Paris, August 1, 2019
2Q19 results
A well-balanced business model to navigate the current environment
Reported net income at €346m in 2Q19 and €1.1bn in 1H19
Financial strength with a Basel 3 fully-loaded CET1 ratio1 at 11.5%, well above our 2020 target (11%)
STRENGTH OF A DIVERSIFIED BUSINESS MODEL
2Q19 UNDERLYING NET REVENUES2 AT €2.3BN, STABLE VS. A RECORD 2Q18
AWM: Strong net revenue growth and positive net inflows in the US notably
Strength of our active asset management model with underlying net revenues2 up +11% YoY in 2Q19 (+4% in 1H19)
in part driven by high levels of performance fees that reached €138m this quarter (€171m in 1H19)
Demonstration of the strength of the multiboutique model with €(2)bn net outflows on LT products despite €(6)bn
net outflows at H2O. More than +€3bn net inflows on LT products across other affiliates, of which +€2bn in the US
The average fee rate remains in line with the New Dimension target at ~30bps
Strong AuM growth of +5% over the quarter to reach €898bn, including WCM
Projected partnership between Ostrum AM and LBP AM to create a key player in life insurance asset management
CIB: Revenue diversification and tight cost control to create value despite an elevated cost of risk due to a large single file
Underlying net revenues2 down YoY in 2Q19 with a high base effect in Global finance. Resilience of Global markets activities with revenues up QoQ and FIC-T also up YoY. Growth from IB/M&A and our Green & Sustainable Hub
Strict cost control, down -7% YoY at constant exchange rate in 2Q19
Cost of risk elevated this quarter driven by a large single file
Underlying RoE2 at 9.3% in 2Q19 and 11.7% with a normalized cost of risk of 30bps
Insurance: Sustained growth and profitability
Underlying net revenues2 up +7% YoY with a positive jaws effect both in 2Q19 and 1H19
Underlying RoE2 >30% in 1H19, in line with the New Dimension 2020 target
Payments: Continued growth dynamic
Underlying net revenues2 up +10% YoY with a positive jaws effect both in 2Q19 and 1H19
Increase in business volumes from Dalenys & PayPlug, up more than +20%
SUSTAINABLE VALUE CREATION AND FINANCIAL STRENGTH
Organic capital creation of 38bps in 2Q19. Basel 3 FL CET1 ratio1 at 11.5% as at June 30, 2019, well above our 2020 target (11%)
Underlying net income2 at €363m in 2Q19 and €555m in 1H19, despite an elevated cost of risk (63bps in 2Q19 and 43bps in 1H19)
Underlying RoTE2 at 9.6% in 2Q19 and 10.8% with a normalized cost of risk of 30bps
Underlying RoTE2 adjusted3 at 12.8% over New Dimension as at June 30, 2019
FOCUS ON THE IMPLEMENTATION OF OUR 2020 AMBITIONS
François Riahi, Natixis Chief Executive Officer, said: “Natixis recorded solid results across all its businesses in the second quarter of 2019. Our diversified and balanced business model proves, once again, its worth in an uncertain economic environment. In Asset & Wealth Management our multi-boutique model demonstrated its robustness. Revenues and assets under management both continued to rise despite outflows at H2O and with net flows in the United States turning back positive. We also announced our ambition to create a 100% SRI-compliant European leader in insurance-related fixed income asset management with La Banque Postale. In Corporate & Investment Banking, we enjoyed sustained performances, including in our capital markets activities despite a less favorable environment than last year to which we notably adapt through tighter cost control. In Insurance and Payments, we continued to combine strong growth with a positive jaws effect. We further bolstered our capital position with our CET1 standing at 11.5%, above our 2020 objective.”
Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See page 13 for the reconciliation of the restated figures with the accounting view [1] See note on methodology 2 Excluding exceptional items. Excluding exceptional items and excluding IFRIC 21 for cost/income, RoE and RoTE (see note on methodology) 3 Adjusting for the non-recurring impact on 4Q18 revenues from Asian equity derivatives and a 30bps normalized cost of risk in 2Q19, net of tax
2Q19 RESULTS
On August 1, 2019, the Board of Directors examined Natixis’ second quarter 2019 results.
| €m | 2Q19 reported | 2Q18 restated | 2Q19 o/w underlying | 2Q18 o/w underlying | 2Q19 vs. 2Q18 restated | 2Q19 vs. 2Q18 underlying | ||||
| Net revenues | 2,282 | 2,360 | 2,297 | 2,305 | (3)% | 0% | ||||
| o/w businesses | 2,091 | 2,106 | 2,091 | 2,106 | (1)% | (1)% | ||||
| Expenses | (1,577) | (1,528) | (1,566) | (1,514) | 3% | 3% | ||||
| Gross operating income | 705 | 832 | 730 | 791 | (15)% | (8)% | ||||
| Provision for credit losses | (110) | (41) | (110) | (41) | ||||||
| Net operating income | 595 | 791 | 620 | 750 | (25)% | (17)% | ||||
| Associates and other items | 7 | 7 | 7 | 7 | ||||||
| Pre-tax profit | 602 | 798 | 627 | 757 | (25)% | (17)% | ||||
| Income tax | (164) | (234) | (172) | (220) | ||||||
| Minority interests | (92) | (57) | (93) | (56) | ||||||
| Net income - group share | 346 | 507 | 363 | 481 | (32)% | (25)% |
Natixis’ underlying net revenues are stable vs. a historically high 2Q18 with AWM up +11%, Payments up +10% YoY and Insurance up +7% YoY. Within CIB, Investment banking/M&A up +5% YoY and good resilience for Global markets (-5% YoY excl. CVA/DVA), offsetting Global finance evolution set against a 2Q18 historically high performance.
Underlying expenses are well under control and up +1% YoY at constant exchange rate, in part reflecting the strong top-line performance across AWM, Insurance and Payments. CIB costs down -7% YoY at constant exchange rate. The underlying cost/income ratio1 is at 70.5%, up +250bps vs. 2Q18.
The underlying loan loss provisioning increased above its normalized level this quarter, mainly driven by a large single file in France. Expressed in basis points of loans outstanding (excluding credit institutions), the businesses’ underlying cost of risk worked out to 63bps in 2Q19 vs. a normalized level of ~30bps.
Underlying tax rate at ~28% in 2Q19. YoY increase in minority interests on the back of a higher performance from some European AM affiliates and Coface.
Net income (group share), adjusted for IFRIC 21 and excluding exceptional items reached €315m in 2Q19. Accounting for exceptional items (-€17m net of tax in 2Q19) and IFRIC 21 impact (+€47m in 2Q19), the reported net income (group share) in 2Q19 is at €346m.
Businesses’ underlying RoE1 reached 12.6% in 2Q19 and 13.9% under a normalized2 cost of risk.
Natixis’ underlying RoTE1 reached 9.6% in 2Q19 excl. IFRIC 21 and 10.8% under a normalized2 cost of risk.
1 See note on methodology. Excluding exceptional items and excluding IFRIC 21 2 Normalizing the 2Q19 cost of risk at 30bps
1H19 RESULTS1
| €m | 1H19 restated | 1H18 restated | 1H19 o/w underlying | 1H18 o/w underlying | 1H19 vs. 1H18 restated | 1H19 vs. 1H18 underlying | ||||
| Net revenues | 4,414 | 4,553 | 4,410 | 4,526 | (3)% | (3)% | ||||
| o/w businesses | 3,992 | 4,146 | 3,992 | 4,146 | (4)% | (4)% | ||||
| Expenses | (3,297) | (3,202) | (3,269) | (3,173) | 3% | 3% | ||||
| Gross operating income | 1,117 | 1,350 | 1,141 | 1,353 | (17)% | (16)% | ||||
| Provision for credit losses | (141) | (77) | (141) | (77) | ||||||
| Net operating income | 976 | 1,273 | 1,000 | 1,276 | (23)% | (22)% | ||||
| Associates and other items | 692 | 20 | 9 | 20 | ||||||
| Pre-tax profit | 1,668 | 1,293 | 1,009 | 1,295 | 29% | (22)% | ||||
| Income tax | (379) | (409) | (308) | (410) | ||||||
| Minority interests | (178) | (117) | (145) | (117) | ||||||
| Net income - group share | 1,110 | 767 | 555 | 769 | 45% | (28)% |
Natixis’ underlying net revenues are higher or stable vs. 1H18 for the vast majority of the businesses with Payments up +10% YoY, Insurance up +7% YoY, AWM up +4% YoY and IB/M&A up +6% YoY. 1H19 revenue evolution to be put in the context of a historically high 1H18, in particular 1Q18 for Global markets and 2Q18 for Global finance.
