assessments on corruption -related risks, both from the perspective of the Bank's
awareness of the associated risks (e.g. monitoring of e-learning sessions conducted for Bank staff and
evaluation of the results) and as part of the annual exercises conducted at Société Générale Group level
on anti-bribery and corruption risk assessment.
BRD staff belonging to the category of staff most exposed to corruption risks participated in the dedicated
courses, with a 100% participation rate.
OTHER CORPORATE GOVERNANCE ELEMENTS
CONFLICTS OF INTEREST
The main obligations of the members of the Board of Directors and the Management Committee, imposed
at Bank level to prevent and avoid conflicts of interest, are:
◾
the obligation to act solely in the Bank's interest and to take decisions without being influenced by
any self-interest that may arise in their activity;
◾
the obligation to keep confidential any facts, data or information that they become aware of in the
course of their responsibilities and understand that they are not entitled to use or disclose them
either during or after their activity;
◾
the obligation to inform the other members of the Board of Directors and the internal auditors of
any operation in which they have, directly or indirectly, interests contrary to the interests of the
Bank and not to take part in any deliberations concerning that operation;
◾
the members of the Management Body shall abstain when the agenda of the Board of Directors
and the Management Committee includes decisions on third parties with whom they are in a conflict
of interest by nature.
◾
the obligation to respect professional secrecy with regard to confidential information to which they
have access, debates and decisions in which they have participated and which have not yet
become public.
◾
Members of the Management Body must not take part in any deliberations on any matter in respect
of which they are or may be in a conflict of interest or in which their objectivity or ability to perform
their duties properly might otherwise be compromised.
REGIME APPLIED TO RELATED PARTIES
The internal regulations establish a set of rules for identifying, monitoring and reporting the transactions
with related parties.
In this respect, the related party transactions are concluded on fair terms that respect competition law, are
subject to the same pricing rules and competences applicable to the transactions with non-affiliated parties.
The transactions with related parties whose value places them in the competence of the Board of Directors'
approval are prior to the approval reviewed by the Audit Committee from the conflict of interest perspective.
TRANSACTIONS OF PERSONS WITH ACCESS TO PRIVILEGED INFORMATION
In order to establish a preventive and secure framework of action for market operations by persons who,
through their position in the Bank, have access to inside information in relation to BRD, the Bank has
established and applied a series of ethical rules to be respected by directors, managers and a number of
other persons with potential access to inside information, in order to avoid breaching the legal framework
applicable to trading in financial instruments issued by BRD. Similar rules are also implemented for the
trading of listed financial instruments issued by other issuers for which BRD provides certain services and
which provide the bank with inside information.
In addition, in order to protect persons who have access to inside information, blackout periods for trading
in financial instruments issued by BRD are established before the publication of the Bank's periodic reports.
Also, obligations have been established to report to the Bank personal transactions with BRD financial
instruments, carried out through other intermediaries by insiders.
At the same time, specific rules for pre-approval of transactions of certain categories of staff are
implemented in order to prevent suspicions of insider trading that may arise at the level of the Bank's senior
management, in the commercial areas (trading, corporate finance and specific services, etc.), as well as in
their support and control areas.
TRANSACTIONS CARRIED OUT BY THE MANAGEMENT STAFF
According to internal normative framework, persons holding managerial responsibilities as well as persons
closely associated with them (within the meaning of Article 25 of the MAR Regulation, members of the
Board of Directors and members of the BRD Executive Committee) shall notify the issuer (General
Secretary /Corporate Governance) and ASF for each transaction performed on their behalf in connection
with BRD's shares, BRD debt instruments or any other instruments related to the BRD issuer. Notifications
are made promptly and no later than three business days after the transaction date, since the total volume
of transactions reaches the threshold set by ASF.
General Secretary /Corporate Governance ensures that the transactions notified by the persons
discharging managerial responsibilities are promptly published, no later than 3 working days from the trade
date, in a way which allows for a quick and non-discriminatory access to this information, in accordance
with the legal provisions.
The reporting requirement shall only apply when the transactions exceed the threshold set up by the
Financial Supervisory Authority (equivalent of EUR 5,000). The threshold is calculated by summing up all
transactions made within one calendar year, without compensation between sales and purchase
transactions.
CYBER SECURITY
In respect of Digital Security, BRD Groupe Société Générale is aligned and guided by the global SG Group
policies implemented for managing cybersecurity.
The function of CISO – Director of Information Security Division - is managing the cyber security activity in
BRD Groupe Société Générale. Information Security Division is the governance and the level 2 team for
Information Security. One team (SOC) is dedicated for operational security and is equivalent to level one
support. The SOC team is reporting to the Chief Technical Officer, Head of Infrastructure Production and
Operations Department.
To fight cybercrime, BRD Groupe Société Générale has an ongoing activity of implementing, managing
and monitoring cyber security solutions in order to protect the assets and transactions of its customers
(individuals and legal entities), as well as the personal data of its customers, employees and suppliers.
Thus, there have been significant improvements in the prevention, detection and response to cyber-attacks,
which are growing in a continuous fast pace on an international level.
As an example, BRD Groupe Société Générale is one of the few Romanian commercial banks offering a
free security solution for its remote banking applications, for both legal entities and individuals.
During 2022, Information Security Division has deployed a consultancy mission in order to prepare the legal
audit according to the national law implementing the EU NIS Directive (Law 362/2018). The audit deadline
is March 2023 and will be conducted by an external certified auditor. BRD Groupe Société Générale is
registered as an Essential Services Operator in the financial domain at national level since 2020.
