The Board of Directors of BNP Paribas met on 4 February 2016. The meeting was chaired by Jean Lemierre and the Board examined the Group’s results for the fourth quarter and endorsed the 2015 financial statements.
GOOD OPERATING PERFORMANCE AND SOLID ORGANIC CAPITAL GENERATION
In a context of a gradual return to growth in Europe, BNP Paribas delivered a good overall performance this year.
Revenues totalled 42,938 million euros, up by 9.6% compared to 2014. They included this quarter an exceptional impact of +314 million euros in Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA), while one-off revenue items totalled -324 million euros in 2014.
The revenues of all the operating divisions were up compared to 2014 with a solid performance by Domestic Markets (1) (+1.6%), and a strong rise at International Financial Services (+14.5%) and CIB (+13.2%). They benefited from the positive impact of the acquisitions made in 2014 and a significant foreign exchange effect. They were up by 3.5% at constant scope and exchange rates.
Operating expenses, which amounted to 29,254 million euros, were up by 10.3%. They included one-off items for a total of 862 million euros: 793 million euros for the Simple & Efficient transformation costs and acquisitions’ restructuring costs (757 million euros in 2014) as well as a 69 million euro contribution to a dedicated fund for the resolution of four Italian banks.
The operating expenses of the operating divisions were up by 9.3%. They were up by 3.1% for Domestic Markets (1), 15.0% for International Financial Services and 11.5% for CIB. At constant scope and exchange rates, they rose by 3.2% in particular due to the implementation of new regulations, the reinforcement of compliance and the finalisation of the business development plans, partly offset by the success of the Simple & Efficient savings plan. The cost/income ratio of the operating divisions thus improved by 0.2 points (2).
Gross operating income was up by 8.2%, at 13,684 million euros. It was up by 8.7% for the operating divisions.
The Group’s cost of risk was stable at a moderate level, totalling 3,797 million euros (3,705 million euros in 2014) or 54 basis points of outstanding customer loans (-3 basis points compared to last year). The scope effect related to the 2014 acquisitions came to 143 million euros.
The Group actively implemented the remediation plan decided as part of the comprehensive settlement with the U.S. authorities and continued to reinforce its compliance and control procedures. It booked a one-off additional provision of 100 million euros in connection with the remediation plan to industrialise existing processes. The Group had booked 6 billion euros last year as a result of the comprehensive settlement with the U.S. authorities.
Non operating items totalled +592 million euros (+211 million euros in 2014). They included this year one-off items for a total of -60 million euro (-297 million euros in 2014): -993 million euros in exceptional goodwill impairments (-297 million euros in 2014) (3), a +716 million euros capital gain from the sale of the stake in Klépierre-Corio, a +123 million euros dilution capital gain due to the merger between Klépierre and Corio and a +94 million euros capital gain from the sale of a non-strategic stake.
Pre-tax income thus came to 10,379 million euros compared to 3,150 million euros in 2014. It was up by 13.0% for the operating divisions.
The Group generated 6,694 million euros in net income attributable to equity holders (157 million euros in 2014). Excluding one-off items, it came to 7,338 million euros, up by 7.3% (4), illustrating the Group’s good overall performance this year.
The return on equity was 8.3% (9.2% excluding one-off items). The return on tangible equity came to 10.1% (11.1% excluding one-off items). The net earnings per share was at €5.14.
At 31 December 2015, the fully loaded Basel 3 common equity Tier 1 ratio (5) was 10.9%, up by 60 basis points compared to 31 December 2014. The fully loaded Basel 3 leverage ratio (6) came to 4.0% (+40 basis points compared to 31 December 2014). The Liquidity Coverage Ratio was 124% at 31 December 2015. Lastly, the Group’s immediately available liquidity reserve was 266 billion euros (260 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 reached 70.9 euros, equivalent to a compounded annual growth rate of 6.5% since 31 December 2008, illustrating the continuous value creation throughout the cycle.
The Board of Directors will propose at the Shareholders’ Meeting the payment of a dividend of €2.31 per share to be paid in cash, equivalent to a 45% pay-out ratio which is in line with the objectives of the plan.
The Group’s good overall performance this year illustrates the satisfactory progress of the 2014-2016 business development plan. Since the beginning of the plan, the average annual revenue growth of the operating divisions was 5.5% (7): +1.4% for Domestic Markets (7), +9.0% for IFS (7) and +7.4% for CIB (7). The Group thus confirmed its return on equity target for 2016 (10% ROE calculated on 10% CET1 ratio) and is going to prepare this year a new medium-term plan for 2017 to 2020.
In the fourth quarter 2015, revenues totalled 10,449 million euros, up by 2.9% compared to the fourth quarter 2014. They included the one-off impact of +160 million euros in Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA) (-11 million euros in the fourth quarter 2014).
The revenues of the operating divisions were up by 4.8%: they rose by +0.4% for Domestic Markets (1), +6.8% for International Financial Services and +8.4% for CIB.
Operating expenses, which amounted to 7,406 million euros, were up by 7.6%. They included the one-off impact of Simple & Efficient transformation costs and the restructuring costs of the acquisitions, which totalled 286 million euros (254 million euros in the fourth quarter 2014), as well as a 69 million euro (8) contribution to a dedicated fund for the resolution of four Italian banks.
The operating expenses of the operating divisions increased by 7.9%: they were up by +6.4% at Domestic Markets (1), +7.4% at International Financial Services and +10.7% at CIB. In addition to the 69 million euro (8) contribution to the resolution process of four Italian banks, they reflect this quarter the impact of several non-recurring items, including in particular 20 million euros restructuring costs in BNL bc and a one-off 31 million euros contribution in Poland to the deposit guarantee fund and to the support fund for borrowers in difficulty.
Gross operating income decreased by 6.9%, at 3,043 million euros. It was down by 1.2% for the operating divisions.
The Group’s cost of risk was down by 4.3% compared to the same period a year earlier, at 968 million euros.
The Group booked in the costs related to the comprehensive settlement with the U.S. authorities the one-off impact of an additional 100 million euro provision in connection with the remediation plan to industrialise the existing processes (50 million euros in the fourth quarter 2014).
Non operating items totalled -502 million euros (-188 million euros in the fourth quarter 2014). They included in particular -993 million euro exceptional goodwill impairments (-297 million euros in 2014) (9) and the 352 million euro capital gain realised from the sale of the residual stake in Klépierre-Corio.
Pre-tax income thus came to 1,473 million euros (2,020 million euros in the fourth quarter 2014). It was stable for the operating divisions.
BNP Paribas posted 665 million euros in net income attributable to equity holders (1,377 million euros in the fourth quarter 2014). Excluding one-off items, it was 1,587 million euros (1,875 million euros in the fourth quarter 2014).
(1) Including 100% of Private Banking in the domestic networks (excluding PEL/CEL effects)
(2) At constant scope and exchange rates
(3) Of which BNL bc’s full goodwill impairment: -917 million euros (-297 million euros in 2014)
(4) FRB, BNL bc, BRB and Personal Investors, excluding private banking
(5) Including 100% of Private Banking in France (excluding PEL/CEL effects), Italy, Belgium and Luxembourg
(6) Contribution to a dedicated fund for the resolution of 4 Italian banks (-65 million euros) and one-off restructuring costs (-20 million euros)
(7) Excluding PEL/CEL effects
(8) BNL bc (-65 million euros), Personal Finance (-4 million euros)
(9) Of which BNL bc’s full goodwill impairment: -917 million euros (-297 million euros in 2014)