Underlying expenses are well under control and up +1% YoY at constant exchange rate reflecting solid revenue growth across most businesses, investments being made (e.g. strategic projects, support functions) and the increase in the SRF contribution. CIB costs down -3% YoY at constant exchange rate. The underlying cost/income ratio2 is at 71.7%, up +390bps vs. 1H18.
The underlying loan loss provisioning almost doubled vs. 1H18 on the back of a large single file impact in 2Q19 and is thus not representative of the normalized cost of risk. Expressed in basis points of loans outstanding (excluding credit institutions), the businesses’ underlying cost of risk worked out to 43bps in 1H19.
Underlying tax rate at ~31% in 1H19 due to the non-deductibility of the SRF contribution in 1Q. Guidance maintained at <30% for 2019.
Net income (group share), adjusted for IFRIC 21 and excluding exceptional items reached €650m in 1H19. Accounting for exceptional items (+€555m net of tax in 1H19) and IFRIC 21 impact (-€95m in 1H19), the reported net income (group share) in 1H19 is at €1,110m.
Businesses’ underlying RoE2 reached 12.5% in 1H19 and 12.9% under a normalized cost of risk3.
Natixis’ underlying RoTE2 reached 9.9% in 1H19 excl. IFRIC 21 and 10.3% under a normalized cost of risk3.
1 Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See page 13 for the reconciliation of the restated figures with the accounting view 2 See note on methodology. Excluding exceptional items and excluding IFRIC 21 3 Normalizing the 1H19 cost of risk at 30bps
2Q19 & 1H19 RESULTS
Exceptional items
| €m | 2Q19 | 2Q18 | 1H19 | 1H18 | ||
| Exchange rate fluctuations on DSN in currencies (Net revenues) | Corporate center | (15) | 55 | 4 | 27 | |
| Transformation & Business Efficiency Investment costs (Expenses) | Business lines & Corporate center | (10) | (18) | (26) | (30) | |
| Fit to Win investments & restructuring expenses (Expenses) | Corporate center | (1) | 4 | (1) | 1 | |
| Disposal of subsidiary in Brazil (Gain or loss on other assets) | CIB | 0 | 0 | (15) | 0 | |
| Capital gain - Disposal of retail activities (Gain or loss on other assets) | Corporate center | 0 | 0 | 697 | 0 | |
| Total impact on income tax | 8 | (14) | (71) | 1 | ||
| Total impact on minority interests | 0 | (1) | (33) | (1) | ||
| Total impact on net income (gs) | (17) | 25 | 555 | (2) |
€586m positive net impact from the disposal of the retail banking activities in 1Q19: €697m capital gain minus €78m income tax minus €33m minority interests
TRANSFORMATION & BUSINESS EFFICIENCY
Investment costs by reporting line
| €m | 2Q19 | 2Q18 | 1H19 | 1H18 | |
| AWM | (0) | (1) | (5) | (1) | |
| CIB | (3) | (3) | (6) | (4) | |
| Insurance | (2) | (1) | (2) | (1) | |
| Payments | (0) | (1) | (0) | (1) | |
| Financial Investments | 0 | 0 | 0 | 0 | |
| Corporate center | (5) | (13) | (13) | (23) | |
| Impact on expenses | (10) | (18) | (26) | (30) |
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p4)
Asset & Wealth Management
| €m | 2Q19 | 2Q18 | 2Q19 vs. 2Q18 | 1H19 | 1H18 | 1H19 vs. 1H18 | 1H19 vs. 1H18 constant FX | ||
| Net revenues | 932 | 842 | 11% | 1,705 | 1,641 | 4% | 0% | ||
| o/w Asset Management1 | 900 | 805 | 12% | 1,642 | 1,567 | 5% | 1% | ||
| o/w Wealth management | 32 | 37 | (12)% | 63 | 74 | (14)% | (14)% | ||
| Expenses | (605) | (568) | 7% | (1,158) | (1,116) | 4% | 0% | ||
| Gross operating income | 327 | 274 | 19% | 547 | 525 | 4% | 1% | ||
| Provision for credit losses | (2) | (1) | (1) | (1) | |||||
| Associates and other items | (2) | (2) | (4) | (2) | |||||
| Pre-tax profit | 323 | 270 | 20% | 542 | 521 | 4% | |||
| Cost/income ratio2 | 65.1% | 67.7% | -2.6pp | 67.8% | 67.8% | -0.0pp | |||
| RoE after tax2 | 15.0% | 15.2% | -0.2pp | 13.5% | 14.6% | -1.1pp |
Underlying net revenues from Asset & Wealth Management (AWM) are up +11% YoY in 2Q19 on a high 2Q18. Net revenues growth even excluding performance fees, illustrating the resilience of our active multi-boutique model. Asset management (excl. Employee savings plan) underlying net revenues excl. performance fees down -4% YoY in North America (€384m) and up + 9% in Europe (€208m) in 2Q19 (-5% at €756m and +11% at €378m in 1H19 for North America and Europe respectively). Wealth management net revenues are down -€5m YoY in 2Q19 mainly due to the perimeter effect from the disposal of Selection 1818 finalized in 4Q18.
The Asset management overall fee rate excluding performance fees is at 30bps in 2Q19, flat QoQ and in line with the New Dimension target. In Europe, 16.5bps (+0.5bps QoQ) and 28.6bps excl. Life Insurance General Accounts (+1.1bps QoQ). In North America, 38bps (flat QoQ). Performance fees reached €138m in 2Q19 and €171m in 1H19 (~11% of AM revenues vs. ~13% FY18) mainly driven by H2O and AEW.
Asset management net inflows on LT products reached >€3bn in 2Q19 excluding H2O illustrating the diversity of the multi-boutique model with, notably, a rebound in the US. H2O AuM at €26bn as at end-June, above its end-June 2018 level. H2O fund flows have normalized quickly - positive net inflows in July. In Europe, ~€1bn net inflows on LT products (excl. H2O) in 2Q19 mainly driven by Fixed income, ESG and Real asset strategies. Net outflows on money market funds (~€4bn) in part driven by corporates’ semester-end. In North America, ~€2bn net inflows on LT products in 2Q19 primarily driven by Fixed income and growth Equity strategies. Good momentum for Loomis.
Asset management AuM reached €898bn as at June 30, 2019 and are up +5% QoQ. Positive FX and perimeter effect of €27bn (mainly driven by the acquisition of a stake in WCM) and positive market effect of +€22bn in 2Q19. Wealth management AuM reached €30.0bn as at June 30, 2019 including Massena Partners (acquisition finalized end of June) and with €0.3bn positive net inflows.
Underlying expenses up +3% YoY at constant exchange rate in 2Q19 reflecting investments being made in new initiatives and digitalization as well as MIFID 2 impact.
The underlying RoE2 reached 15.0% in 2Q19 and 13.5% in 1H19.