As a mature organization, BRD continuously improved its security posture according to its Cyber Defense
Strategy through:
o
Prevention
o
Regular internal security audit missions on different areas and subjects;
o
Enhancing the operational program for early detection of the information security vulnerabilities and
obsolescence, while decreasing the Remediation Objectives times;
o
Adopting a new approach for IT projects, embedding security and data privacy by-design and by-
default early in the project cycle;
o
Technical security projects conducted along with the Groupe Société Générale technical entities in
order to increase the security in depth controls on different technologies;
o
During 2022, the Infrastructure Production and Operations Department of BRD Groupe Société
Générale has continued to maintain the certifications for the Bank:
o
ISO27001:2013, regarding the secure management of information
o
PCI DSS for „Service Provider Level 1”, essential for the relationship with the authorities and traders
in Electronic Cards activity.
o
Improving the capability to respond to incidents by performing the cyber-attack simulation exercises
as:
o
Execution of a Table Top crisis exercise simulating a Cyberattack scenario;
o
Within the Digital Transformation program, ensuring the continuous support in the development of
the projects, by providing and validating the security requirements;
o
Assessing the security risks within the ongoing projects, as well as within the New Products
Committee (NPC);
o
Strengthening the IAM area by updating governance and by clarifying and segregating the roles
between the two main actors involved in the process of managing and authorizing access to IT
resources: Level 1 - Operational (represented by User Rights Management) and Level 2 -
Governance, which ensures the management of the roles and profiles in business applications;
o
Deployment of continuous review and periodic controls to reduce access rights related risks and to
enhance the management of the roles and profiles in business applications.
o
Continued the permanent awareness of the Bank’s employees:
o
Since onboarding and yearly, through regulatory web trainings, as well as through periodical e-
mails and webinars;
o
Awareness sessions dedicated for BRD Headquarter and specific departments.
o
Periodically phishing simulation exercises for BRD and Affiliates;
o
Continued periodical awareness of the Bank’s customers on the phishing and malware attack
campaigns, through multiple channels: SMS, e-mail, applicative push messages, institutional sites
and newsletters;
o
Continuous updating of Suppliers’ contracts to include InfoSec standard clauses information
security clauses based on contract profiling, including the Appendices for awareness of suppliers'
representatives;
o
Detection, Reaction and Response capabilities
o
Permanently update the detection, reaction and response security specific tools.
PREVENTING FINANCIAL CRIME AND PERSONAL DATA PROTECTION
BRD is engaged in the fight against fraud and considers this effort as a fundamental part of its policy, along
with a general commitment to initiate and maintain business relationships in full compliance with applicable
laws and standards of ethics and integrity, managed by the Bank through the Control functions.
Fraud risk management is part of the general Bank’s risk management and represents all the principles
that should be taken and respected by all employees.
In order to prevent and reduce fraud risk and the associated risks, and also to impose the conduct needed
to prevent and identify the frauds, all the Bank employees are responsible for learning, assumption,
enforcing and implementation of fraud risk management policy, whether their labour relations are
established through individual contracts on undetermined period, on limited period, full time or part-time
working program, temporary employment, working home contracts, apprenticeship contracts. To comply
with BRD Policy of fraud risk management is also mandatory for persons in relation with the Bank (detached
from other employers to provide work in the BRD - Groupe Societe Generale SA during the detachment
period, persons in temporary relation with bank provided by labour agencies under a disposal contract,
service providers having contractual relation with the bank, and staff conducting practice or other
professional internships in the Bank’s units, without limiting to doctorates, pupils or students).
This fraud risk management policy presents the main guidelines to manage the fraud risk (internal and
external) in BRD, establishing the general principals applied by the bank in the fight against fraud: definition,
objectives, evaluation instruments, control, conduct, roles and responsibilities, internal regulation
framework, in accordance with legal regulations, the reality of the markets where the bank operates and
with the policies in the field of Groupe Societe Generale.
The main objective of managing the fraud risk is to reduce exposure to such risks and to the associated
risks, by implementing some actions of preventing fraud, by mitigating the impact if the fraud occurred, by
early detection of potential fraud or occurred fraud and by recovery the loss from any operation/action taken
in scope to fraud the Bank, Groupe Societe Generale or their clients. Also, the management of fraud risk
aims to create a stable and safe environment for the Bank and its clients/partners through effective antifraud
approach and to facilitate the creation of an organizational culture that protects the bank's reputation and
values.
Antifraud Bank’s strategy is to entirely cover “antifraud process” in accordance with the best international
standards in the field, legal requirements and polices / code of SG Group, starting with prevention and
detection, finalizing with investigation and remediation of fraud. BRD is based on integrity, high standards
of ethic, promoting bank’ values, respecting internal regulatory framework and laws, in order to achieve
specific quality objectives and to achieve targeted performance.
BRD has zero tolerance for any type of fraud, which means that all suspected incidents of fraud are
thoroughly analyzed / investigated.
In the last years, BRD Group went through a complex process for GDPR implementation and continuously
improves its operations involving the processing of personal data in order to comply with European and
national data protection legislation. The main purpose is to be compliant with law requirements, to avoid
financial losses as a consequence of fines applied by the authority (ANSPDCP), reputational losses, and
possible negative impact on data subjects. For the management of data protection, the Bank has in place
internal policies which are reviewed annually and are submitted to the BoD and/or Management
Committee's approval.
Personal data collected from data subjects (i.e. customers, potential customers, collaborators, partners,
employees, candidates for open positions within the bank etc.) is processed only for specific purposes on
which data subjects were clearly informed. When necessary, the Bank collects the consent from data
subjects.
