2Q20 and 1H20 results: underlying net income impacted by the crisis but in positive territory thanks to strong cost control
Reported net income at €(57)m in 2Q20 and +€4m excluding exceptional items2 despite an unprecedented market environment
Basel 3 fully-loaded CET1 ratio3 at 11.2%, +290bps above regulatory requirements
MODEL DEMONSTRATING ITS FLEXIBILITY WITH FINANCIAL DISCIPLINE
BUSINESS' UNDERLYING NET REVENUES1 EXCL. CVA/DVA: €1.5BN IN 2Q20 (-26% YOY), €3.4BN IN 1H20 (-15%) UNDERLYING EXPENSES1 DOWN -11% YOY IN 2Q20
AWM: Model flexibility and best quarter in 5 years for net inflows driving AuM above €900bn
AuM up +9% QoQ in 2Q20 to reach €906bn at end-June 2020, thanks to positive net inflows and positive market effect
Net inflows reached ~€16bn in 2Q20, best quarter since 1Q15 with close to ~€7bn net inflows in North America
Underlying net revenues1 down -24% YoY in 2Q20 (-13% in 1H20) impacted by the full effect of the first quarter market dislocation and with notably, lower performance fees and mark-downs on the seed money portfolio. 2Q20 average fee rate impacted by a mix effect following the drop in equity markets in March (averaging effect) with some improvement in June
Flexibility of the AM multiboutique model with underlying expenses1 down -14% YoY in 2Q20
Outlook: End-June AuM close to their 3Q19 average level. ~€100m cost savings identified by 2022 with ~50% to materialize by end-2020
CIB: A tight cost control and a cost of risk sensitivity unchanged despite a higher 2Q20
Underlying net revenues1 down -39% YoY in 2Q20 (-27% in 1H20), significantly impacted by the crisis. Continued support to the economy with financing revenues strongly up QoQ. Solid +11% YoY revenue growth in Investment banking/M&A in 2Q20 with a historical quarter for DCM and a role played in ~80% of CAC 40 issuances
Market activities impacted by the COVID-19 context, notably in Equity with lower client activity during lockdown and significant mark-downs for 2019 dividends. Resilient client activity in FICT although below its 1Q20 levels
Strict cost control with underlying expenses1 down -8% YoY in 2Q20 and -6% in 1H20
Cost of risk increase in 2Q20 due to higher provisioning, notably due to IFRS9 and across energy exposures
Outlook: 2020 cost of risk sensitivity unchanged vs. previous estimate. Project to adjust EQD positioning to focus on Groupe BPCE retail networks and Natixis’ key strategic clients
Insurance: Particularly resilient model, driver of growth and profitability
Underlying net revenues1 up +14% YoY in 2Q20 and +9% in 1H20
Underlying RoE1 at ~35% in 2Q20 and ~34% in 1H20
Outlook: New Dimension 2020 financial targets all expected to be delivered or exceeded
Payments: Lower volumes in April/May, back to normal in June
Underlying net revenues1 moderately down -5% YoY in 1H20 despite a -18% evolution in 2Q20, impacted by the drop in activity due to lockdown
Profitable in 1H20 despite the 2Q20 slowdown
Outlook: 2020 net revenues are expected to exhibit growth momentum, with positive jaw effect in 2H20
FINANCIAL STRENGTH
Basel 3 FL CET1 ratio3 at 11.2% as at June 30, 2020, and at 11.6% proforma for items temporarily impacting RWA, notably on the market side. Ratio +290bps above regulatory requirements (~€3.1bn of CET1 buffer) and +330bps proforma
Reported net income at €(261)m in 1H20 and €(77)m excluding exceptional items2. Positive earnings capacity3 of +€17m in 1H20 despite volatile items impacting the semester and the cost of risk increase due to the COVID-19 context
2021 targets to be released on November 5, 2020 and new strategic plan in June 2021
“Natixis’ results in the first half of 2020 were impacted by the coronavirus crisis. In an unprecedented context marked by an increased cost of risk, the impact of lockdown measures on economic activity, and extreme market volatility, Natixis maintained positive earnings capacity and a very comfortable capital position. This demonstrates the strength of our business model and, notably in the second quarter of the year, the flexibility of our cost base, in line with the objectives of the New Dimension strategic plan. The impact of certain one-off factors such as the suspension of dividends and the mark to market of assets and liabilities, some of which are expected to reverse over time, has been integrated into our results. However, the crisis is not over, and the cost of risk is likely to remain elevated over the coming quarters. We will draw on the strength of our businesses to accelerate Natixis’ transformation through structural changes. We are launching a project to adjust the setup of our Equity Derivatives business towards our key strategic clients and are implementing significant measures to reduce expenses.”
François Riahi, Natixis Chief Executive Officer
Figures restated as communicated on April 20, 2020 following the announced disposal of a 29.5% stake in Coface. See page 16 for the reconciliation of the restated figures with the accounting view 1 Excluding exceptional items. Excluding exceptional items and excluding IFRIC 21 for the Cost income ratio, RoE and RoTE. 2 See page 6 3 See note on methodology
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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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