1 Asset management including Private equity and Employee savings plan 2 See note on methodology. Excluding exceptional items and excluding IFRIC 21
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p4)
Corporate & Investment Banking
| €m | 2Q19 | 2Q18 | 2Q19 vs. 2Q18 | 1H19 | 1H18 | 1H19 vs. 1H18 | 1H19 vs. 1H18 constant FX | ||
| Net revenues | 847 | 976 | (13)% | 1,654 | 1,920 | (14)% | (16)% | ||
| Net revenues excl. CVA/DVA/Other | 844 | 922 | (9)% | 1,644 | 1,872 | (12)% | (15)% | ||
| Expenses | (520) | (548) | (5)% | (1,099) | (1,113) | (1)% | (3)% | ||
| Gross operating income | 327 | 428 | (24)% | 554 | 807 | (31)% | (34)% | ||
| Provision for credit losses | (104) | (37) | (134) | (68) | |||||
| Associates and other items | 3 | 3 | 6 | 9 | |||||
| Pre-tax profit | 225 | 393 | (43)% | 426 | 748 | (43)% | |||
| Cost/income ratio1 | 62.4% | 56.9% | +5.5pp | 65.5% | 57.2% | +8.3pp | |||
| RoE after tax1 | 9.3% | 17.3% | -8.0pp | 9.5% | 17.2% | -7.7pp |
Underlying net revenues are down high-single digit in 2Q19 excl. CVA/DVA and Other. Revenue evolution largely driven by a high base effect for Global finance activities with a historically high 2Q18. Continued growth in Investment banking/M&A and resilient Global markets in 2Q19 with solid performances across the Americas and EMEA (excl. France) platforms. Increased revenue diversification and robust pipeline built up for 2H19 especially on our key sectors and Investment banking/M&A.
Global markets net revenues excl. CVA/DVA significantly up QoQ in 2Q19 and slightly down YoY. 1H19 revenue evolution reflecting a high base, especially in 1Q18. FICT net revenues up +2% YoY in 2Q19 with maintained high selectivity on profitable deals. Continued good performance in Credit especially in the US and revenues picking up in Rates, despite challenging market conditions and the lack of jumbo transactions. Less favorable environment for FX, notably due to the lack of volatility on major currencies. Equity net revenues excluding cash equity down -16% YoY in 2Q19 (high 2Q18) with a solid recovery post 4Q18 and remaining close to 1Q19 levels. Increased diversification while continuing to bring innovative solutions to address clients’ needs. Global finance net revenues down YoY due to the base effect from a historically high 2Q18, especially on Aviation and US Real estate. Sustained 2Q19 activity in Energy & Natural Resources as well as in Europe Real estate. Robust new loan production, up +36% QoQ although down YoY (base effect). Solid origination levels for Europe Real estate and ASF. Distribution rate on Real Assets at ~62% in 1H19. Investment banking and M&A net revenues up +5% YoY in 2Q19 (+6% in 1H19), in part driven by Green & Sustainable initiatives and including a good performance both in ECM and DCM. Sustained M&A activity in 2Q19 with a good contribution from PJ Solomon in the US. Proportion of revenues generated from service fees at ~38% in 2Q19 and ~40% in 1H192.
Underlying expenses are well under control and down -7% YoY at constant exchange rate in 2Q19 reflecting lower variable costs and ongoing efforts to improve efficiency despite investments being made to develop our sectorial approach as well as control functions.
Underlying cost of risk above its normalized level of ~30bps due to a large single file in France in 2Q19.
Underlying RoE1 of 9.3% in 2Q19 and 9.5% in 1H19. Normalizing for the cost of risk3, the 2Q19 RoE would have reached 11.7% (10.4% in 1H19). RWA are well under control, down -1% QoQ. Acquisition of Azure Capital Limited in Australia finalized in June to complement the international network of M&A boutiques and already bringing new mandates.
1 See note on methodology. Excluding exceptional items and excluding IFRIC 21 2 ENR, Real Assets, ASF 3 Normalizing the cost of risk at 30bps
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p4)
Insurance
| €m | 2Q19 | 2Q18 | 2Q19 vs. 2Q18 | 1H19 | 1H18 | 1H19 vs. 1H18 | ||
| Net revenues | 207 | 193 | 7% | 425 | 397 | 7% | ||
| Expenses | (114) | (107) | 6% | (239) | (225) | 6% | ||
| Gross operating income | 93 | 85 | 9% | 186 | 171 | 9% | ||
| Provision for credit losses | 0 | 0 | 0 | 0 | ||||
| Associates and other items | 5 | 0 | 5 | 3 | ||||
| Pre-tax profit | 98 | 86 | 15% | 192 | 175 | 10% | ||
| Cost/income ratio1 | 56.9% | 58.1% | -1.2pp | 54.2% | 54.4% | -0.2pp | ||
| RoE after tax1 | 27.7% | 25.2% | +2.5pp | 30.4% | 29.1% | +1.3pp |
Banking view
Underlying net revenues up +7% YoY both in 2Q19 and 1H19 with growth across the board.
Underlying expenses up +6% YoY both in 2Q19 and 1H19, translating into a positive jaws effect and an underlying cost/income ratio1 improvement, in line with the 2020 target of ~54%.
Underlying gross operating income up +9% YoY both in 2Q19 and 1H19.
Underlying RoE1 continued progression, above 30% in 1H19 which is the target set for New Dimension by 2020
Insurance view
Global turnover2 reached €3.3bn in 2Q19, up +10% YoY (+2% in 1H19 at €6.7bn).
Life and Personal protection: €2.9bn earned premiums2 in 2Q19, up +11% YoY.
- Total AuM2 at €65.0bn as at end-June 2019, up +3% QoQ and +8% YTD, driven by €1.6bn of net inflows2 in 2Q19 (€3.4bn YTD).
- Unit-linked AuM2 at €15.9bn as at end-June 2019, up +5% QoQ and +13% YTD, driven by €0.6bn of net inflows2 both in 1Q19 and 2Q19 (36% of total net inflows). UL products accounted for 29% of gross inflows in 2Q19, above the French market3.
- Personal protection: earned premiums up +22% YoY in 2Q19 at €0.3bn (+12% in 1H19 at €0.5bn).
P&C: €0.4bn earned premiums in 2Q19, up +7% YoY (+5% in 1H19 at €0.8bn). The combined ratio reaches 90.5% in 2Q19
(-1.5pp YoY) and 91.5% in 1H19 (-0.6pp YoY).
The non-life equipment rate at the end of June is at 26.5% (+0.5pp QoQ) for Banques Populaires and at 29.5% (+0.4pp QoQ) for Caisses d’Epargne.
1 See note on methodology. Excluding exceptional items and excluding IFRIC 21 2 Excluding reinsurance agreement with CNP 3 Source: FFA
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p4)
Payments
| €m | 2Q19 | 2Q18 | 2Q19 vs. 2Q18 | 1H19 | 1H18 | 1H19 vs. 1H18 | ||
| Net revenues | 105 | 95 | 10% | 208 | 188 | 10% | ||
| Expenses | (94) | (87) | 8% | (181) | (166) | 9% | ||
| Gross operating income | 11 | 8 | 33% | 27 | 22 | 21% | ||
| Provision for credit losses | (1) | (0) | (1) | (0) | ||||
| Associates and other items | 0 | 1 | 0 | 1 | ||||
| Pre-tax profit | 10 | 9 | 17% | 26 | 23 | 15% | ||
| Cost/income ratio1 | 89.8% | 91.6% | -1.8pp | 87.0% | 88.1% | -1.1pp | ||
| RoE after tax1 | 7.2% | 7.9% | -0.7pp | 9.8% | 10.6% | -0.8pp |
Underlying net revenues are up +10% YoY both in 2Q19 and 1H19. 40% of 1H19 revenues realized with direct clients (+3pp vs. 1H18).
- Payment Processing & Services: Steady +4% YoY revenue growth in Natixis Payments’ historical activities in 2Q19 (+5% in 1H19). Number of card transactions processed up +9% YoY in 2Q19.
- Merchant Solutions: Solid business volumes generated by Dalenys (medium/large corp.) and PayPlug (SME), up +22% YoY in 2Q19 (+24% in 1H19). Successful delivery of a fully-integrated “mobility as a service” (MAAS) solution for the SNCF Group simplifying payment services associated with all types of travel.
- Prepaid & Issuing Solutions: Robust growth in 2Q19 driven by meal vouchers (+7% YoY) and the contribution of our Benefits & Rewards activity (Titres Cadeaux and Comitéo). Number of mobile payments more than x2.6 vs. 2Q18. Launch of Xpollens in partnership with Visa, the first end-to-end “Payments in a box” offer integrating a full range of innovative payment solutions, from payment cards to instant payments through account management.