The Bank has implemented processes aimed to efficiently respond to exercising of rights requests and to
manage potential data breaches.
A Data Protection Officer (DPO) has been appointed since the application of GDPR, monitoring the
compliance of Bank’s operations at central level, in close cooperation with Legal and Compliance
departments. Beside the DPO, at Bank level have been appointed Data Protection Correspondents within
central business structures. Data Protection Correspondents ensure the operational tasks of the activity
carried out by the DPO, including the following: providing necessary information to keep the Processing
Register up to date, support for preparing responses to requests for exercise of rights received from data
subjects, providing advice and support to business departments regarding the assessment of the impact
on data protection, analysis and documentation of security breaches, involvement of DPO in all activities
that require this thing. For local affiliates, even they have appointed their own DPO or not (for the latter
case being nominalized only a Data Protection Correspondent with the above responsibilities), the activity
is closely monitored and Group's rules and principles are applicable. From the projects performed during
the last year may be considered personal data update online through BRD site.
Also, at Bank's level is developed a GDPR Program, monitored quarterly by BRD's Top Management
through a dedicated Steering Committee, program within which are assured the implementation,
improvement of different privacy requirements, and the management of transversal projects involving
privacy aspects.
Some of these tasks are linked to performance assessment.
The Bank has taken measures to continuously improve the security of its applications in order to keep pace
with technological developments. Moreover, the selection process of services/goods providers that could
have access to Bank’s data considers only the third parties that have implemented adequate technical and
organizational measures to keep Bank’s data secure.
The technical and organizational measures implemented by the Bank to secure the personal data include
the following:
●
Information notice made available both in agencies and published on Bank’s website
●
Offering the possibility for data subjects to express or withdraw the consent and exercise their
rights through various channels (bank units, website, email, etc.)
●
Implementation of cookies consent on Bank’s website
●
Encryption of data at rest and in transit
●
Developing a comprehensive training program including on -line and e-learning for all employees
●
Implementation of privacy by design/by default process, including performance of privacy
impact analysis for sensitive processing and minimization of data
●
Granting access to data to employees based on need to know basis
●
Periodic revision of access rights mentioned above
●
Performance of penetration tests in order to timely detect vulnerabilities of exposed applications
●
Implementation of a normative framework aimed to the protection of personal data
●
Set up of data protection unit within the Bank in order to monitor compliance with regulation and
spreading the privacy culture by appointing data protection correspondents within each
structure, etc.
The data subjects may exercise their rights regarding the personal data as granted by GDPR through the
communication channels provided by the Bank (agencies, contact center, complaints, electronic form
available on the Bank's website, by contacting directly at dataprotection@brd.ro in case of clients or
pdpo@brd.ro in the case of employees).
The activity (requests from data subjects other than employees) is coordinated by SEGL / QLT with the
support of the Data Protection Cell.
Requests received from employees / collaborators are processed by the Human Resources Department
with the support of the Data Protection Cell. Data subjects may be clients, former clients, legal
representatives, employees, candidates, guarantors etc.
V.
RESPONSIBLE
EMPLOYER
The strategic objective in the Human Resources are is to be an employer of choice that actively promotes
diversity and new ways of working through:
-
Building an employee-focused organisation, putting people at the heart of our strategy and paying
more attention to health and well-being in the workplace;
-
Continuously developing employee skills;
-
Recognizing individual performance and contribution to the bank's performance;
-
Creating a culture of accountability;
-
Simplification.
Human rights, diversity, anti-discrimination policy, gender equality
Within BRD, the general policy is to treat everyone, with equal respect, offering everyone equal
opportunities to be recruited, promoted, rewarded, trained and based solely on personal qualities, by
respecting human rights, as set out in the Universal Declaration of Human Rights, as well as in the EU
Charter of Fundamental Rights.
Diversity is an important component of the Bank's strategy and is based on an effective and independent
performance management system that ensures that employees' attributes are valued from a competency
perspective.
We are committed to maintain fair relations with our employees, pay particular attention to adequate
working conditions in terms of social protection, health and safety at work, as well as respect for the dignity
of employees in accordance with the relevant legislation in force, the applicable Collective Labour
Agreement and internal regulatory documents.
The internal regulatory framework ensures protection against any form of discrimination and access to jobs
is provided freely throughout the organisation.
Employees have the following main rights:
-
the right to collective bargaining; - our employees have the right to exercise their freedom of
association and collective bargaining in accordance with the applicable legal provisions.
-
the right to protection of personal data;
-
the right to protection in the event of dismissal; the Bank gives 20 working days' notice when
dismissing employees, as well as compensation for dismissal and termination through retirement;
-
the right to protection against all forms of harassment;
-
other rights provided for by the legislation in force, such as: the right to remuneration for work
performed; the right to daily and weekly rest; the right to annual rest leave; the right to equal
opportunities and treatment; the right to dignity at work; the right to safety and health at work; the
right to access to vocational training; the right to information and consultation; the right to take part
in determining and improving working conditions and the working environment; the right to
collective and individual bargaining;
-
the right to participate in collective action;
-
the right to form or join a union;
-
other rights provided for by law or applicable collective agreements.
When hiring and setting individual rights, the Bank ensure and will ensure equality of opportunity and
treatment for all employees without discrimination, direct or indirect according to criteria of race, colour,
national origin, ethnicity, religion, social origin, age, or union activity, sex, sexual orientation, genetic
characteristics, handicap, family situation or responsibility, or any other criteria that have the purpose or
effect of not offering, reducing or cancelling the recognition, use or exercise of rights under the Collective
Labor Agreement.
