The Board of Directors of BNP Paribas met on 30 October 2014. The meeting was chaired by Baudouin Prot and the Board examined the Group’s results for the third quarter 2014.
VERY GOOD OVERALL PERFORMANCE THANKS TO THE DIVERSIFIED BUSINESS AND GEOGRAPHIC MIX
The Group delivered an overall very good performance thanks to its diversified business and
geographic mix. There was a good sales and marketing drive, confirming the loyalty of institutional,
corporate and individual clients. The Group closed two bolt-on acquisition deals this quarter with
the buyout of the 50% stake that it did not own in LaSer and the acquisition of BGZ in Poland.
Revenues totalled 9,537 million euros, up 3.9% compared to the third quarter 2013. One-off items
this quarter totalled -197 million euros (-138 million euros in the third quarter 2013) corresponding
to Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA). Excluding
these one-off items and at constant scope and exchange rates, revenues were up 2.8%.
Revenues grew in all the operating divisions, driven in particular by the specialised businesses,
international retail and Fixed Income. They rose by 2.6%(1) compared to the third quarter 2013 and
were up 2.8%(1) at Retail Banking(2), 5.2%(1) at Investment Solutions and 2.9%(1) at Corporate and
Operating expenses, at 6,623 million euros, were up by 3.8%. They include the one-off 148 million
euro impact of Simple & Efficient transformation costs (145 million euros in the third quarter 2013).
Operating expenses of the operating divisions were up 2.6%(1): the increase related to continued
investments in business development plans was limited thanks to the impact of Simple & Efficient.
Operating expenses were up 1.3%(1) at Retail Banking(2), 4.3%(1) at Investment Solutions and 4.8%(1) at
Gross operating income was up 4.2% over the period at 2,914 million euros. It rose by 2.5%(1) for
the operating divisions.
The Group’s cost of risk was down 9.2% this quarter, at 754 million euros (47 basis points of
outstanding customer loans), reflecting the Group’s good risk control.
Pre-tax income thus came to 2,308 million euros (2,120 million in the third quarter 2013), up 8.9%.
Net income attributable to equity holders was 1,502 million euros (1,358 million euros in the third
quarter 2013). Excluding one-off items, it was 1,730 million euros, up 12.5% compared to the same
period a year earlier.
On 26 October 2014, the European Central Bank (ECB) published the results of its Comprehensive
Assessment of the assets of the 130 most significant Eurozone banking groups. The assessment
included a detailed review of the banks’ assets (Asset Quality Review - AQR) and a Stress
Test performed in close cooperation with the European Banking Authority (EBA).
The exercise was unprecedented in terms of scope and duration. BNP Paribas supplied 370 million
data points and the ECB reviewed over 50% credit and market risk-weighted assets in a process
that lasted for almost a year.
The overall impact of the AQR adjustments on BNP Paribas Group’s CET1 ratio as at
31 December 2013 was minor: -15 basis points, of which 8 basis points were already included in
the CET1 ratio published on 30 June 2014. This places BNP Paribas amongst the best comparable
European banks. The Group has factored in the AQR results in the fully loaded Basel 3 common
equity Tier 1 ratio(3) as at 30 September 2014 which came to 10.1%.
The Stress Test results also show the Group’s ability to withstand a severe stress scenario, based
on extremely severe assumptions with respect to the evolutions of economic and market
The results of the assessment conducted by the ECB and the EBA thus confirm the Group’s
balance sheet solidity, the quality of its assets and the rigor of its risk management policy.
The fully loaded Basel 3 leverage ratio(4) was 3.5%(5). The Group’s immediately available liquidity
reserve is 268 billion euros (244 billion euros as at 30 June 2014), equivalent to over one year of
room to manoeuvre in terms of wholesale funding.
Lastly, the Group continues to reinforce its compliance and control procedures: it is implementing
the remediation plan agreed as part of the comprehensive settlement with the U.S. authorities and
is reinforcing its internal control system.
For the first nine months of the year, the Group’s results include the impact of a total of 5,950
million euros in one-off charges relating to the comprehensive settlement with the U.S. authorities.
Excluding the impact of all the one-off items, net income attributable to equity holders was 5,265
Revenues totalled 29,018 million euros, up 0.3% compared to the first nine months of 2013. It
included -313 million euros in one-off items compared to +161 million euros for the same period a
year earlier. Excluding the one-off items and at constant scope and exchange rates, it was up 2.7%
(+2.1% for the operating divisions).
Operating expenses rose by 2.2%, to 19 522 million euros. The rise was 2.3% excluding one-off
items and at constant scope and exchange rates (+2.7% for the operating divisions).
Gross operating income was 9,496 million euros, down 3.5% compared to the first nine months of
2013, but up 3.6% excluding one-off items and at constant scope and exchange rates (+1.0% for
the operating divisions).
At 2,693 million euros, the cost of risk was down 3.3 % compared to the first nine months of 2013.
Pre-tax income thus came to 1,255 million euros for the first nine months of 2014
(7,478 million euros for the first nine months of 2013). Excluding one-off items and at constant
scope and exchange rates, it was up 7.7% compared to the same period a year earlier.
BNP Paribas thus posted for the first nine months of the year -1,147 million euros in net income
attributable to equity holders (4,708 million euros for the first nine months of 2013). Excluding the
impact of one-off items, it came to 5,265 million euros, up 12.4% compared to the same period a
year earlier. The annualised return on equity(6) was 8.0% excluding the net impact of the costs
related to the comprehensive settlement with the U.S. authorities.
(1) At constant scope and exchange rates
(2) Including 100% of Private Banking of the domestic markets, BancWest and TEB (excluding PEL/CEL effects)
(3) Ratio taking into account all the CRD4 rules with no transitory provision
(4) Ratio taking into account all the CRD4 rules with no transitory provision, calculated according to the delegated act of the European Commission dated 10 October 2014
(5) Including the forthcoming replacement of Tier 1 instruments that have become ineligible with equivalent eligible instruments
(6) OCA/DVA not annualised and the costs related to the comprehensive settlement with the U.S. authorities have been restated from the net income