1 See note on methodology. Excluding exceptional items and excluding IFRIC 21
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p4)
Financial Investments
| €m | 2Q19 | 2Q18 | 2Q19 vs. 2Q18 | 1H19 | 1H18 | 1H19 vs. 1H18 | ||
| Net revenues | 196 | 174 | 13% | 389 | 364 | 7% | ||
| Coface | 181 | 156 | 16% | 356 | 333 | 7% | ||
| Other | 15 | 18 | (18)% | 33 | 31 | 6% | ||
| Expenses | (140) | (129) | 9% | (273) | (257) | 6% | ||
| Gross operating income | 56 | 45 | 23% | 116 | 107 | 8% | ||
| Provision for credit losses | (4) | 1 | (6) | (5) | ||||
| Associates and other items | 5 | 3 | 5 | 6 | (5)% | |||
| Pre-tax profit | 57 | 50 | 15% | 115 | 108 | 6% |
The net combined ratio of Coface1 reached 77.5% in 2Q19 vs. 81.5% in 2Q18 (76.0% 1H19 vs. 77.0% 1H18) with a cost ratio moving from 35.0% to 32.2% (from 33.8% 1H18 to 32.0% 1H19) and a loss ratio moving from 46.6% to 45.3% (from 43.2% 1H18 to 44.0% 1H19).
Corporate Center
| €m | 2Q19 | 2Q18 | 2Q19 vs. 2Q18 | 1H19 | 1H18 | 1H19 vs. 1H18 | ||
| Net revenues | 9 | 25 | 28 | 16 | ||||
| Expenses | (93) | (74) | 25% | (318) | (296) | 7% | ||
| SRF | 0 | (0) | (170) | (160) | 6% | |||
| Other | (93) | (74) | 26% | (148) | (136) | 9% | ||
| Gross operating income | (83) | (49) | 69% | (290) | (280) | 3% | ||
| Provision for credit losses | 1 | (4) | 1 | (3) | ||||
| Associates and other items | (5) | 2 | (3) | 4 | ||||
| Pre-tax profit | (87) | (51) | 72% | (292) | (280) | 4% |
Underlying net revenues from the Corporate Center of €9m in 2Q19 vs. €25m in 2Q18 (various positive elements impacting 2Q18).
Underlying expenses excluding SRF contribution up +€19m YoY in 2Q19 mainly due to severances and real estate management.
Underlying pre-tax profit contribution broadly unchanged YoY in 1H19 excl. SRF.
1 Reported ratios, net of reinsurance
FINANCIAL STRUCTURE
Basel 3 fully-loaded ratios1
Natixis’ Basel 3 fully-loaded CET1 ratio worked out to 11.5% as at June 30, 2019.
- Basel 3 fully-loaded CET1 capital amounted to €11.1bn
- Basel 3 fully-loaded RWA amounted to €96.9bn
Based on a Basel 3 fully-loaded CET1 ratio of 11.6% as at March 31, 2019, the respective 2Q19 impacts were as follows:
- Irrevocable Payment Commitment deduction from capital (IPC): -12bps
- 2Q19 strategic operations (WCM, IM, Fiera Capital, Massena Partners, Azure Capital): -16bps
- 2Q19 results: +36bps
- 2Q19 ordinary dividends: -20bps
- 2Q19 RWA and other effects: +2bps
Basel 3 regulatory ratios1
As at June 30, 2019, Natixis’ Basel 3 regulatory capital ratios stood at 10.6% for the CET1, 12.8% for the Tier 1 and 15.2% for the total capital ratio.
- Core Tier 1 capital stood at €10.3bn and Tier 1 capital at €12.4bn
- Natixis’ RWA totaled €96.9bn, breakdown as follows:
- Credit risk: €65.6bn
- Counterparty risk: €6.6bn
- CVA risk: €1.8bn
- Market risk: €9.6bn
- Operational risk: €13.3bn
Book value per share
Equity capital (group share) totaled €18.6bn as at June 30, 2019, of which €2.0bn in the form of hybrid securities (DSNs) recognized in equity capital at fair value (excluding capital gain following reclassification of hybrids).
Natixis’ book value per share stood at €5.24 as at June 30, 2019 based on 3,150,059,450 shares excluding treasury shares (the total number of shares being 3,153,078,482). The tangible book value per share (after deducting goodwill and intangible assets) was €3.96.
Leverage ratio1
The leverage ratio worked out to 4.35% as at June 30, 2019.
Overall capital adequacy ratio
As at June 30, 2019, the financial conglomerate’s excess capital was estimated at around €3.5bn (based on own funds including current financial year’s earnings).
1 See note on methodology
APPENDICES
Note on methodology:
The results at 30/06/2019 were examined by the board of directors at their meeting on 01/08/2019.
Figures at 30/06/2019 are presented in accordance with IAS/IFRS accounting standards and IFRS Interpretation Committee (IFRIC) rulings as adopted in the European Union and applicable at this date
Changes in Natixis’ account presentation following the disposal of the retail banking activities to BPCE S.A.
- Employee savings plan is reallocated to Asset & Wealth Management
- Film industry financing is reallocated to Corporate & Investment Banking
- Insurance is not impacted
- Payments becomes a standalone business line
- Financial Investments are isolated and include Coface, Natixis Algeria and the private equity runoff activities. The Corporate Center is refocused on Natixis’ holding and ALM functions and carries the Single Resolution Fund contribution within its expenses
Additional impacts on the quarterly series from the disposal of the retail banking activities to BPCE S.A.
- New support function services provided by Natixis to the activities sold (TSA / SLA), as well as the cancellation of services or analytical items that have been made obsolete following such a disposal are factored in
- The reclassification as Net revenues of the residual IT and logistic services that continue to be provided to the activities sold. Such services now being provided to entities that do not fall under Natixis’ scope of consolidation anymore, they have been reclassified as Net revenues instead of expense deductions
- The implementation of introductory fees between the Natixis CIB Coverage and the entities sold
In order to ensure comparability between the 2018 and 2019 quarterly series, these impacts have been simulated retroactively as of January 1st, 2018, even though they only impact the published financial statements as of their implementation date in 2019. These items essentially impact the Corporate Center and more marginally the CIB. The others business lines are unimpacted
Business line performances using Basel 3 standards:
- The performances of Natixis business lines are presented using Basel 3 standards. Basel 3 risk-weighted assets are based on CRR-CRD4 rules as published on June 26th, 2013 (including the Danish compromise treatment for qualified entities).
- Natixis’ RoTE is calculated by taking as the numerator net income (group share) excluding DSN interest expenses on preferred shares after tax. Equity capital is average shareholders’ equity group share as defined by IFRS, after payout of dividends, excluding average hybrid debt, average intangible assets and average goodwill.
- Natixis’ RoE: Results used for calculations are net income (group share), deducting DSN interest expenses on preferred shares after tax. Equity capital is average shareholders’ equity group share as defined by IFRS, after payout of dividends, excluding average hybrid debt, and excluding unrealized or deferred gains and losses recognized in equity (OCI).
- RoE for business lines is calculated based on normative capital to which are added goodwill and intangible assets for the business line. Normative capital allocation to Natixis’ business lines is carried out based on 10.5% of their average Basel 3 risk-weighted assets. Business lines benefit from remuneration of normative capital allocated to them. By convention, the remuneration rate on normative capital is maintained at 2%.
Note on Natixis’ RoE and RoTE calculation: Calculations based on quarter-end balance sheet in 1Q19 to reflect the disposal of the retail banking activities. The €586m net capital gain is not annualized
Net book value: calculated by taking shareholders’ equity group share (minus distribution of dividends proposed by the Board of Directors and submitted to the approval of the General Shareholders' Meeting on May 28, 2019), restated for hybrids and capital gains on reclassification of hybrids as equity instruments. Net tangible book value is adjusted for goodwill relating to equity affiliates, restated goodwill and intangible assets as follows:
| €m | 30/06/2019 |
| Goodwill | 3,863 |
| Restatement for Coface minority interests | (162) |
| Restatement for AWM deferred tax liability & others | (334) |
| Restated goodwill | 3,367 |
| €m | 30/06/2019 |
| Intangible assets | 697 |
| Restatement for Coface minority interest & others | (48) |
| Restated intangible assets | 649 |
Own senior debt fair-value adjustment: calculated using a discounted cash-flow model, contract by contract, including parameters such as swap curves and revaluation spread (based on the BPCE reoffer curve). Adoption of IFRS 9 standards, on November 22, 2016, authorizing the early application of provisions relating to own credit risk as of FY2016 closing.