Decisions related to salaries, benefits, training, promotions, disciplinary measures or dismissals are based
solely on professional activity, inclusive on employee’s performance, not on personal characteristics, race,
origin, gender, religion, sexual orientation or political opinion.
Individual employment contracts are usually for an indefinite period of time, which is a rule for employment
under the applicable legislation. Employees on fixed-term individual employment contracts will not be
treated less favorably than permanent employees solely on the grounds of the duration of the individual
employment contract, unless different treatment is justified by objective reasons.
Job information is available on the internal platform, MyWorkplace, in order to ensure that employees have
free access to it, as required by law.
The hybrid work programme was launched in 2020. Currently the Bank has adopted a hybrid work
organisation model with a mix of teleworking and physical presence at the office.
In accordance with legal requirements, our employees are entitled to paid leave and days off, depending
on the situation. In addition, under the collective labour agreement, the Bank grants days off for certain
family events.
There is a Collective Labour Agreement in BRD, which is the result of annual negotiations between the
management and the employees' union (39% syndication degree).
Communication with our employees is always open and aims to keep them informed and aware of the
reality of the company. To this end, we constantly inform and consult our union representatives about
developments in the company's activities that may affect the interests/rights of employees, in accordance
with the applicable legal and/or contractual provisions.
BRD tools and special programs:
-
Recruitment (job description, selection criteria)
-
Promotion (criteria, specific programs)
-
Remuneration (criteria, compensation packages and benefits)
-
Career management (specific programs)
-
Assessment (skills, rating system)
-
Dismissal (criteria, compensatory packages)
These tools take into account: the needs of the Bank; qualification, professional experience; professional
performance; technical, commercial, managerial skills; professionalism, team spirit, innovation.
The Human Resources Department (DRU) provided specific support through several projects that aimed
to optimize the Bank's structure to be more efficient and provide quality services to our customers. The
Bank's objective was to ensure efficient and dynamic structures, in order to maximize the results from the
point of view of business development. Some of the most important such projects relate to: optimizing the
structure of the various departments located at the central headquarters, territorial reorganization at
network level (relocations, closures and mergers of agencies) and providing support for special projects,
etc.
In BRD, women are not a minority population; they actually represent 76% of all personnel (at the end of
2022). They also occupy a significant number of managerial positions (68% of the total managerial
positions).
●
427 women are in maternity leave (8% of all women); when returning from maternity leave, they
receive an integration training according to agreement with the direct manager
The number of employees of the Group was 6,627 as of 2022 end (7,032 at the end of 2021), while the
number of active employees of the Bank was 6,286 as of 2022 end (6,534 at the end of 2021).
The Bank also recognizes, promotes and supports the benefits of the diversity of the management body
and considers it an essential element in the protection and expansion of the competitive advantage, given
that through diversity, maximum efficiency and performance can be achieved, increasing innovation and
cooperation both within the management body and within the Bank, facilitating the expression of
independent opinions and a solid decision-making process within the management body. In this context,
the Bank has adopted and implemented a diversity policy.
In this respect, in the recruitment process, the Nomination Committee considers a wide range of skills and
competencies, a balance is desired to be achieved, so that the members of the management body have
theoretical knowledge and practical experience regarding: financial markets; framework and regulatory
requirements; strategic planning and understanding of the Bank's strategy and business plan and their
realization; risk management (identification, evaluation, monitoring, control and reduction of the main
types of risk, including past activity / attributions); accounting and audit; assessing the effectiveness of
the governance framework, establishing effective governance, supervision and control mechanisms; the
interpretation of the financial information of a credit institution, the identification of fundamental issues on
the basis of such information and appropriate controls and measures.
The Nomination Committee evaluates and reviews the composition of the governing body annually and
at any time, the committee may propose to improve any aspect of its diversity.
During the year 2022 there were several changes in the governing body, including the appointment of
new members, which also took into account the objective regarding the gender representation within the
management body.
The target of presence for the weakly represented gender within the Management Body is 30% of the
total number of the members, to be reached by 2023
.
More details on the changes that took place at the level of the management body are available in the
body of Administrators' report.
Creating a culture of responsibility
The environment in which BRD operates is uncertain: numerous regulations, transparency requirements,
tougher competition, the digital revolution, etc. In this context, our values help us to focus on what is
essential, to carry out our activity with pride and to encourage others to want to join us in the development
of tomorrow's bank: the successful awareness of our role as bankers, in the service of our customers.
Responsibility is one of the values of our Bank and is incorp orated in the actions of its employees.
As bankers, we contribute to the economic, social and sustainable development of the environment in the
economies in which we operate. We want to help our clients fulfil their projects’ potential, while paying
attention to risks in all their aspects.
Our responsibility and code of ethics involve quickly meeting the needs of our clients, while taking into
account the long-term interest of all stakeholders and strictly adhering to the rules of our profession. Our
responsibility is also reflected in the courage to be accountable for our actions and decisions and to express
our opinions in a transparent manner. In short, it's about giving as much importance to how we get results
as to the results themselves.
At the beginning of 2022, all BRD employees completed a training session on the Code of Conduct in e-
learning, training in which the components of the code were addressed. The course could be promoted
only in case of a score of at least 80% at the final test.
The Code of Conduct is available and applies to all employees, including relevant and affiliated persons,
insiders and BRD employees responsible for the Bank's activity in the financial markets.
Also, during 2022 the Bank's staff received dedicated professional training in order to raise awareness
about risks and specific issues such as: the integrity of financial markets, preventing and combating
corruption, preventing money laundering and terrorist financing, etc.
