Gelin, BRD�s capital adequacy ratio up to 11.6% after tapping unshared profit

BRD will increase its solvency ratio to 11.6% by the end of July, by adding the unshared profit for 2009 to the capital, hence no need for further cash injections to stay above the regulatory minimum of 10% , said the CEO of BRD, Patrick Gelin.

“We will keep our capital adequacy ratio above 10% this year and in 2010 as well, without any need of additional injection. After adding the unshared profit, the solvency will stay in the range of 11.6% at the end of June”, said Gelin.

At the end of last year, BRD’s solvency ratio was at 9.38%, down from 12.07% a year earlier. On the other hand, this measure was determined based on NBR regulation by including profits in own capital, and the 2008 decline was triggered by the implementation of the new Basel II capital adequacy framework, without considering the realized profit.

BRD-SocGen shareholders have approved in late April the distribution of a gross dividend of 0.72828 lei/share of last year profit, up 23% from 0.5921lei/share a year earlier. The dividends of an aggregated value of 507.54 million lei will be paid out within two months since the shareholders’ meeting.

BRD SocGen posted a net profit of 1.364 billion lei, up 46% from 2007, but without considering the amount from the sale of the equity position in Asiban, the profit increase was 22%.

Gelin added he expected the bank to double the credit loss provisions this year.

Given the recent IMF/EU financial arrangement, National Bank of Romania has set guidelines for banks capital adequacy requirements at over 10% in 2009 and 2010 as the regulatory minimum is 8%.

NBR has applied new 2-year stress tests to banks considering two scenarios, setting the last year’s values of main indicators as benchmarks.

The basic scenarios showed that this year and next year, the required total banking market capitalization is within 1 bln euro range, the injections following to be carried out in two stages: by the end of September and by the end of March 2010 respectively.

The main scenario takes into consideration a 4% decline in GDP this year, while in a worse case scenario, not yet applicable for capital requirements, assesses the quality of banks’ loan books and of own funds in the event of a 7% fall in GDP in 2009.

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