Regulatory (phased-in) capital and ratios: based on CRR-CRD4 rules as reported on June 26, 2013, including the Danish compromise - phased in. Presentation excluding current financial year’s earnings and accrued dividend (based on a 60% pay-out1)
Fully-loaded capital and ratios: based on CRR-CRD4 rules as reported on June 26, 2013, including the Danish compromise - without phase-in. Presentation including current financial year’s earnings and accrued dividend (based on a 60% pay-out1)
Leverage ratio: based on delegated act rules, without phase-in (presentation including 1H19 earnings and accrued dividend1) and with the hypothesis of a roll-out for non-eligible subordinated notes under Basel 3 by eligible notes. Repo transactions with central counterparties are offset in accordance with IAS 32 rules without maturity or currency criteria. Leverage ratio disclosed including the effect of intragroup cancelation - pending ECB authorization
Exceptional items: figures and comments on this press release are based on Natixis and its businesses’ income statements excluding non-operating and/or exceptional items detailed page 4. Figures and comments that are referred to as ‘underlying’ exclude such exceptional items. Natixis and its businesses’ income statements including these items are available in the appendix of this press release
Restatement for IFRIC 21 impact: the cost/income ratio, the RoE and the RoTE excluding IFRIC 21 impact calculation in 1H19 takes into account ½ of the annual duties and levies concerned by this accounting rule. The impact for the quarter is calculated by difference with the former quarter
Earnings capacity: net income (group share) restated for exceptional items and the IFRIC 21 impact
Expenses: sum of operating expenses and depreciation, amortization and impairment on property, plant and equipment and intangible assets
1 Pay-out ratio based on reported net income group share minus DSN interest expenses on preferred shares after tax and excluding the €586m net capital gain from the disposal of the retail banking activities
Natixis - Consolidated P&L (restated)
| €m | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 2Q19 vs. 2Q18 | 1H18 | 1H19 | 1H19 vs. 1H18 | |||
| Net revenues | 2,193 | 2,360 | 2,156 | 2,040 | 2,132 | 2,282 | (3)% | 4,553 | 4,414 | (3)% | |||
| Expenses | (1,675) | (1,528) | (1,499) | (1,656) | (1,720) | (1,577) | 3% | (3,202) | (3,297) | 3% | |||
| Gross operating income | 518 | 832 | 658 | 383 | 412 | 705 | (15)% | 1,350 | 1,117 | (17)% | |||
| Provision for credit losses | (36) | (41) | (93) | (23) | (31) | (110) | (77) | (141) | |||||
| Associates | 7 | 3 | 6 | 13 | 3 | 8 | 10 | 11 | |||||
| Gain or loss on other assets | 6 | 4 | (0) | 44 | 682 | (2) | 10 | 681 | |||||
| Change in value of goodwill | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Pre-tax profit | 495 | 798 | 570 | 418 | 1,066 | 602 | (25)% | 1,293 | 1,668 | 29% | |||
| Tax | (175) | (234) | (154) | (110) | (215) | (164) | (409) | (379) | |||||
| Minority interests | (60) | (57) | (59) | (127) | (86) | (92) | (117) | (178) | |||||
| Net income (group share) | 260 | 507 | 358 | 181 | 764 | 346 | (32)% | 767 | 1,110 | 45% |
Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See below for the reconciliation of the restated figures with the accounting view
Natixis - Reconciliation between management and accounting figures
1H18
| €m | 1H18 underlying | Exceptional items | 1H18 restated | Contribution from perimeter sold | 1H18 reported | |||
| Net revenues | 4,526 | 27 | 4,553 | 437 | 4,989 | |||
| Expenses | (3,173) | (29) | (3,202) | (233) | (3,435) | |||
| Gross operating income | 1,353 | (2) | 1,350 | 204 | 1,554 | |||
| Provision for credit losses | (77) | (77) | (7) | (84) | ||||
| Associates | 10 | 10 | 0 | 10 | ||||
| Gain or loss on other assets | 10 | 10 | 0 | 10 | ||||
| Pre-tax profit | 1,295 | (2) | 1,293 | 197 | 1,490 | |||
| Tax | (410) | 1 | (409) | (61) | (470) | |||
| Minority interests | (117) | (1) | (117) | 0 | (118) | |||
| Net income (group share) | 769 | (2) | 767 | 136 | 903 |
| €m | 1H19 underlying | Exceptional items | 1H19 restated | Residual contribution from perimeter sold | 1H19 reported | |||
| Net revenues | 4,410 | 4 | 4,414 | 22 | 4,436 | |||
| Expenses | (3,269) | (28) | (3,297) | (22) | (3,319) | |||
| Gross operating income | 1,141 | (24) | 1,117 | 0 | 1,117 | |||
| Provision for credit losses | (141) | (141) | 0 | (141) | ||||
| Associates | 11 | 11 | 0 | 11 | ||||
| Gain or loss on other assets | 2 | 682 | 681 | 0 | 681 | |||
| Pre-tax profit | 1,009 | 659 | 1,668 | 0 | 1,668 | |||
| Tax | (308) | (71) | (379) | 0 | (379) | |||
| Minority interests | (145) | (33) | (178) | 0 | (78) | |||
| Net income (group share) | 555 | 555 | 1,110 | 0 | 1,110 |
1H19
Natixis - IFRS 9 Balance sheet
| Assets (€bn) | 30/06/2019 | 31/03/2019 |
| Cash and balances with central banks | 17.8 | 20.3 |
| Financial assets at fair value through profit and loss1 | 218.1 | 219.3 |
| Financial assets at fair value through Equity | 11.5 | 11.1 |
| Loans and receivables1 | 124.9 | 119.2 |
| Debt instruments at amortized cost | 1.8 | 1.5 |
| Insurance assets | 106.9 | 104.3 |
| Non-current assets held for sale | 0.0 | 0.0 |
| Accruals and other assets | 16.4 | 15.9 |
| Investments in associates | 0.7 | 0.7 |
| Tangible and intangible assets | 2.2 | 2.3 |
| Goodwill | 3.9 | 3.8 |
| Total | 504.3 | 498.4 |
| Liabilities and equity (€bn) | 30/06/2019 | 31/03/2019 |
| Due to central banks | 0.0 | 0.0 |
| Financial liabilities at fair value through profit and loss1 | 217.8 | 211.9 |
| Customer deposits and deposits from financial institutions1 | 97.5 | 101.8 |
| Debt securities | 48.5 | 45.7 |
| Liabilities associated with non-current assets held for sale | 0.0 | 0.0 |
| Accruals and other liabilities | 18.5 | 17.8 |
| Insurance liabilities | 96.5 | 93.4 |
| Contingency reserves | 1.7 | 1.7 |
| Subordinated debt | 4.0 | 4.0 |
| Equity attributable to equity holders of the parent | 18.6 | 20.8 |
| Minority interests | 1.2 | 1.4 |
| Total | 504.3 | 498.4 |
1 Including deposit and margin call
Natixis - 2Q19 P&L by business line
| €m | AWM | CIB | Insurance | Payments | Financial investments | Corporate Center | 2Q19 restated | |||