In the field of Culture and Conduct (C&C) at the Bank level, the actions of promoting C&C aspects among
employees through campaigns and dedicated projects continued, in order to consolidate the maturity of the
organization and promote and strengthen a culture in which the risk of conduct is known, assimilated and
properly administered as part of the day-to-day activities of employees.
Acknowledging individual contribution to the Banks’ performance
The Human Resources Department places particular emphasis on the employees’ engagement, something
that improves team performance. Recognizing each person's contribution to the long-term performance of
the group, ensuring well-being in the workplace and using the benefits of diversity in teams are essential to
maintaining employee relationships with the company and improving efficiency.
Performance management is based on three major pillars:
●
Clear and measurable objectives based on the appropriate job description.
●
Continuous feedback and individual development plan.
●
A serious and transparent process of evaluating the employee, both in terms of results and in
terms of how they were achieved.
The assessment process is a way to manage and develop skills aimed at:
●
Discussions on the expected level of achievement of the objectives depending on the deadlines
and means defined at the beginning of the year, as well as in relation to the working environment.
●
Evaluating the results and the way in which they were achieved, taking into account the
responsibilities and objectives set for that year.
●
Identifying acquired skills.
●
Identifying training needs and ensuring the conditions for professional development.
The evaluation of individual and collective performance takes into account the qualitative and quantitative
performance criteria measured with KPIs. The role of the KPI system, a key element of performance
management, is to set challenging but achievable goals with relevant performance indicators. Achieving
these goals is a key element in the organization and is linked to continuous improvement of services and
the achievement of goals, objectives and priorities.
Encouraging an environment that promotes employees’ commitment
One of the principles of our leadership model is that "everyone acts ethically and courageously". This
translates into specific concrete behaviours that can be observed in the organization and that are valued at
the level of employees: we encourage everyone to speak, ask and provide constructive feedback and take
responsibility for actions.
In the context of an ever-changing business environment, BRD launched at the end of 2019, the
Organizational Culture Program which aims to accelerate the speed of the organization's reaction to
external challenges by increasing employee involvement, by adopting behaviours that bring positive change
in organization and improve Bank’s performance.
The Organizational Culture Program launched in 2019 aims to outline a vision for the new way of working,
defining the current organizational culture, establishing and implementing an action plan that will support
the spread of the new crops throughout the Bank.
In the first stage of the project, a series of individual discussions took place with the board members as well
as several workshops with both the board and the Bank's top management in order to define together the
desired cultural vision in BRD.
In the second stage of the project, around 150 interviews and several workshops were held with people
from all areas of the bank, followed by a questionnaire launched throughout the Bank to understand the
point of view of employees regarding current working environment and gather ideas about their ideal
working environment.
We are currently working on defining an action plan to support the spread of the new culture that aims to:
●
developing a way of working focused on simplification,
●
improving the way of collaboration between employees,
●
encouraging the expression of opinions and improving the culture of feedback,
●
increasing the level of responsibility of each employee, regardless of the hierarchical level,
●
sharing examples of good practices in the organization,
●
optimizing communication at the organization level,
●
developing employees' skills,
●
improving the relationship with the client.
In addition to the action plan launched in 2021, on 2022 within the Organizational Culture Program,
coaching programs were developed for both the Board and for top management to support them as
examples of practicing the new way of working for the teams which they lead.
Last but not least, several initiatives were carried out in the Bank in 2022 such as:
●
Transversal projects
●
Agile teams
●
The new format for organizing the Board meeting
●
Workshops and focus group on different business topics
Below are some BRD’s key human resources indicators for 2022 and in evolution:
Indicator
2018
2018
2019
2019
2020
2020
2021
2022
% from
total
employees
/FTE
% from
total
employees
/FTE
% from
total
employees
/FTE
2021
% from total
employees
/FTE
2022
% from total
employees
/FTE
Total number of
female
employees on
permanent
contracts
5,062
67
5,061
68
4,804
69
4,570
68
4.649
72
Total number of
female
employees on
fixed-term
contracts
628
8
580
8
469
7
468
7
257
4
Total number of
male employees
on permanent
contracts
1,688
22
1,641
22
1,552
22
1.530
23
1.468
23
Total number of
male employees
on fixed-term
contracts
143
2
114
2
113
2
110
2
70
1
Total number of
employees
7,521
100
7,396
100
6,938
100
6,678
100
6.444
100
Number of female
employees
present on
permanent
contracts (FTE)
4,463
65
4,455
66
4,244
67
4.036
66
4.214
65
Number of female
employees
present on fixed-
term contracts
(FTE)
623
9
561
8
464
7
463
8
254
4
Number of male
employees
present on
1,673
24
1,622
24
1,537
24
1.509
25
1.458
23
permanent
contracts (FTE)
Number of male
employees
present on fixed-
term contracts
(FTE)
142
2
112
2
113
2
110
2
70
1
FTE
6,901
100
6,751
100
6,357
100
6.118
100
5.996
100
Number of work-
study participants
present during
the year
656
10
1,168
16
108
2
30
0.5
110
2
Number of work
accidents (as
defined by local
regulation)
4
0
2
0
8
0
2
0
5
0
Number of
employees who
had an annual
performance
evaluation
(eligible
employees with
more than 6
months in the
Bank)
5,921
99
6,200
100
6,249
99.96%
6,277
100
5,936
99
Training
2018
2019
2020
2021
2022
Total number of hours of
training
296,459
356,340
325,867.75
434,197.00
386,745.31
Total number of hours of
training for female employees
(classroom and e-learning)
223,972
280,740
261,102.12
331,126.00
305,541.13
Total number of hours of
training for male employees
(classroom and e-learning
72,488
75,600
64,765.63
103,071.00
81,204.18
Average number of training
hours per employees who
attended at least one training
session during the year
37
52
44
66
62
Number of female employees
who attended at least one
training session during the year
5,980
5,133
5,514
4,357
4,281
Number of male employees
who attended at least one
training session during the year
2,100
1,806
1,925
1,542
1,433
Number of employees who
have completed at least one
training course
8,080
6,939
7,439
5,899
5,714
* part-time employees are marked as FTE=1
Extra information on our human resources strategy is available in the main body of the annual report, under
the dedicated human resources chapter.
