First-Quarter 2016 Results
CORE BUSINESSES NET REVENUES FLAT despite an adverse market environment
EARNINGS CAPACITY of €311m, ROTE of 9.1%(1)
Solid resilience in 1Q16
- Core businesses(2): net revenues flat year-on-year at close to €2bn and a limited 4% pre-tax profit decline over the same period
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- Very sound momentum in Insurance with net revenues up 19% and in Specialized Financial Services, where revenues expanded 6% overall and 11% in Specialized Financing
- Improved margins and limited net outflows of €1bn in Asset Management
- Good resilience in Corporate & Investment Banking key franchises, with revenues down only 3% year-on-year. Further solid momentum in the Equity segment
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- Operating expenses virtually flat vs. 1Q15 (+1%), excluding the increase in estimated contribution to the Single Resolution Fund
- Cost of risk for core businesses almost stable year-on-year : 45bps in 1Q16 and 35bps (12 months rolling)
- Net income (gs) reported of €200m including non-operating items and IFRIC 21 impact
- ROE for core businesses excluding IFRIC 21 of 12.1%
scarce resources and balance sheet management in strict accordance with our plan
- Confirmation of the asset-light model with Basel 3 RWA(3) 6% lower year-on-year and 2% down on end-2015
- CET1 ratio of 10.8%(4) at end-March 2016 with a 30bps generation before distribution
- Leverage ratio(2) kept above 4% at end-March 2016
STRATEGic guidances confirmed
- Greater contribution from Investment Solutions to core businesses’ pre-tax profit (46% in 1Q16 vs. 41% in 1Q15)
- Capacity to deliver a payout ratio of at least 50% and to re-distribute surpluses beyond the CET1 target
- Launch of a Transformation and Business Efficiency project
(1) Excluding IFRIC 21 (2) See note on methodology (3) Based on CRR-CRD4 rules published on June 26, 2013, including the Danish compromise - no phase-in except for DTAs on loss carry-forwards (4) Based on CRR-CRD4 rules as reported on June 26, 2013, including the Danish compromise - without phase-in except for DTAs on tax-loss carryforwards and pro forma of additional phase-in of DTAs following ECB regulation 2016/445 and planned acquisition of PJS
The Board of Directors examined Natixis’s first-quarter 2016 accounts on May 9, 2016.
For Natixis, the main features of first-quarter 2016 were(1):
- stable core business revenues of close to €2bn and a decline in group net revenues of only 3% year-on-year.
Within the Investment Solutions core business, Asset Management recorded limited net outflows of €1bn during the quarter, while margins improved in both the US and Europe. Insurance enjoyed robust momentum, with overall turnover climbing 20% year-on-year to reach €1.8bn (excluding the reinsurance treaty with CNP).
In Corporate & Investment Banking, Structured Financing continued to generate a high proportion of revenues from fee income (37%), and grew new loan production by 3% year-on-year excluding the Global Energy & Commodities segment. Capital markets revenues were fueled by a good showing in Equity Derivatives and solid resilience in Fixed Income thanks to Rates and Forex businesses.
Revenues from Specialized Financial Services increased 6% vs. 1Q15, thanks to solid performances in Leasing, Sureties & Guarantees and Factoring,
- a 3% year-on-year rise in expenses to €1.605bn. They remained well under control, inching up only 1% vs. 1Q15 excluding the increase in estimated contribution to the Single Resolution Fund,
- a core-business provision for credit loss at 45bps, virtually unchanged from a year earlier,
- earnings capacity (net income (group share) excluding the IFRIC 21 impact) of €311m during the quarter, down 8% year-on-year,
- a reported net income (group share) of €200m,
- a leverage ratio(1) of 4.2% at end-March 2016,
- a CET1 ratio(2) of 10.8% at March 31, 2016.
Laurent Mignon, Natixis Chief Executive Officer, said: “Our core businesses fared well this quarter, with revenues holding steady against a highly volatile market backdrop, thanks to our commercial dynamism. Despite a sharp increase in regulatory costs, we safeguarded our profitability and confirmed our ability to deliver a payout ratio of over 50%. In order to cement our asset-light strategy and step up measures to adapt our business lines to more demanding conditions, we unveiled plans for a new organization for Corporate & Investment Banking with a particular emphasis on expanding our origination and distribution capability. We have also begun an in-depth analysis focusing on transforming processes in each of our business lines along with a project geared to operational efficiency”.
- See note on methodology
- Based on CRR-CRD4 rules as reported on June 26, 2013, including the Danish compromise - without phase-in except for DTAs on tax-loss carryforwards and pro forma of additional phase-in of DTAs following ECB regulation 2016/445 and planned acquisition of PJS
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. Figures in this press release are unaudited.
NATIXIS financial disclosures for the first quarter 2016 are contained in this press release and in the presentation attached herewith, available online at www.natixis.com in the “Investor Relations” section.
The conference call to discuss the results, scheduled for Tuesday May 10th, 2016 at 9:00 a.m. CET, will be webcast live on www.natixis.com (on the “Investor Relations” 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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