| Net revenues | 932 | 847 | 207 | 105 | 196 | (5) | 2,282 | |||
| Expenses | (605) | (523) | (116) | (94) | (141) | (98) | (1,577) | |||
| Gross operating income | 327 | 324 | 92 | 11 | 55 | (103) | 705 | |||
| Provision for credit losses | (2) | (104) | 0 | (1) | (4) | 1 | (110) | |||
| Net operating income | 325 | 219 | 92 | 10 | 51 | (102) | 595 | |||
| Associates and other items | (2) | 3 | 5 | 0 | 5 | (5) | 7 | |||
| Pre-tax profit | 323 | 223 | 96 | 10 | 56 | (107) | 602 | |||
| Tax | (164) | |||||||||
| Minority interests | (92) | |||||||||
| Net income (gs) | 346 | |||||||||
Asset & Wealth Management
| €m | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 2Q19 vs. 2Q18 | 1H18 | 1H19 | 1H19 vs. 1H18 | |||
| Net revenues | 799 | 842 | 841 | 1,032 | 773 | 932 | 11% | 1,641 | 1,705 | 4% | |||
| Asset Management1 | 762 | 805 | 805 | 998 | 742 | 900 | 12% | 1,567 | 1,642 | 5% | |||
| Wealth management | 37 | 37 | 36 | 34 | 31 | 32 | (12)% | 74 | 63 | (14)% | |||
| Expenses | (548) | (569) | (584) | (642) | (558) | (605) | 6% | (1,117) | (1,163) | 4% | |||
| Gross operating income | 251 | 273 | 257 | 389 | 216 | 327 | 20% | 524 | 542 | 3% | |||
| Provision for credit losses | (0) | (1) | (1) | 0 | 1 | (2) | (1) | (1) | |||||
| Net operating income | 251 | 272 | 256 | 390 | 216 | 325 | 20% | 523 | 541 | 4% | |||
| Associates | 0 | 0 | 0 | 2 | 0 | 0 | 0 | 0 | |||||
| Other items | (0) | (3) | (2) | 41 | (2) | (2) | (3) | (4) | |||||
| Pre-tax profit | 251 | 269 | 255 | 433 | 214 | 323 | 20% | 520 | 537 | 3% | |||
| Cost/Income ratio | 68.6% | 67.6% | 69.4% | 62.3% | 72.1% | 64.9% | 68.1% | 68.2% | |||||
| Cost/Income ratio excl. IFRIC 21 | 68.1% | 67.7% | 69.6% | 62.4% | 71.6% | 65.1% | 67.9% | 68.0% | |||||
| RWA (Basel 3 - in €bn) | 11.7 | 11.8 | 12.5 | 12.3 | 12.5 | 13.7 | 16% | 11.8 | 13.7 | 16% | |||
| Normative capital allocation (Basel 3) | 4,143 | 4,065 | 4,150 | 4,363 | 4,364 | 4,407 | 8% | 4,104 | 4,385 | 7% | |||
| RoE after tax (Basel 3)2 | 13.7% | 15.2% | 13.9% | 19.6% | 11.5% | 15.1% | 14.4% | 13.3% | |||||
| RoE after tax (Basel 3) excl. IFRIC 212 | 14.0% | 15.1% | 13.8% | 19.5% | 11.8% | 15.0% | 14.5% | 13.4% |
[1] Asset management including Private equity and Employee savings plan
2 Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles
Corporate & Investment Banking
| €m | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 2Q19 vs. 2Q18 | 1H18 | 1H19 | 1H19 vs. 1H18 | |||
| Net revenues | 944 | 976 | 828 | 518 | 807 | 847 | (13)% | 1,920 | 1,654 | (14)% | |||
| Global markets | 527 | 457 | 334 | 14 | 366 | 419 | (8)% | 984 | 785 | (20)% | |||
| FIC-T | 378 | 299 | 252 | 231 | 251 | 304 | 2% | 677 | 554 | (18)% | |||
| Equity | 148 | 145 | 97 | (219) | 125 | 117 | (19)% | 293 | 242 | (17)% | |||
| Equity excl. cash | 143 | 140 | 97 | (219) | 125 | 117 | (16)% | 283 | 242 | (15)% | |||
| Cash equity | 5 | 4 | (0) | (0) | 0 | 0 | 9 | 0 | |||||
| CVA/DVA desk | 1 | 13 | (15) | 2 | (9) | (3) | 14 | (12) | |||||
| Global finance1 | 341 | 394 | 341 | 362 | 337 | 333 | (15)% | 735 | 670 | (9)% | |||
| Investment banking2 | 82 | 85 | 78 | 126 | 87 | 90 | 5% | 167 | 177 | 6% | |||
| Other | (7) | 41 | 74 | 16 | 16 | 6 | 34 | 22 | |||||
| Expenses | (566) | (551) | (525) | (559) | (582) | (523) | (5)% | (1,117) | (1,105) | (1)% | |||
| Gross operating income | 378 | 425 | 302 | (41) | 225 | 324 | (24)% | 803 | 549 | (32)% | |||
| Provision for credit losses | (31) | (37) | (98) | (9) | (30) | (104) | (68) | (134) | |||||
| Net operating income | 347 | 388 | 204 | (50) | 195 | 219 | (43)% | 735 | 414 | (44)% | |||
| Associates | 4 | 3 | 3 | 3 | 2 | 3 | 6 | 6 | |||||
| Other items | 3 | 0 | (0) | 0 | (15) | 0 | 3 | (15) | |||||
| Pre-tax profit | 353 | 391 | 207 | (47) | 183 | 222 | (43)% | 744 | 405 | (46)% | |||
| Cost/Income ratio | 60.0% | 56.4% | 63.5% | 107.9% | 72.2% | 61.8% | 58.2% | 66.8% | |||||
| Cost/Income ratio excl. IFRIC 21 | 57.7% | 57.2% | 64.4% | 109.4% | 69.1% | 62.7% | 57.4% | 65.9% | |||||
| RWA (Basel 3 - in €bn) | 59.7 | 61.7 | 61.2 | 61.1 | 62.0 | 61.1 | (1)% | 61.7 | 61.1 | (1)% | |||
| Normative capital allocation (Basel 3) | 6,435 | 6,416 | 6,676 | 6,631 | 6,634 | 6,740 | 5% | 6,426 | 6,687 | 4% | |||
| RoE after tax (Basel 3)3 | 16.0% | 17.6% | 9.0% | NR | 7.6% | 9.6% | 16.8% | 8.6% | |||||
| RoE after tax (Basel 3) excl. IFRIC 213 | 17.0% | 17.2% | 8.7% | NR | 8.6% | 9.2% | 17.1% | 8.9% |
[1] Including Film industry financing 2 Including M&A 3 Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles
Insurance
| €m | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 2Q19 vs. 2Q18 | 1H18 | 1H19 | 1H19 vs. 1H18 | |||
| Net revenues | 204 | 193 | 192 | 201 | 218 | 207 | 7% | 397 | 425 | 7% | |||
| Expenses | (118) | (108) | (103) | (118) | (125) | (116) | 7% | (226) | (241) | 6% | |||
| Gross operating income | 86 | 85 | 89 | 83 | 93 | 92 | 8% | 170 | 184 | 8% | |||
| Provision for credit losses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Net operating income | 86 | 85 | 89 | 83 | 93 | 92 | 8% | 170 | 184 | 8% | |||
| Associates | 3 | 0 | 3 | 9 | 0 | 5 | 3 | 5 | |||||
| Other items | 0 | 0 | (0) | 0 | 0 | (0) | 0 | (0) | |||||
| Pre-tax profit | 89 | 85 | 92 | 91 | 93 | 96 | 14% | 173 | 189 | 9% | |||
| Cost/Income ratio | 58.0% | 56.1% | 53.8% | 58.9% | 57.5% | 55.8% | 57.1% | 56.7% | |||||
| Cost/Income ratio excl. IFRIC 21 | 51.1% | 58.5% | 56.2% | 61.2% | 51.7% | 57.8% | 54.7% | 54.7% | |||||
| RWA (Basel 3 - in €bn) | 7.3 | 7.0 | 7.1 | 7.3 | 8.0 | 7.9 | 13% | 7.0 | 7.9 | 13% | |||
| Normative capital allocation (Basel 3) | 853 | 868 | 828 | 841 | 858 | 942 | 8% | 861 | 900 | 5% | |||
| RoE after tax (Basel 3)1 | 28.6% | 26.4% | 30.3% | 30.7% | 29.4% | 28.4% | 27.5% | 28.8% | |||||
| RoE after tax (Basel 3) excl. IFRIC 211 | 33.0% | 24.9% | 28.8% | 29.2% | 33.3% | 27.2% | 28.9% | 30.1% |
1 Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles
Payments
| €m | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 2Q19 vs. 2Q18 | 1H18 | 1H19 | 1H19 vs. 1H18 | |||
| Net revenues | 93 | 95 | 96 | 105 | 103 | 105 | 10% | 188 | 208 | 10% | |||
| Expenses | (79) | (88) | (84) | (90) | (88) | (94) | 7% | (167) | (181) | 8% | |||
| Gross operating income | 14 | 7 | 12 | 15 | 16 | 11 | 46% | 21 | 27 | 25% | |||