VI.
BEHALF OF BRD
Any purchasing act must comply with the principles and commitments of Responsible Purchasing included
in the Sustainable Sourcing Charter.
Sourcing projects over EUR 50,000 and significant outsourced activities are handled by Sourcing
Department via a normative framework which includes both a responsible purchasing policy, as well as a
code of conduct for suppliers in place.
Sourcing Department works with the Sourcing Network on different streams to support business units in
the identification of levers and to monitor local targets achievement for carbon footprint (Energy / Air Travel
/ Car Fleet) and single use plastics (Catering / Vending machines / Events / Office supplies).
Specific procedures involve:
a)
Actions performed during the selection process of suppliers: starting with October 2020
environmental and social risks related to products and services are evaluated based on the
CSR Risk Matrix. Depending on the sourcing category, a certain CSR percentage is included in
the assessment grid and is part of the final assessment of the suppliers’ selection.
b)
Actions performed before contracting a supplier: checking the suppliers from the CSR point of
view (within the SG Group CSR exclusion lists – “CSR Watch List & CSR Exclusion Risk).
Actions performed while contracting and during the relationship with a supplier: since 2019, any
procurement act must comply with the principles and commitments included in the Sustainable Sourcing
Charter. The Charter sets out the Group’s sustainability commitments, obligations and expectations with
respect to its suppliers and thus procurement contracts include mandatory CSR clauses.
Since 2019, all contracts signed with the involvement of the ACH team, with a value> 50k, EUR, VAT
include the mandatory CSR clauses.
VII.
ENVIRONMENTAL AND SOCIAL FACTORS (E&S) - ENVIRONMENTAL AND SOCIAL RISK
ASSESSMENT STANDARDS
The 18
th
7
impacts and ambitions in an ever shrinking window for transition to a 1.5°C world”, therefore, for BRD
climate risks are a constant preoccupation.
Climate risks include physical, transitional and liability risks. In accordance with the TCFD, the physical risk
refers to acute risks (caused by one-off events) or chronic risks (long-term changes) related to temperature,
wind, water or solid waste. In the same manner, the transition risk refers to the financial risks that could
result from the process of migrating to a low-carbon economy. Changes in policy, technology and physical
risks could lead to a reassessment of the value of a wide range of assets as costs and opportunities become
apparent. Liability risk is the impact that could occur if parties who have suffered loss or damage due to the
effects of climate change seek compensation from those they hold liable.
Climate change is not seen by the Société Générale Group and BRD, as part of it, as a distinct risk, but
rather as an additional factor for the categories already covered by the Bank's risk management system
(credit risks, operational risks, market risks, etc.). At the same time, for physical risk, the Société Générale
Group continues to explore the approach and understanding of this particular type of risk, and climate
change in general. In line with the Société Générale Group's policy, BRD has introduced in 2020 the
calculation of a climate vulnerability index (CVI) that reflects the transition risk associated with a client or
group of clients, perimeter that has been extended further in 2022 (reducing the applicable threshold). CVI
is represented on a 7-step impact scale (high positive, moderate positive, low positive, no impact, low
negative, moderate negative and high negative), for the following portfolios: oil and gas, electricity
generation, metals and mining , automobiles, shipping, aircraft. Thus, if and when the case, the Bank is in
a dialogue with its customers, especially with those classified moderately and high negatively, on their
climate vulnerability, in order to develop a strategy to mitigate the transition risk.
7
In 2023/2024 the methodology of this indicator will be subject to an extension of perimeter, scope and tool
to be used for its application.
In 2020, BRD implemented an environmental and social risk assessment process for certain categories of
customers and transactions, a process approved by the Bank's management committee and which has
been enhanced yearly. The process is based on the principle of the 3 lines of defences. BRD takes into
account at onboarding of its clients and in its lending decisions related to corporate clients, environmental
and social risks, applying in this sense the standards of Société Générale Group and other international
standards to which the latter has adhered. The assessment of the environmental and social risks associated
with corporate clients is performed for certain categories of clients, while the application of exclusion criteria
(dictated by specific activities), and refers to all clients of this type. The environmental or social risks of a
company are generally related to i) its sector of activity, ii) the vulnerability of the communities and iii) the
environment in which it operates. BRD applies in its E&S evaluations the Group's 9 environmental sectoral
policies (to be noted updates occurred in 2022), some of them from the perspective of climate change, as
follows: i) thermal coal, ii) oil and gas, iii) thermal power energy sector, iv) industrial agriculture and forestry,
v) dams and hydroelectric power, vi) shipping, vii) mining and viii) civil nuclear power and ix) defence and
security.
These sectoral Environmental & Social policies of the Société Générale Group are public and accessible
at:
https://www.societegenerale.com/en/publications-
documents?search=&theme=rse&category=&year=&op=Filtrer
.
