2Q17 and 1H17 Results
REVENUES rose 9% to over €2.4bn in 2Q17
Reported NET INCOME climbed 28% to €487m in 2Q17 and 32% in 1H17 to €768m
Further growth momentum in core businesses
INVESTMENT SOLUTIONS: Sound eXpansion in insurance and good level of net inflows in Asset management
- Insurance: overall turnover amounting to €6.4bn, up 81%/1H16, excluding the reinsurance treaty with CNP
- Asset management: €9bn in net inflows in 2Q17 (€14bn in 1H17) and €834bn of AuM at end-June 2017
CIB: strong activity levels for all busineSs lines
- Global markets: net revenues (excluding the CVA/DVA desk) up 20% vs. 2Q16, with net revenues rising 13% for FICT and 33% for Equity
- Global finance & Investment banking: net revenues up 16% vs. 2Q16, driven by M&A and Investment banking
- Increased contribution to revenues from international platforms, up to 57% in 1H17
SFS: good commercial dynamics, reinforcement in payments
- Fine performances in Specialized Financing (net revenues +3% vs. 2Q16)
- Payments: new step forward in the merchant services sector with the proposed acquisition of 50.04% stake in Dalenys signed on June, 26
Marked increase in profitability in 2Q17 and 1H17(1)
- Core-business net revenues up 12% in 2Q17 and 13% in 1H17, to €2.3bn and €4.5bn, respectively, fueled by Investment Solutions and CIB
- Improvement in cost of risk for core businesses to 31bps in 2Q17 and 28bps in 1H17
- Reported net income (group share) of €487m in 2Q17 (+28%/2Q16) and €768m in 1H17 (+32%/1H16)
- Core-business ROE: 16.1% in 2Q17 (+140bps/2Q16) and 16% in 1H17 (+260bps/1H16)
- Natixis ROTE of 13.7% in 2Q17 (+200bps/2Q16) and 13.1% in 1H17 (+270bps/1H16), above the New Frontier target
Main objectives of the plan achieved: success of the asset light model
- 18% drop in RWA for CIB and 6% decline for Natixis since end-2013
- Reinforcement of franchises in Asset Light activities: Asset management, M&A and Payments
- Share of capital allocated to Investment Solutions up to 35% at end-June 2017 vs. 29% at end-2013
- CET1 ratio(2) of 11.3% at end-June 2017 after factoring in a projected minimum dividend payout of 50%
(1) Excluding exceptional items and the IFRIC 21 impact for ROE and ROTE
(2) Based on CRR-CRD4 rules published on June 26, 2013, including the Danish compromise - no phase-in except for DTAs on loss carry-forwards
The Board of Directors approved Natixis’ accounts for second-quarter 2017 on August 1st, 2017.
For Natixis, the main features of 2Q17 were:
- revenue growth of 12% yoy to €2.298bn for core businesses and 9% yoy to €2.410bn for Natixis.
Growth in the Investment Solutions (net revenues +11% yoy to €920m) was underpinned by the diversity and adaptation of the product range, both in Asset management and Insurance, where revenues advanced by 12% yoy to €696m and 13% yoy to €177m, respectively.
Asset management recorded €9bn of net inflow during the quarter, including €8bn on long-term products, while AuM were down by €3bn vs. end-March 2017to €834bn, due to adverse exchange-rate effects.
In Insurance, momentum remained robust in all segments and overall turnover (excluding the reinsurance treaty with CNP) climbed 78% vs. 2Q16 to reach €3bn.
Corporate & Investment banking also enjoyed strong momentum across all business lines, while continuing to strengthen its international franchises, particularly in Asia. All in all, revenues grew 16% vs. 2Q16 and reached €1bn. The quarter was notably boosted by further strong growth in Investment banking and by significant yoy expansion in revenues from Fixed-Income and Derivative solutions in the Capital markets field.
Specialized Financial Services grew net revenues by 2% to €347m, buoyed by solid performances in Sureties and Guarantees (net revenues +7%) and Leasing (net revenues +3%).
- a tight grip on operating expenses, which rose only 5% yoy to €1.594bn,
- a significant improvement in cost-income ratio, excluding IFRIC 21(1), to 66,5%, down 280bps vs. 2Q16,
- a drop in cost of risk for core businesses to €63m vs. €71m in 2Q16, with the year-earlier period having been marked by the provisions set aside on the Oil & Gas sector,
- 28% growth in reported net income (group share) to €487m,
- core-business ROE(1) of 16.1% excluding the IFRIC 21 impact,
- a CET1 ratio(2) of 11.3% at end-June 2017,
- a leverage ratio(1) of 4.3% at end-June 2017.
Laurent Mignon, Natixis Chief Executive Officer, said: “After faring well in the first quarter 2017, Natixis enjoyed a fine second quarter, fueled particularly by sharp increases in both revenues and profitability in core businesses. These results testify to the successful application of our asset light strategy across all of our business lines with the resolute development of our Asset management, Insurance, M&A and Payments activities whether in the financing area, where our Originate-to-Distribute model is working effectively. In order to enhance our agility and efficiency, and to continue expanding our business and leveraging our talents, we began work in the second quarter on an in-depth transformation of our organizations, processes and working methods, with the aim of seizing all the opportunities offered by innovation. These initiatives will leave us well-placed for the start of our new strategic plan in 2018”.
- See note on methodology
- Based on CRR-CRD4 rules published on June 26, 2013, including the Danish compromise without phase-in except for DTAs on tax-loss carryforwards
This media release may contain objectives and comments relating to the objectives and strategy of Natixis. Any such objectives inherently depend on assumptions, project considerations, objectives and expectations linked to future and uncertain events, transactions, products and services as well as suppositions regarding future performances and synergies.
No assurance can be given that such objectives will be realized. They are subject to inherent risks and uncertainties, and are based on assumptions relating to Natixis, its subsidiaries and associates, and the business development thereof; trends in the sector; future acquisitions and investments; macroeconomic conditions and conditions in Natixis' principal local markets; competition and regulation. Occurrence of such events is not certain, and outcomes may prove different from current expectations, significantly affecting expected results. Actual results may differ significantly from those implied by such objectives.
Information in this media release relating to parties other than Natixis or taken from external sources has not been subject to independent verification, and Natixis makes no warranty as to the accuracy, fairness, precision or completeness of the information or opinions herein. Neither Natixis nor its representatives shall be liable for any errors or omissions, or for any prejudice resulting from the use of this media release, its contents or any document or information referred to herein.
Included data in this press release have not been audited.
NATIXIS financial disclosures for the second quarter 2017 are contained in this press release and in the presentation attached herewith, available online at www.natixis.com in the “Investors & shareholders” section.
The conference call to discuss the results, scheduled for Wednesday August 2nd, 2017 at 9:00 a.m. CET, will be webcast live on www.natixis.com (on the “Investors & shareholders” page).
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About Groupe BPCE
Groupe BPCE is the second-largest banking group in France. Through its 100,000 staff, the group serves 35 million customers – individuals, professionals, companies, investors and local government bodies – around the world. It operates in the retail banking and insurance fields in France via its two major networks, Banque Populaire and Caisse d’Epargne, along with Banque Palatine and Oney. It also pursues its activities worldwide with the asset & wealth management services provided by Natixis Investment Managers and the wholesale banking expertise of Natixis Corporate & Investment Banking. The Group's financial strength is recognized by four credit rating agencies with the following senior preferred LT ratings: Moody's (A1, stable outlook), Standard & Poor's (A, stable outlook), Fitch (AA-, negative outlook) and R&I (A+, stable outlook).
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