The Board of Directors of BNP Paribas met on 30 July 2015. The meeting was chaired by Jean Lemierre and the Board examined the Group’s results for the second quarter 2015 and endorsed the interim financial statements for the first half of the year.
STRONG INCOME GROWTH AND SOLID ORGANIC CAPITAL GENERATION
BNP Paribas posted a very good performance this quarter in a context of a gradual return to growth in Europe. Revenues were up sharply and grew in all the operating divisions. The Group showed the strength of its integrated business model building on a solid and diversified customer base.
Revenues totalled 11,079 million euros, up by 15.8% compared to the second quarter 2014. They include this quarter an exceptional impact of +80 million euros in Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA). The one-off revenue items for the second quarter 2014 totalled -353 million euros.
The revenues of the operating divisions were up significantly (+12.2% compared to the second quarter 2014) with a very good growth at International Financial Services (+20.7%) and Corporate and Institutional Banking (+15.6%), and continued increase in Domestic Markets (1) (+2.7%). They also benefited from the positive impact of the acquisitions made in 2014.
Operating expenses, at 7,083 million euros, were up by 11.2%. They include the one-off impact of Simple & Efficient transformation costs and the restructuring costs of the acquisitions made in 2014 (6) which totalled 217 million euros (198 million euros in the second quarter 2014). The cost/income ratio improved significantly (-2.6 percentage points) at 63.9%.
The operating expenses of the operating divisions were up by 11.4%, resulting in a positive
0.8 point jaws effect. They were up by 2.3% in Domestic Markets (1), 20.7% in International Financial Services and 13.3% in CIB.
Gross operating income was up by 24.8%, at 3,996 million euros. It increased by 13.5% for the operating divisions.
The Group’s cost of risk was up by 5.6% compared to the same quarter last year, at 903 million euros (51 basis points of outstanding customer loans), due to the scope effect related to the acquisitions made in 2014 (2). It was down slightly excluding this effect.
Non operating items totalled 592 million euros. They include this quarter in particular a dilution capital gain from the merger between Klépierre and Corio and a capital gain from the sale of a 7% stake in Klépierre-Corio for a total amount of 420 million euros. Non operating items were 154 million euros in the second quarter 2014.
As a reminder, in the second quarter of last year, the Group booked a total of 5,950 million euros in the costs related to the comprehensive settlement with the U.S. authorities.
Pre-tax income thus came to 3,685 million euros compared to -3,450 million euros in the second quarter 2014. It rose by 18.2% for the operating divisions.
The Group generated 2,555 million euros in net income attributable to equity holders
(-4,218 million euros in the second quarter 2014). Excluding the one-off items, it was up sharply by 13.7%, illustrating the Group’s very good performance this quarter.
As at 30 June 2015, the fully loaded Basel 3 common equity Tier 1 ratio (3) stood at 10.6%, up
by 30 basis points compared to 31 March 2015. The fully loaded Basel 3 leverage ratio (4) came to 3.7% (+30 basis points compared to 31 March 2015). The Group’s immediately available liquidity reserve was 290 billion euros (291 billion euros as at 31 December 2014), equivalent to over one year of room to manoeuvre in terms of wholesale funding.
The net book value per share was 68.8 euros, equivalent to a compounded annualised growth rate of 6.5% since 31st December 2008, illustrating the continuous value creation throughout the cycle.
Lastly, the Group is actively implementing the remediation plan agreed as part of the comprehensive settlement with the U.S. authorities and is continuing to reinforce its internal control and compliance system.
For the first half of the year, revenues totalled 22,144 million euros, up by 13.7% compared to the first half of 2014. They include for the first half of this year the one-off impact of +117 million euros in Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA). The one-off revenue items in the first half of 2014 totalled -116 million euros.
The revenues of the operating divisions were up sharply (+13.0%) illustrating the Group’s very good performance in the first half of the year: they were up by +2.5% for Domestic Markets (1), +20.5% for International Financial Services and +19.7% for CIB.
Operating expenses, at 14,891 million euros, were up by 13.1%. They include the one-off impact of Simple & Efficient transformation costs and the restructuring costs of the acquisitions made in 2014 which totalled 347 million euros (340 million euros in the first half of 2014). They also include the 245 million euro impact (5) of the first contribution to the Single Resolution Fund, whose entire contribution for 2015 was fully booked in the first quarter of the year based on the IFRIC 21 “Levies” interpretation.
The operating expenses of the operating divisions were up by 11.0%, resulting in a largely positive jaws effect (2 points). They were up 1.7% in Domestic Markets (1), 20.6% in International Financial Services and 13.4% in CIB.
Gross operating income was up by 14.8%, at 7,253 million euros. It increased by 16.7% for the operating divisions.
The Group’s cost of risk was slightly up by 0.4%, at 1,947 million euros, due to the scope effect related to the acquisitions made in 2014 (6). It was down excluding this effect. It included in the first half of 2014 a one-off 100 million euro provision due to the exceptional situation in Eastern Europe.
Non operating items totalled 931 million euros. They include in particular a dilution capital gain from the merger between Klépierre and Corio and a capital gain from the sale of a 7% stake in Klépierre-Corio for a total amount of 487 million euros as well as a 94 million euro capital gain from the sale of a non-strategic stake (7) . Non operating items totalled 250 million euros in the first half of 2014.
The Group had separately booked in the first half of last year a total of 5,950 million euros in costs related to the comprehensive settlement with the U.S. authorities.
Pre-tax income thus came to 6,237 million euros (-1,320 million euros in the first half of 2014). It was up very sharply by 26.8% for the operating divisions.
The Group generated 4,203 million euros in net income attributable to equity holders (-2,815 million euros in the first half of 2014). Excluding the impact of one-off items, it was up sharply by 14.1%, illustrating the Group’s very good performance in the first half of the year. Return on equity, excluding exceptional items, was 10.1%.
(1) Including 100% of Private Banking in the domestic networks (excluding PEL/CEL effects)
(2) Scope effect of 68 million euros
(3) Ratio taking into account all the CRD4 rules with no transitory provisions
(4) Ratio taking into account all the rules of the CRD4 directives with no transitory provisions, calculated according to the delegated act of the European Commission dated 10 October 2014, including the forthcoming replacement of Tier 1 instruments that have become ineligible with equivalent eligible instruments
(5) Estimated impact, net of the reduction of the French systemic tax
(6) Scope-effect of 142 million euros.
(7) CIB-Corporate Banking (€74m), Corporate Centre (€20m)