Fourth Quarter 2006
CONTINUED INTERNATIONAL GROWTH AND PROFITABILITY
Net Banking Income: €7.1bn (+25.4%)
Gross Operating Income: €2.4bn (+22.8%)
3.1 pt positive jaws effect at constant scope and exchange rates
Net Income Group Share: €1,719mn (+28.8%)
STRONG GROWTH THROUGHOUT THE YEAR:
Net Banking Income: €27.9bn (+27.9%)
A POWERFUL ORGANIC GROWTH DRIVE:
Net Banking Income at constant scope and exchange rates: +13.5%
Operating Expenses and Depreciation at constant scope and exchange rates: +11.1%
BUILDING A SECOND HOME MARKET:
NET BANKING INCOME UP FOR ALL CORE BUSINESSES:
French Retail Banking (Including 100 % of revenues from Private Banking in France, excluding the PEL/CEL effect.) : €5,671mn (+ 4.3 %)
International Retail Financial Services: €7,296mn (+ 22.3 %)
Asset Management and Services: €4,350mn (+ 22.5 %)
Corporate and Investment Banking: €7,859mn (+ 22.4 %)
EARNINGS PER SHARE: €8.03 (+15.4%)
DIVIDEND PER SHARE: €3.10 (+19.2%) (Subject to shareholder approval)
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On 14 February 2007, the Board of Directors of BNP Paribas, in a meeting chaired by Michel Pébereau, examined the Group's results for the fourth quarter 2006, and approved the accounts for the 2006 fiscal year.
A Particularly Dynamic Fourth Quarter
The fourth quarter 2006 confirmed the revenue growth dynamic observed in the first nine months of the year: net banking income grew 25.4% to 7,052 million euros. This growth came from acquisitions, in particular BNL, and major organic growth: at constant scope and exchange rates, net banking income was up 11.3%.
Operating expenses and depreciation (4,654 million euros) grew 26.8% due in particular to BNL's 141 million euros in restructuring costs booked this quarter. At constant scope and exchange rates, the rise was only 8.2%, i.e. more than three points less than revenue growth.
Gross operating income soared 22.8% (+16.9% at constant scope and exchange rates) to 2,398 million euros. Excluding BNL's restructuring costs, it was up 30.0%.
A further decline in the cost of risk pushed operating income up 27.5% to 2,116 million euros (+26.8% at constant scope and exchange rates).
Net income group share totalled 1,719 million euros (+28.8%).
All the core businesses contributed to this performance:
- the French Retail Banking network (including 100% of revenues from French Private Banking) generated more fees compared to the exceptionally high fourth quarter 2005 benchmark (+6.7%), essentially fees from financial transactions (+15.0%). Despite a 2.1% fall in net interest income due to a rise in short-term rates and its consequences: flattening of the rates curve and a rise in regulated interest rates, net banking income edged up 1.6%. With operating expenses and depreciation virtually stable (+0.2%) compared to the high level in the fourth quarter 2005 and cost of risk down (-17.6%), French Retail Banking's (including 2/3 of revenues from French Private Banking) pre-tax income was up 8.0%.
- International Retail Banking and Financial Services generated net banking income up 10.3%, operating expenses and depreciation 9.2% higher and a cost of risk down 11.5%. Pre-tax income was up 13.2% compared to the fourth quarter 2005 with varied trends across the businesses lines (See appendix).
- Asset Management and Services has continued its powerful organic growth with revenues up 15.7%, operating expenses and depreciation 15.2% higher and quarterly pre-tax income 20.2% higher than in the fourth quarter 2005. All the business lines contributed to this sharp growth in revenues driven by international expansion, especially in Europe and in Asia.
- all Corporate and Investment Banking's business lines enjoyed an excellent fourth quarter with revenues up 19.0% compared to the fourth quarter 2005, operating expenses and depreciation only up 8.4%, net write-backs of provisions and pre-tax income up 38.5%.
- excluding the 141 million euros in restructuring costs, BNL's contribution to the Group's quarterly pre-tax income was 177 million euros. It includes 23 million euros of cost synergies achieved in the fourth quarter of the year. BNL's commercial business was sustained and the cost of risk in line with previous quarters in 2006.
2006: A Year of Accelerated Growth for the Group
In 2006, the Group's net banking income soared 27.9% to 27,943 million euros. This growth is the result of a combination of vigorous organic growth (+13.5% at constant scope and exchange rates) and the accelerating effect of external growth, in particular with the acquisition of BNL in the second quarter of the year.
More generally, the year 2006 was marked by the Group's significant internationalisation: the share of NBI generated in France has fallen to 48% on average (compared to 55% in 2005), and even 43% in the fourth quarter of the year. In the fourth quarter, French Retail Banking accounted for only 20% of the Group's net banking income.
At 17,065 million euros, operating expenses and depreciation were up 27.6%, or 11.1% at constant scope and exchange rates. Gross operating income thus jumped 28.2% to 10,878 million euros (+17.2% at constant scope and exchange rates).
The cost of risk (783 million euros, +28.4%) rose only due to the Bank's larger scope. At constant scope and exchange rates, it was down 38.6%.
Thus, operating income (10,095 million euros) was up 28.2%. At constant scope and exchange rates, it was up 21.6%.
Non-operating items contributed 475 million euros, down 13.5% compared to 2005, primarily because, starting in 2006, LaSer Cofinoga's income is no longer booked as income from associated companies but consolidated on a proportional integration basis. The tax burden rose 29.2% to 2,762 million euros and the share of minority interests rose 15.2% to 500 million euros.
The net income group share, 7,308 million euros, was up 24.9%.
These results take into account a 23.9% increase in payments to employees in connection with the Group's Employee Profit-Sharing Programme in France.
Return on equity, taking into account the capital increase realised to finance the acquisition of BNL, was 21.2% after tax. Net earnings per share came to 8.03 euros (up 15.4% despite a 6.9% increase in the average number of shares outstanding).
The Board of Directors will propose at the Shareholders Meeting to pay a dividend of 3.10 euros, a 19.2% increase compared to last year.
As at 31 December 2006, the Group's international capital adequacy ratio was 10.5% and the Tier 1 ratio was 7.4%.
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