BNP Paribas Group: Results as at 31 March 2016
The Board of Directors of BNP Paribas met on 2 May 2016. The meeting was chaired by Jean Lemierre and the Board examined the Group’s results for the first quarter 2016.
SOLID ORGANIC CAPITAL GENERATION IN A CHALLENGING ENVIRONMENT THIS QUARTER
Thanks to the diversity of its geographies and of its business units, all focused on serving clients, BNP Paribas reported this quarter good revenues resilience despite a particularly unfavourable environment: interest rates still low, stock market crisis, wait-and-see attitude by debt investors.
Revenues totalled 10,844 million euros, down by 2.0% compared to the first quarter 2015. They included the one-off impact of +365 million euros in Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA) (+37 million euros in the first quarter 2015).
As for the operating divisions, revenues held up well compared to the first quarter 2015 at Domestic Markets(1) (-0.7% with a decline in financial fees) and International Financial Services (-0.7% due to the spot effect of the stock market crisis on Insurance’s financial statements) but were down by 18.9% (15.5% excluding FVA) at CIB because of the sharp decrease in the revenues of Global Markets.
Operating expenses, at 7,627 million euros, were well under control and down by 2.3% compared to the first quarter 2015. They included the one-off impact of the acquisitions’ restructuring costs and the CIB transformation plan’s costs for a total of 46 million euros (20 million euros in the first quarter 2015). They no longer included this quarter any Simple & Efficient transformation costs (110 million euros in the first quarter 2015): in line with the objective, the last costs related to this plan were booked in the fourth quarter 2015.
Operating expenses were up by 2.3% for Domestic Markets(1) and 2.2% for International Financial Services but down by 8.8% for CIB as a result of lower business activity this quarter. Based on the IFRIC 21 “Levies” interpretation, they included the entire increase in banking contributions and taxes for 2016 (+1.0% impact on the operating expenses of the operating divisions). They benefited from the success of the Simple & Efficient savings plan but factored in the implementation of new regulations and the reinforcement of compliance.
The gross operating income of the Group was thus down by 1.2%, at 3,217 billion euros.
The cost of risk was however significantly lower, in particular thanks to the good control of risks at loan origination, the low interest rate environment and the improvement recorded in Italy. It came to 757 million euros (1,044 million euros in the first quarter 2015) or 43 basis points of outstanding customer loans.
Non operating items totalled +178 million euros (+339 million euros in the first quarter 2015 due to the one-off +67 million euro dilution capital gain from 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 2,638 million euros compared to 2,552 million euros in the first quarter 2015 (+3.4%).
Net income attributable to equity holders was thus 1,814 million euros, up by 10.1% compared to the first quarter 2015. Excluding one-off items, it came to 1,607 million euros (+4.0%).
The annualised return on equity, excluding one-off items, equalled 9.4%. The annualised return on tangible equity, excluding one-off items, was 11.2%. The annualised return on equity calculated on the basis of a CET1 ratio of 10% is 10.1%, in line with the target of the 2014-2016 plan.
As at 31 March 2016, the fully loaded Basel 3 common equity Tier 1 ratio(2) was 11.0%, up by 10 basis points compared to its level on 31 December 2015, illustrating solid organic capital generation. The fully loaded Basel 3 leverage ratio(3) came to 4.0% (stable compared to 31 December 2015).
The Liquidity Coverage Ratio stood at 116% as at 31 March 2016. Lastly, the Group’s immediately available liquidity reserve totalled 298 billion euros (compared to 266 billion euros as at 31 December 2015), equivalent to over one year of room to manoeuvre in terms of wholesale funding.
The net book value per share reached 71.7 euros, equivalent to a compounded annual growth rate of 6.4% since 31 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 compliance and control procedures.
(1) Including 100% of Private Banking in Domestic Markets (excluding PEL/CEL effects)
(2) Ratio taking into account all the CRD4 rules with no transitory provisions
(3) Ratio taking into account all the CRD4 rules at 2019 with no transitory provisions, calculated according to the delegated act of the European Commission dated 10 October 2014