The main reason for this was higher risk costs as coverage ratio improved. The bank ended the year in red for the first time ever.
Negative loan growth: The bank’s loan growth was negative in 4Q at -2.4%, even if we adjust for the currency effect. L/D ratio improved to 111% from 114.5% in 3Q 12 but the improvement for the whole year was modest, in contrast with the announced strategy for 2012. NIM for the quarter contracted to 3.8% from 3.9% in 3Q 12 when the margin was boosted by the reticence to pay more for deposits. BRD-GSG said that in 2012 it increased a bit its market share on loans to 14.6% from 14.3%, while its deposits share decreased to 14.7% from 14.9%.
Robust F&C: The bank has restated slightly its 2011 results which could have an impact on yoy comparison. F&C had a positive evolution, as some of them were hiked. Salaries costs were 0.5% yoy higher, the first increase in the past four quarters. For the whole 2012, headcount decreased by 5%, while the number of outlets by only 2%. With lower revenues, C/I ratio for the quarter deteriorated to 48.9% from 45.7%.
NPLs up modestly: The increase in NPLs from 20.1% to 21.3%, was in line with our expectation but coverage ratio jumped to 51.9% from 47.0% in 3Q 12 as the revaluation of collaterals continued (the bank has not yet provisioned for Hidroelectrica). NPLs for the retail portfolio were 8% while for the legal entities stood at 36% (mainly SMEs).