During its meeting of 10 November 1999, the Board of Directors of BNP reviewed the BNP 1999 nine-month results. These results do not include Paribas' results, Paribas being consolidated within the BNP Group from 1 October 1999. Nonetheless, these results include BNP's share of the restructuring charges relating to the BNP PARIBAS integration ; results excluding restructuring charges are also indicated in order to make the comparison with the year-earlier period easier.
NET INCOME ATTRIBUTABLE TO THE GROUP : EURO 1,643 MILLION (2)
For the first nine months of 1999, consolidated net income amounted to EURO 1,748 million and net income attributable to the Group totalled EURO 1,643 million, up 81.1% from the year-earlier period.
Taking into account the EURO 595 million restructuring charge relating to the BNP PARIBAS integration, the BNP Group had a net income attributable to the group of EURO 1,048 million, up 15.5% from the year-earlier period.
Business in the first nine months of 1999 benefited from a combination of positive factors, particularly economic conditions in France and the United States and the vitality of the world's capital markets. In this climate, consolidated net banking income ( EURO 6,557 million)(3) rose by 21.9%. However, for the first nine months of 1998, net banking income included EURO 126 million related to the securitisation of sovereign debt . Computed on a comparable basis, the increase in net banking income stood at 15.4% based on a comparable structure (5) .
(1) Excluding restructuring charges
(2) Excluding restructuring charges
(3) In keeping with usual accounting policies, net banking income does not include capital gains on investment portfolio.
Operating expense and depreciation (including variable remunerations) rose by 14.6% (6% based on a compable structure). This increase is for its larger part attributable to Global Customers and Markets whose activities benefited from a significant development.
Considering the sizeable difference between the respective rates of growth of net banking income on one hand and operating expense and depreciation on the other, consolidated gross operating income amounted to EURO 2.37 billion, up 37.7% from the first nine months of 1998 (or 36.3% on a comparable basis and at constant structure (4).
Gross operating income, increased very favourably in each of the Group's three core businesses (Retail Banking in France, Retail Banking Outside Europe, and Global Customers and Markets)
RETAIL BANKING IN FRANCE : GROSS OPERATING INCOME OF EURO 717 MILLION (+ 16.4%)
Net banking income of the Retail Banking in France business rose by 6% to EURO 3,019 million. Value-added to capital and other banking income are up 3.9% and commissions 8.3% (economic definition) despite a decrease of 31% in foreign exchange commissions due to the creation of the euro. All sectors of this core business contributed to the good performance.
The strong growth in fund collection persisted, particularly regarding mutual fund outstandings (+20.5%) and life insurance outstandings (+14.5%). Sight deposits increased by 12.7% and total average deposits by 2.5% from the first nine months of 1998.
The network's loans outstanding increased on average by 4.1% compared to the same period in 1998 driven by consumer credits (+10.2%) and mortgage loans (+8.3%).
With BNP's tele-sales centre's (BNP en Ligne) 100,000 calls per month, and more than 80,000 individual and professional customers subscribing to the bank's internet service and 300,000 connections per month, and the market's most advanced range of e-commerce services, BNP has reinforced its N°1 position on these new channels of distribution.
(4) Restructuratiof the Ivory Coast and Kenya debts contributed an exceptional revenue of 126 million euros, offset by provisions of the same amount in the pre-tax income. This item has to be adjusted to put 1998 and 1999 results on a comparable basis.
(5) The main changes in the scope of consolidation between the two period consisted in First Hawaiian integration and UEB full consolidation.
Expenses relating to new product research and development of new distribution channels rose by 19.5% from the first nine months of 1998 while productivity and cost control efforts have been continued. Excluding R&D expenses on new distribution channels development, the network's operating expenses rose by only 1.7%, including estimated profit sharing, substantially increased given the first nine months of the Bank's 1999 performance.
Gross operating income of the Retail Banking in France business rose by 16.4% to reach EURO 717 million.
