ANALYST FORECAST - SocGen Romanian Unit 9-Mo Net Profit Seen Rising Faster Than Yr-Ago

November 7 (SeeNews) - Analysts expect that the net profit of Romanian Development Bank (BRD), majority-owned by French banking group Societe Generale, will rise by at least 27% in the nine months through September, much faster than the growth in the same period a year earlier, a SeeNews poll indicated on Wednesday.

Forecasts by analysts from three Romanian brokerage houses put BRD's net profit for the first nine months of 2007 between 605 million lei ($261.0 million/178.4 million euro) and 682 million lei, while assets are seen in a a range between 32.4 billion and 35.4 billion lei.

The bank's net profit for the first nine months of 2006 rose 6.5% on the year to 477 million lei, while assets increased by some 37% to 25.3 billion lei.

BRD will release its nine-month financial results on November 12.

“Taking into account the good development of the banking system in the first half of the year, the population’s appetite for credits, the development of the business environment in Romania, the constant rise of the prices on the real estate market, BRD has all the chances to maintain the [growth] rhythm in the third quarter,” said Paul Brendea, an analyst with Prime Transaction brokerage.

“So we estimate a 50% rise in interest income, which would translate into a total value of some 1.8 billion lei,” Brendea said.

Cristian Tudorescu, senior analyst at Vanguard brokerage house, considers safe BRD's annual net profit target in the context of the bank’s nine-month financial results. “BRD is likely to confirm the positive signal given by Banca Transilvania about the growth in profits in the banking sector, due to less strict regulation regarding the credit in the system. We estimate a profit of 619 million lei at the end of September, so the yearly target of 800 million lei is still in place.”

The bank posted a net profit of 656 million lei last year, up 19%. Its assets totalled 28 billion lei at the end of 2006 from 19.2 billion lei a year earlier. BRD ranked second in terms of assets in the Romanian banking sector at the end of June after Banca Comerciala Romana (BCR), owned by Austria's Erste.

“The sustained rise in the lending operations, especially in the retail segment, could lead to a rise of more than 34% of BRD’s assets on the year to 34 billion lei. The rise from the end of last year is estimated to be 21.7%,” Mihai Cristian Alexa, an analyst with SSIF Broker, told SeeNews.

BRD is one of the 39 banks operating in Romania. It has more than 2.2 million customers and a network of over 600 branches.

“We expect that the outlets opened 18-24 months ago to become real profit centres, where the generated income rise much faster than the administration and staff costs,” Alexa said. He estimates BRD’s total income rising 55.6% in the first nine months to 6.2 billion lei.

The bank is one of the most liquid stocks on the Bucharest Stock Exchange (BVB) and is included in its 10-share blue-chip BET index. It had a market capitalisation of 17.6 billion lei as of November 7.

BRD shares closed at 25.3 lei on Tuesday, down 2.69% on the day.

“For the estimated profit, BRD would have a PER [price/earnings ratio] of 21.4, below the market average. Anyway, BRD is, by indicators, the least evaluated bank on the bourse, and at a PER exceeding by little 20, it stands well even in comparison with many other stocks that do not have the same market liquidity,” Brendea explained.

Analysts polled by SeeNews:

1. Paul Brendea, Prime Transaction

2. Cristian Tudorescu, Vanguard

3. Mihai Cristian Alexa, SSIF Broker

ANALYST FORECASTS FOR BRD'S NINE-MONTH FINANCIAL RESULTS (in lei):

(1 euro = 3.3912 Romanian lei)