On 5 May 2010, the Board of Directors of BNP Paribas, in a meeting chaired by Michel Pébereau, examined the Group's first quarter results 2010.
GREATER PROFIT GENERATING CAPACITY THANKS TO THE GROUP'S NEW DIMENSION
After the year 2009 marked by the economic recession, particularly in the first quarter, the first quarter 2010 has seen signs of the beginning of economic recovery. For BNP Paribas, the integration of BNP Paribas Fortis, taken over on 12 May 2009, is ongoing. In particular, the businesses of BNP Paribas Fortis and BGL BNP Paribas were split into different businesses of BNP Paribas Group and a new business unit was created: BeLux Retail Banking, which encompasses the retail and corporate banking businesses in Belgium and Luxembourg, the Group's new domestic markets.
In this context, BNP Paribas Group had an excellent performance, enabling it to generate net earnings of 2,283 million euros, up 46.5% compared to the first quarter 2009. This rise is due both to the Group's new dimension and to good income growth at constant scope and exchange rates of each of the Group's three operating divisions.
Net earnings per share in the first quarter reached 1.87 euro, up 20.6% compared to the first quarter 2009. The annualised return on equity was 14.4% compared to 12.3% in the first quarter 2009.
The new Group posted 11,530 million euros in revenues, up 21.7% compared to the first quarter 2009. In keeping with the Group's strategy, the retail banking businesses account for more than half of revenues (53%), CIB's account for 34% and Investment Solutions' for 13%. At constant scope and exchange rates, the level of revenues was comparable to that of the first quarter 2009, despite an exceptionally high base. This solid performance is due to the sales and marketing drive of the business units as well as the strengthening of the Group's franchise.
At 6,596 million euros, operating expenses rose 23.3% compared to the first quarter 2009. At constant scope and exchange rates, they were down 3.4% compared to the same period a year earlier, thanks to cost-cutting efforts undertaken across all the business units during the crisis.
The Group's cost/income ratio was 57.2%. At constant scope and exchange rates, it improved by 2 points.
Gross operating income totalled 4,934 million euros, up 19.5% compared to the first quarter 2009. At constant scope and exchange rates, it was up 5.0% compared to the first quarter 2009, reflecting the good operating performance of all the Group's business units.
The Group's cost of risk, at 1,337 million euros, or 83bp of customer loans, was down respectively 489 million euros and 561 million euros compared to the first and fourth quarters of 2009.
The good operating performance of all the Group's business units, combined with the effects of the integration of BNP Paribas Fortis and the drop in the cost of risk, helped generate 3,840 million euros in pre-tax income, up 67.7% compared to the first quarter 2009 (+55.4% at constant scope and exchange rates).
BNP Paribas has never bought a Greek bank. Therefore, it has no material exposure to the country's local economy. Its exposure to the Greek banking system is negligible. Its corporate commitments are limited (about 3 billion euros or 0.2% of the Group's total commitments). They are focussed on corporations which are primarily international and in the shipping sector with asset-secured loans and risks with minimal correlation to the Greek economy. Moreover, the Group has some exposure, limited compared to its size, in respect of Greek sovereign debt: about 5 billion euros or 0.4% of the Group's total commitments. Besides banking risks, BNP Paribas net exposure to Greece arising from its insurance business is negligible.
The integration of entities of BNP Paribas Fortis and BGL BNP Paribas with those of BNP Paribas was, due to its magnitude, supported by all the Group's business units, functions and territories. More than 85% of the 1,160 integration projects identified have already been launched. During the quarter, 42 million euros in synergies were booked and added to the 120 million euros already recorded in the 2009 accounts. In addition to the 162 million euros already booked, the full year effect of synergies implemented comes to 92 million euros, which will be reflected in the financial statements in the coming quarters. So, the total of 254 million euros in synergies already implemented is in line with the plan announced.
Read the Press Release (unavailable link)
View the slides of the presentation (unavailable link)
View the slides of Financial Stability Board (unavailable link)