| Provision for credit losses | (0) | (0) | 0 | (2) | (0) | (1) | (0) | (1) | |||||
| Net operating income | 14 | 7 | 12 | 13 | 16 | 10 | 40% | 21 | 26 | 23% | |||
| Associates | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Other items | 0 | 1 | 0 | 0 | 0 | 0 | 1 | 0 | |||||
| Pre-tax profit | 14 | 8 | 12 | 13 | 16 | 10 | 28% | 22 | 26 | 19% | |||
| Cost/Income ratio | 85.2% | 92.2% | 87.6% | 85.7% | 84.8% | 89.6% | 88.7% | 87.2% | |||||
| Cost/Income ratio excl. IFRIC21 | 84.5% | 92.4% | 87.9% | 85.9% | 84.1% | 89.8% | 88.5% | 87.0% | |||||
| RWA (Basel 3 - in €bn) | 1.0 | 1.2 | 1.0 | 1.1 | 1.1 | 1.2 | (1)% | 1.2 | 1.2 | (1)% | |||
| Normative capital allocation (Basel 3) | 295 | 300 | 352 | 332 | 356 | 373 | 25% | 297 | 365 | 23% | |||
| RoE after tax (Basel 3)1 | 12.8% | 7.4% | 9.6% | 10.1% | 12.0% | 7.3% | 10.1% | 9.6% | |||||
| RoE after tax (Basel 3) excl. IFRIC 211 | 13.4% | 7.2% | 9.4% | 9.9% | 12.5% | 7.1% | 10.3% | 9.7% |
Standalone EBITDA calculation
Figures excluding exceptional items
| €m | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 1H18 | 1H19 | |
| Net revenues | 93 | 95 | 96 | 105 | 103 | 105 | 188 | 208 | |
| Expenses | (79) | (87) | (85) | (90) | (88) | (94) | (166) | (181) | |
| Gross operating income - Natixis reported excl. exceptional items | 14 | 8 | 11 | 15 | 16 | 11 | 22 | 27 | |
| Analytical adjustments to net revenues | (1) | (1) | (2) | (1) | (1) | (1) | (3) | (3) | |
| Structure charge adjustments to expenses | 5 | 5 | 5 | 5 | 6 | 5 | 10 | 11 | |
| Gross operating income - standalone view | 18 | 12 | 14 | 19 | 20 | 15 | 29 | 35 | |
| Depreciation, amortization and impairment on property, plant and equipment and intangible assets | 3 | 4 | 4 | 5 | 4 | 4 | 7 | 8 | |
| EBITDA - standalone view | 21 | 16 | 18 | 24 | 24 | 19 | 36 | 43 |
EBITDA = Net revenues (-) Operating expenses. Standalone view excluding analytical items and structure charges
[1] Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles
Financial investments
| €m | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 2Q19 vs. 2Q18 | 1H18 | 1H19 | 1H19 vs. 1H18 | |||
| Net revenues | 190 | 174 | 197 | 181 | 193 | 196 | 13% | 364 | 389 | 7% | |||
| Coface | 177 | 156 | 180 | 165 | 175 | 181 | 16% | 333 | 356 | 7% | |||
| Other | 13 | 18 | 17 | 16 | 18 | 15 | (18)% | 31 | 33 | 6% | |||
| Expenses | (130) | (125) | (131) | (140) | (133) | (141) | 13% | (255) | (275) | 8% | |||
| Gross operating income | 59 | 49 | 66 | 41 | 60 | 55 | 11% | 109 | 115 | 6% | |||
| Provision for credit losses | (6) | 1 | 1 | 3 | (2) | (4) | (5) | (6) | |||||
| Net operating income | 54 | 50 | 67 | 44 | 58 | 51 | 1% | 104 | 108 | 4% | |||
| Associates | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Other items | 2 | 3 | 0 | 0 | 0 | 5 | 5 | 5 | |||||
| Pre-tax profit | 56 | 53 | 67 | 44 | 58 | 56 | 5% | 109 | 114 | 4% | |||
| RWA (Basel 3 - in €bn) | 5.3 | 5.6 | 5.5 | 5.6 | 5.7 | 5.7 | 2% | 5.6 | 5.7 | 2% |
Corporate Center
| €m | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 2Q19 vs. 2Q18 | 1H18 | 1H19 | 1H19 vs. 1H18 | |||
| Net revenues | (37) | 79 | 3 | 3 | 37 | (5) | 42 | 32 | |||||
| Expenses | (232) | (87) | (71) | (107) | (234) | (98) | 12% | (319) | (331) | 4% | |||
| SRF | (160) | (0) | (0) | 0 | (170) | 0 | (160) | (170) | 6% | ||||
| Other | (73) | (86) | (71) | (107) | (64) | (98) | 13% | (159) | (162) | 2% | |||
| Gross operating income | (269) | (7) | (68) | (104) | (196) | (103) | (277) | (299) | |||||
| Provision for credit losses | 1 | (4) | 4 | (15) | 0 | 1 | (3) | 1 | |||||
| Net operating income | (269) | (11) | (63) | (118) | (196) | (102) | (280) | (298) | |||||
| Associates | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Other items | 1 | 2 | 2 | 3 | 699 | (5) | 4 | 694 | |||||
| Pre-tax profit | (268) | (9) | (62) | (115) | 503 | (107) | (276) | 396 | |||||
| RWA (Basel 3 - in €bn) | 9.0 | 9.4 | 8.7 | 7.8 | 7.0 | 7.3 | (22)% | 9.4 | 7.3 | (22)% |
2Q19 results: from data excluding non-operating items to reported data
| €m | 2Q19 underlying | Exchange rate fluctuations on DSN in currencies | Transformation & Business Efficiency investment costs | Fit to Win investments & restructuring expenses | 2Q19 reported | ||
| Net revenues | 2,297 | (15) | 2,282 | ||||
| Expenses | (1,566) | (10) | (1) | (1,577) | |||
| Gross operating income | 730 | (15) | (10) | (1) | 705 | ||
| Provision for credit losses | (110) | (110) | |||||
| Associates | 8 | 8 | |||||
| Gain or loss on other assets | (2) | (2) | |||||
| Pre-tax profit | 627 | (15) | (10) | (1) | 602 | ||
| Tax | (172) | 5 | 3 | 0 | (164) | ||
| Minority interests | (93) | 0 | (92) | ||||
| Net income (group share) | 363 | (10) | (7) | (0) | 346 |
1H19 results: from data excluding non-operating items to restated data
| €m | 1H19 underlying | Exchange rate fluctuations on DSN in currencies | Transformation & Business Efficiency investment costs | Fit to Win investments & restructuring expenses | Liquidation of a holding structure | Capital gain - Disposal of retail banking activities | 1H19 restated | ||
| Net revenues | 4,410 | 4 | 4,414 | ||||||
| Expenses | (3,269) | (26) | (1) | (3,297) | |||||
| Gross operating income | 1,141 | 4 | (26) | (1) | 0 | 0 | 1,117 | ||
| Provision for credit losses | (141) | (141) | |||||||
| Associates | 11 | 11 | |||||||
| Gain or loss on other assets | (2) | (15) | 697 | 681 | |||||
| Pre-tax profit | 1,009 | 4 | (26) | (1) | (15) | 697 | 1,668 | ||
| Tax | (308) | (1) | 8 | 0 | (78) | (379) | |||
| Minority interests | (145) | 0 | (33) | (178) | |||||
| Net income (group share) | 555 | 3 | (18) | (0) | (15) | 586 | 1,110 |
Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See page 13 for the reconciliation of the restated figures with the accounting view
Natixis - 2Q19 capital & Basel 3 financial structure
See note on methodology - Irrevocable Payment Commitment (IPC) deduction disclosed as part of the ratio as of 2Q19
Fully-loaded
| €bn | 30/06/2019 |
| Shareholder’s Equity | 18.6 |
| Hybrid securities(2) | (2.1) |
| Goodwill & intangibles | (3.8) |
| Deferred tax assets | (0.7) |
| Dividend provision | (0.3) |
| Other deductions | (0.5) |
| CET1 capital | 11.1 |
| CET1 ratio | 11.5% |
| Additional Tier 1 capital | 1.8 |