Based on i) ESG public information (generally non-financial or sustainability reports) or collected through
the engagement with the clients in the scope of environmental and social risk assessments, ii) sustainability
strategies or commitments and iii) negative information of these nature, BRD performs Corporate
assessments in terms of E&S risk. As part of customer relationship management, commercial teams
continues the efforts to integrate environmental and social issues into the dialogue with corporate
customers. In some cases, based on the recommendations included in SG's sectoral E&S policies, the
commercial teams encourage customers to adhere to various international standards applied by the Bank
in its E&S evaluation process. BRD as a lender, also performs for a defined perimeter, E&S assessments
on certain transactions. The scope of the E&S risk assessment related to transactions refers to those
operations that fall within the scope of the Equator Principles or certain categories of services for which the
underlying asset is known and raises certain environmental or social issues. The management of
environmental and social risks related to transactions is incorporated in the credit granting process and is
based on the approval competencies related to that customer or transaction, and the customer assessment
process, in the KYC process.
The process of assessing the risks related to a client or transactions consists of 3 stages:
1.
Identification of E&S risks
2.
Assessment of these risks
3.
Defining an action plan for risk prevention or mitigation (if applicable)
Customer E&S evaluation is an iterative process that begins in the prospecting stage and is updated
periodically. Each new transaction or service that falls within the scope of the assessment must be analyzed
from an E&S point of view.
BRD, as part of Société Générale Group, has access to the experience of the later, respectively to a number
of ESG correspondents and technical specialists. BRD has a process of validation and escalation of certain
risk categories at Group level.
To be noted that currently the Group and the Bank has an undergoing project to continue enhancing both
clients and transactions ESG analysis, in terms of perimeter, due diligences, tools to be applied for
implementing the continuously evolving regulatory framework and as to reflect the increased voluntary
commitments assumed by the Group.
Sustainable financing
Climate change, apart from posing a risk to a financial institution, could represent also an opportunity for
promoting sustainable finance types of instruments. A CNSM report on green finance
8
opportunity of approximately EUR 60 bn investments until 2030 only for addressing climate change.
Consistent with its purpose of accompanying its clients in their energy transition towards a more sustainable
future and as a result of reaching in advance its targets, in 2022, Societe Generale has reinforced its
commitments to contribute to sustainable finance with €300bn by 2025. As part of this commitment, BRD
aims to contribute to this collective endeavor with EUR 1bn sustainable finance transactions to be
concluded by the same date, as part of its Horizon 2025 program.
In its business relations with corporate clients, the Bank aims to identify the business opportunities with
positive impact deriving from the activity of its clients. BRD’s commercial offer includes green loans,
sustainable loans related to sustainability criteria, mediate green bonds, for different categories of asset
and transactions, based on recognized international standards, such as the LMA Principles of Green
Financing and the LMA Principles of loans related to sustainability criteria. It can also support the Société
Générale Group in issuing green bonds on the international market for clients in its portfolio. In 2022, BRD
enlarged the scope and definition of sustainable finance as to encompass all sorts of sustainable finance
instruments that could be made available to a corporate client.
BRD has transposed its medium term target on yearly objectives, through a dedicated action plan, on the
corporate side and aims for sustainable financing opportunities with an emphasis on energy efficiency and
energy transition, clean mobility, sustainable municipal projects, the circular economy, green buildings,
social inclusion, etc., based on a proactive approach.
Through various transactions, BRD originated and executed in 2022 a volume of sustainable financing of
EUR 119.2m on corporates and EUR 96m on retail, as an expression of its role to increasingly channel the
financing towards more sustainable activities. Also, as part of its mission to contribute to the increased
awareness on sustainability or ESG topics within its ecosystem of clients and partners, BRD had organized
specific actions and events, mainly for the SMEs, like a sustainable financing session within the “ZF pentru
IMM” (>40,000 persons reached) and the first Climate Change Forum in Romania, with an audience of
almost 1 million people across all channels.
As a recognition of its contribution, BRD has received several awards like Leader in green finance in
Romania by Capital magazine and Best Sustainable finance solutions provider, by the Diplomat within the
Sustainability Awards Gala.
Environmental impact of own activities
Responsibility to protect the environment goes beyond legal mandatory limits and represents a voluntary
commitment of the Bank, which aims to constantly reduce CO2 emissions coming from its own activities.
Such policy involves the control and improvement of its direct impact on the environment, in
association with its various stakeholders.
To measure environmental indicators (on an annual periodicity) BRD uses Planethic – an internal online
tool managed by Société Générale (which includes at least all consolidated entities of Société Générale
Group and also all companies that are more than 50% owned by SG Group).
Planethic Reporting measures indicators from 6 areas of interest for environment and uses multiple units
of measure:
o
Energy
o
Buildings Management system (number of buildings, number of occupants, surfaces and types of
surfaces – offices, sales offices, dining facilities, parking areas…)
o
Paper
o
Transport
o
Waste
o
Water
8
internal/de5fs23hu73ds/progress?id=yO2T7TZqDyNv6jD5KzstclnhDVTKsWZJ41MncJIA1mc,
The indicators (measured and reported by different departments in BRD) are centralized and processed
through the application, so that in the end a general indicator can be calculated for environment, which can
be expressed by the carbon footprint.
The data is used in order to determine the progress against the objectives regarding the reduction of the
emission resulted from our own activities. The target is to cut the emissions by 50% at the end of 2030,
compared to the level registered at the end of 2019.
Indicator
Measurement unit
2019
2020
2021
2022
Total number of employees
employees
7 396
6 938
6 678
.
