Concorde has a below-market price target for BRD stock

Concorde Research has a "Neutral" outlook for BRD-Groupe Societe Generale (BRD) shares, with a target price in the next twelve months of 18.4 lei per share, 16% below the market price in the first part of the trading session of on Friday, according to the company's latest report, published on the BVB Research Hub portal.

BRD's net profit amounted to 366 million lei in the second quarter, down 12% year-on-year, mainly on the back of higher operating expenses, while moderate risk costs and the lower contribution to the Guarantee Scheme and the Resolution Fund resulted in a 13% increase in net profit, in quarterly dynamics, it is mentioned in the report prepared by financial analyst Krisztian Karikas.

Net interest income increased by 7.7% year-on-year due to higher volumes, but quarter-on-quarter there was a slight decrease of 0.9% due to the higher cost of funding, so the net interest margin decreased by 0.1% percentage points to 3.3%. Operating expenses increased by around 14% in annual dynamics, against the background of salary increases, turnover tax and increased IT expenses. But, thanks to the reduced contribution to the Guarantee Scheme and the Resolution Fund, operating expenses decreased by 5.9%, in quarterly dynamics.

The contribution to income from provisions continued to be negative, but asset quality remained good, with the NPL ratio increasing slightly to 2.2%, while the coverage ratio remained virtually unchanged at 77%.

The net loan portfolio grew by 14%, in annual dynamics, an evolution to which all business segments contributed. Loans related to retail increased by 8.5%, in annual dynamics, while net loans related to the corporate segment had an increase of 22.3%.

The deposit base increased by 12% in the second quarter compared to the same period last year. In addition, BRD Asset Management reached assets under management of 5.1 billion lei, increasing by 46% in annual dynamics.

Overall, BRD's results were solid, translating into a 2.1% quarterly increase in return on equity, according to the analyst.

In February of this year, Concorde had raised the price target for the BRD share to 18.4 lei, compared to 15.5 lei previously estimated, so now the analyst has maintained the target estimated several months ago.