| Tier 1 capital | 12.9 |
| Tier 1 ratio | 13.3% |
| Tier 2 capital | 2.3 |
| Total capital | 15.1 |
| Total capital ratio | 15.6% |
| Risk-weighted assets | 96.9 |
Regulatory
| €bn | 30/06/2019 |
| Fully-loaded CET1 capital | 11.1 |
| Current financial year’s earnings | (1.1) |
| Current financial year’s accrued dividend | 0.3 |
| CET1 capital | 10.3 |
| CET1 ratio | 10.6% |
| Additional Tier 1 capital | 2.1 |
| Tier 1 capital | 12.4 |
| Tier 1 ratio | 12.8% |
| Tier 2 capital | 2.3 |
| Total capital | 14.7 |
| Total capital ratio | 15.2% |
| Risk-weighted assets | 96.9 |
IFRIC 21 effects by business line
| Effect in Expenses |
| €m | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 1H18 | 1H19 | |
| AWM | (4) | 1 | 1 | 1 | (4) | 1 | (3) | (3) | |
| CIB | (22) | 7 | 7 | 7 | (24) | 8 | (15) | (16) | |
| Insurance | (14) | 5 | 5 | 5 | (13) | 4 | (9) | (8) | |
| Payments | (1) | 0 | 0 | 0 | (1) | 0 | 0 | 0 | |
| Financial investments | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Corporate center | (119) | 40 | 40 | 40 | (119) | 40 | (80) | (79) | |
| Total Natixis | (160) | 53 | 53 | 53 | (161) | 54 | (107) | (107) |
Historical figures restated for the disposal of the retail banking activities
Normative capital allocation and RWA breakdown - 30/06/2019
| €bn | RWA EoP | % of total | Goodwill & intangibles 1H19 | Capital allocation 1H19 | RoE after tax 1H19 |
| AWM | 13.7 | 16% | 3.1 | 4.4 | 13.3% |
| CIB | 61.1 | 73% | 0.2 | 6.7 | 8.6% |
| Insurance | 7.9 | 9% | 0.1 | 0.9 | 28.8% |
| Payments | 1.2 | 1% | 0.2 | 0.4 | 9.6% |
| Total (excl. Corp. center and Financial invmts) | 83.9 | 100% | 3.6 | 12.3 |
| RWA breakdown (€bn) | 30/06/2019 |
| Credit risk | 65.6 |
| Internal approach | 54.5 |
| Standard approach | 11.1 |
| Counterparty risk | 6.6 |
| Internal approach | 5.7 |
| Standard approach | 1.0 |
| Market risk | 9.6 |
| Internal approach | 4.1 |
| Standard approach | 5.4 |
| CVA | 1.8 |
| Operational risk - Standard approach | 13.3 |
| Total RWA | 96.9 |
Fully-loaded leverage ratio1
According to the rules of the Delegated Act published by the European Commission on October 10, 2014, including the effect of intragroup cancelation - pending ECB authorization
| €bn | 30/06/2019 |
| Tier 1 capital1 | 13.2 |
| Total prudential balance sheet | 399.0 |
| Adjustment on derivatives | (48.4) |
| Adjustment on repos2 | (29.8) |
| Other exposures to affiliates | (47.7) |
| Off balance sheet commitments | 36.4 |
| Regulatory adjustments | (5.2) |
| Total leverage exposure | 304.4 |
| Leverage ratio | 4.35% |
[1] See note on methodology. Without phase-in - supposing replacement of existing subordinated issuances when they become ineligible 2 Repos with clearing houses cleared according to IAS32 standard, without maturity or currency criteria
Net book value as at June 30, 2019
| €bn | 30/06/2019 |
| Shareholders’ equity (group share) | 18.6 |
| Deduction of hybrid capital instruments | (2.0) |
| Deduction of gain on hybrid instruments | (0.1) |
| Distribution | |
| Net book value | 16.5 |
| Restated intangible assets1 | (0.6) |
| Restated goodwill1 | (3.4) |
| Net tangible book value2 | 12.5 |
| € | |
| Net book value per share | 5.24 |
| Net tangible book value per share | 3.96 |
1H19 Earnings per share
| €m | 30/06/2019 |
| Net income (gs) | 1,110 |
| DSN interest expenses on preferred shares after tax | (45) |
| Net income attributable to shareholders | 1,065 |
| Earnings per share (€) | 0.34 |
Number of shares as at June 30, 2019
| 30/06/2019 | |
| Average number of shares over the period, excluding treasury shares | 3,149,759,007 |
| Number of shares, excluding treasury shares, EoP | 3,150,059,450 |
| Number of treasury shares, EoP | 3,019,032 |
Net income attributable to shareholders
| €m | 2Q19 | 1H19 |
| Net income (gs) | 346 | 1,110 |
| DSN interest expenses on preferred shares after tax | (22) | (45) |
| RoE & RoTE numerator | 324 | 1,065 |
[1] See note on methodology 2 Net tangible book value = Book value – goodwill - intangible assets
| RoTE1 | ||
| €m | 30/06/2019 | |
| Shareholders’ equity (group share) | 18,621 | |
| DSN deduction | (2,122) | |
| Dividend provision | (288) | |
| Intangible assets | (649) | |
| Goodwill | (3,367) | |
| RoTE Equity end of period | 12,195 | |
| Average RoTE equity (2Q19) | 12,202 | |
| 2Q19 RoTE annualized with no IFRIC 21 adjustment | 10.6% | |
| IFRIC 21 impact | (47) | |
| 2Q19 RoTE annualized excl. IFRIC 21 | 9.1% | |
| Average RoTE equity (1H19) | 12,205 | |
| 1H19 RoTE annualized excl. IFRIC 21 | 13.4% | |
| RoE1 | ||||
| €m | 30/06/2019 | |||
| Shareholders’ equity (group share) | 18,621 | |||
| DSN deduction | (2,122) | |||
| Dividend provision | (288) | |||
| Unrealized/deferred gains and losses in equity (OCI) | (513) | |||
| RoE Equity end of period | 15,697 | |||
| Average RoE equity (2Q19) | 15,722 | |||
| 2Q19 RoE annualized with no IFRIC 21 adjustment | 8.3% | |||
| IFRIC 21 impact | (47) | |||
| 2Q19 RoE annualized excl. IFRIC 21 | 7.0% | |||
| Average RoE equity (1H19) | 15,735 | |||
| 1H19 RoE annualized excl. IFRIC 21 | 10.4% | |||
Doubtful loans2
| €bn | 31/03/2019 Under IFRS 9 | 30/06/2019 Under IFRS 9 |
| Provisionable commitments3 | 1.7 | 1.7 |
| Provisionable commitments / Gross debt | 1.5% | 1.4% |
| Stock of provisions4 | 1.3 | 1.3 |
| Stock of provisions / Provisionable commitments | 76% | 75% |
[1]See note on methodology. Returns based on quarter-end balance sheet to reflect the disposal of the retail banking activities. The €586m net capital gain is not annualized 2 On-balance sheet, excluding repos, net of collateral 3 Net commitments 4 Specific and portfolio-based provisions
Disclaimer
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 Insurance 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 2019 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 August 2, 2019 at 9:00 a.m. CET, will be webcast live on www.natixis.com (on the “Investors & shareholders” page).
Contacts:
| Investor Relations: | investorelations@natixis.com | Press Relations: | relationspresse@natixis.com | ||
| Damien Souchet | T + 33 1 58 55 41 10 | Daniel Wilson | T + 33 1 58 19 10 40 | ||
| Noemie Louvel | T + 33 1 78 40 37 87 | Vanessa Stephan | T + 33 1 58 19 34 16 | ||
Attachment