6 444
Total number of occupants
occupants
7 488
5 807
5 106
4 959
Occupied area m²
m
2
223 086
218 764
184 111
194 467
Waste
tonnes
448
402
212
139
Distances travelled for business
purpose
Mil km
11
9
8,23
7,47
Distance travelled by plane
Mil km
1,7
0,5
0,03
0,26
Distance travelled by train
Mil km
0,03
0,05
0,001
0,01
Distance travelled by car
Mil km
9,3
8,3
8,2
7,2
Water consumption
Mil m
3
0,07
0,05
0,05
0,04
VIII.
RESPONSIBILITY FOR THE DEVELOPMENT OF THE ROMANIAN SOCIETY
BRD is about building the future by helping people bring to life their projects, their hopes and dreams.
Building future by helping companies grow and succeed. Building the future by helping communities grow
stronger.
People are the greatest agents of change and our mission is to empower each and every one who wants
to positively impact the future.
Besides being a bank, we are also a community investor, a supporter of projects and people that can move
Romania forward. We support creativity, innovation and performance, though several platforms and
programs.
Education, Technology & innovation
: We are a fan of the technology and we love tech creators. The
development of the society and a better future is not possible without innovation and technology. We
support the biggest robotic competition for High schools in Romania, BRD First Tech Challenge and several
tech accelerators and incubators, offering mentoring and financial support; we have a journalistic platform,
Mindcraft Stories in order to make science and technology popular and most of all, better understood.
Scoala9 is our editorial platform presenting ideas and solutions on how Romanian education can evolve.
We invest also in tech solutions for a better and more inclusive education for all children.
Culture & ideas
: Humanities are tremendous important in a more& more technologized word. We invest
in the new generation of creators, in art & music, hundreds of events and programs every year; we are the
only bank having a cultural foundation, Fundatia9, our own cultural centre and cultural magazine, one of
the most relevant pieces of journalism in today’s Romania. Our editorial platform Scena9 charts the cultural
scene in Romania. We bookmark cultural news, write about what is relevant, new, and yet to be discovered.
We watch the new generation of makers from the widest possible range of fields, follow their projects and
map their evolution. We seek to etch out the portrait of this new generation that makes our world go round.
Sport
: We love sports because they offer us a passionate journey, with beautiful moments, with heroes
who win, attract fans or, on the contrary, struggle with difficulties. We love sports because they teach us
every day how to start over when we encounter difficulties, how to work as a team, how to enjoy victories.
Whether it's confirmed athletes or young talents, BRD reaffirms its involvement in promoting sports in
Romania. Our brand ambassador is Cristina Neagu, the most important Romanian handball player of all
times, 4 times the best handball player in the world. She embodies the performance, the ambition of a
generation. But we also support the educational programs for young athletes and sport related projects for
disabled persons.
Nature capital, biodiversity & fight against Climate Change
: Climate Change is the most important
challenge of today world, and it will require creativity, innovation and resources in order to find solutions.
As a bank we want to be a leader in green financing, but we are aware that we all need to learn how to be
more sustainable. We initiated Climate Change Summit – with the ambition to become the most relevant
regional conference on solutions to climate change, bringing expertise from around the world and the
brightest minds from Romania.
Volunteering
: The 6000 people from BRD are a huge asset for the communities as well, and we are
embarking them in many causes, harvesting people’s skills and desire to contribute, create change and
value inside BRD and in the community. ZiuaV (V from volunteering but also from Value and from Future –
in Romanian) is probably one of the biggest corporate volunteering program. We have built a marketplace
for missions and our colleagues can choose where to contribute with time, skills, money or ideas and
energy.
IX. APPLICABLE LEGAL FRAMEWORK
BRD - Groupe Société Générale prepared this non-financial statement based on the specific provisions of
the Order of the Minister of Finance no. 1802/2014 (supplemented and amended) on requirements for the
Non-Financial Statement. The document also takes into consideration provision on Non-Financial
Statement from the NBR Order no. 7/2016 on amending and supplementing the Order of the National Bank
of Romania no. 27/2010 for the approval of the Accounting Regulations compliant with the International
Financial Reporting Standards, applicable to credit institutions, and of the Order of the National Bank of
Romania no. 6/2015 for the approval of the Accounting Regulations compliant with the European directives.
The information related to EU Regulation 852/2020 will be reported by SG Group for all its subsidiaries.
TRANSLATION
DECLARATION
Acting as director s of BRD - Groupe Société Générale SA, in accordance with
Article 30 of the
Accounting Law no. 82/1991 republished and with art 223, letter A,
paragraph 1 (c) of the ASF
Regulation no. 5/2018 on issuers of financial instruments and market operations,
responsibility for preparing the separate and consolidated financial statements for the year ended
December 31, 2022 and confirm, to the best of our knowledge, the following:
a) The accounting policies used in preparing the separate and consolidated financial
statements for the year ended December 31, 2022 are in accordance with accounting
regulations applicable to credit institutions, as per Order no. 27/2010 for approving the
Accounting Regulations in accordance with International Financial Reporting Standards,
applicable to credit institutions, issued by the National Bank of Romania, with
subsequent amendments;
b) The financial statements present a true and fair view of the financial position, financial
performance and other information related to the activity of BRD and its subsidiaries
included in the financial statements consolidation process;
c) BRD - Groupe Société Générale SA operates on a going concern basis;
d) The Board of Director’s Report on the financial statements mentioned above includes a
fair review of the development and performance of the Bank and Group, as well as a
description of the main specific risks and uncertainties.
Giovanni Luca SOMA Francois BLOCH
Chairman of the Board of Directors Member of the Board of Directors