RETAIL BANKING OUTSIDE EUROPE : GROSS OPERATING INCOME OF EURO 365 MILLION (+94.1%)
The net banking income of this core business (EURO 887 million) rose by 84% due to the integration of First Hawaiian Bank. Excluding the impact of acquisitions and disposals, the increase of the net banking income amounted to 8.3%.
Given the enlarged scope of consolidation, operating expense and depreciation rose by 77.6% to EURO 522 million (+ 0.6% on a comparable structure).
Gross operating income stood at EURO 365 million, up 94.1% (+21.7% based on a comparable structure).
In the United States, the restructuring of the new Bancwest Corp is moving ahead smoothly. Sierra West Bankcorp, a California and Nevada bank recently acquired by the Group, is fully consolidated starting 1 July 1999.
The BNPI - Africa network also posted a good performance with a 25 % increase in gross operating income.
GLOBAL CUSTOMERS AND MARKETS : GROSS OPERATING INCOME OF EURO 1,206 MILLION (+76.3%)
The net banking income of Global Customers and Markets amounted to EURO 2,589 million (+39%, or +32,7% based on a comparable structure).
All sectors of this core business contributed to the sharp increase in gross operating income, particularly:
Asset management: assets managed by the Group (including Private Banking assets) at 30 September 1999 amounted to EURO 96.9 billion, up 26.1% from the figure a year ealier.
Financial activities: BNP Equities' results strongly increased both in derivatives and in the equity brokerage, while the performance of the interest rate and foreign exchange business rose significantly; M&A and Structured Finance teams posted remarkable results.
International networks: gross operating income rose substantially, especially in Europe, despite a decrease in net banking income in Asia that was largely caused by the controlled reduction of credit outstandings.
The lasting favourable economic conditions in France and the stabilisation of the emerging countries' situation in 1999, compared to the first nine months of 1998 affected by numerous crises, allowed to have provisions at a much reduced level: EURO 297 million, down 62% on a comparable basis.
BNP continued the active management of its equity portfolio. Amid rising stock market prices, it realised capital gains of EURO 336 million, remaining however lower than the figure of the year -earlier period (EURO 446 million).
Net income before tax and restructuring charges rose by 91.3% to EURO 2,742 million. Taking into account an income tax of EURO 724 million (+107.4%), consolidated net income before restructuring charges stood at 1,748 million (+85.4%).
|Results (in millions of euros)||9 months 1999||On a comparable basis (7)||On published figures (7)|
|Net banking income||6,557||+ 24.9 %||+ 21.9 %|
|Operating expense and depreciation||(4,188)||(+ 14.6 %)||(+ 14.6 %)|
|Gross operating income||2,369||+ 48.5 %||+ 37.7 %|
|Net additions to allowances||(297)||(- 62.2 %)||(- 67.4 %)|
|Capital gains, earnings of companies carried under the equity method, and other||400||- 17.0 %||- 17.0 %|
|Income taxes||(724)||(+ 107.4 %)||(+ 107.4 %)|
|Consolidated net income||1,748||+ 85.4 %||+ 85.4 %|
|Net income attributable to the Group before restructuring charges||1,643||+ 81.1 %||+ 81.1 %|
|Net income attributable to the Group after restructuring charges||1,048|
Presenting these results to the Board of Directors, Chairman Michel Pébereau stressed that the operating environment had been exceptionally favourable for banks since the beginning of the year and that the modernisation efforts which had been carried out over the past years by the BNP teams had enabled the Bank to benefit fully from this environment.
(6) The statutory auditors verified the sincerity of the first nine months of 1999 results for consistency, reliability, and relevance, on the basis of auditing standards similar to those used for the half-year results. They also verified the conformity of information presented for the third quarter 1998 with the financial statements prepared by the Bank for that period, ensuring especially that the same accounting policies and principles were used for both periods.
(7) Restructuration of the Ivory Coast and Kenya debts contributed an exceptional revenue of 126 million euros, offset by provisions of the same amount in the pre-tax income. This item has to be adjusted to put 1998 and 1999 results on a comparable basis.