Natixis 2019 first quarter results


Paris, May 9, 2019

1Q19 results
Development and transformation at the core of New Dimension
Reported net income at €764m in 1Q19 vs. €260m in 1Q18 (restated), up +194%,
notably driven by the disposal of the retail banking activities
Financial strength with a Basel 3 fully-loaded CET1 ratio at 11.3% pro forma, well above our 2020 target (11%)

RESILIENCE OF THE BUSINESS MODEL IN A CHALLENGING ENVIRONMENT FOR
GLOBAL MARKET REVENUES - NATIXIS’ 1Q19 UNDERLYING NET REVENUES1 AT €2.1BN

AWM: Strong AuM increase and flows back to positive territory

Strength of our active asset management model with underlying net revenues1 slightly down YoY, in part due to
the 4Q18 market effect. Excluding performance fees, underlying net revenues1 are up +1% YoY

Strong AuM growth of +6% over the quarter to reach €855bn

Flows turning positive again (+€1bn) driven by Europe. Positive net inflows, notably at Harris, in March

The average fee rate remains in line with the New Dimension target at ~30bps

Creation of Thematics Asset Management and partnership announced with Fiera Capital

CIB: Underlying RoE1 ~10% despite challenging market conditions, thanks to our diversified expertise

Underlying net revenues1 lower than 1Q18 amidst challenging market conditions and with a high base effect in Global markets, partially offset by the resilience of Global finance and the good performance of Investment banking/M&A

Underlying RoE1 ~10% in 1Q19 despite this context with sustained pipeline for Global finance and IB/M&A

Expansion of our M&A multi-boutiques model: acquisition of Azure Capital

Insurance: High profitability and with a key milestone towards New Dimension targets

Underlying net revenues1 up +7% YoY in 1Q19 with a positive jaw effect and an underlying RoE1 >30%

Gross inflows on unit-linked products remain above the French market, with the gap widening

Key step for Natixis Assurances towards becoming a fully-fledged insurer (see Groupe BPCE/Covéa announcement)

Payments: Continuous growth dynamic

Underlying net revenues1 up +11% YoY in 1Q19 with a positive jaw effect

Increase in business volumes from PayPlug & Dalenys, up +26% YoY in 1Q19. Historical processing activity +9% YoY

SUSTAINABLE VALUE CREATION AND FINANCIAL STRENGTH

Disposal of the retail banking activities (€586m capital gain) supplemented by +37bps of organic capital creation in 1Q19. Basel 3 FL CET1 ratio2 at 11.3% pro forma as at March 31, 2019, well above our 2020 target (11%)

Transformation & Business Efficiency: ~€50m of annual additional costs savings identified by end-2020, raising the total to €300m over New Dimension

Underlying net income1 at €192m in 1Q19, impacted by IFRIC 21

Underlying RoTE1 at 10.2% in 1Q19 and 13.2% over New Dimension3 as at March 31, 2019

Cash dividend of 0.78€ per share4: €0.30 ordinary, €0.48 special

FOCUS ON THE IMPLEMENTATION OF OUR 2020 AMBITIONS

François Riahi, Natixis Chief Executive Officer, said: “The first quarter of 2019 was marked by a number of important developments in the implementation of our New Dimension strategic plan. Our partnership with Covéa is perfectly aligned with the growth ambitions of our bancassurance model for Groupe BPCE, while the addition of a new M&A boutique in Australia is fully consistent with our CIB roadmap to expand in Investment banking with a sectorial approach. In a challenging environment, especially for market activities during the first two months of the year, and despite a high basis for comparison due to our very strong first quarter in 2018, the diversification and the uniqueness of our business model enabled us to further strengthen our capital position while confirming the payment of a €0.78 dividend per share following the disposal of our retail banking activities.”


1Q19 RESULTS5

On May 9, 2019, the Board of Directors examined Natixis’ first quarter 2019 results.

€m 1Q19
restated
1Q18
restated
 1Q19
o/w underlying
1Q18
o/w underlying
 1Q19 vs. 1Q18
restated
1Q19 vs. 1Q18 underlying1Q19 vs. 1Q18 underlying
constant FX
Net revenues 2,1322,193 2,1132,221 (3)%(5)%(8)%
o/w businesses 1,9012,040 1,9012,040 (7)%(7)%(10)%
Expenses (1,720)(1,675) (1,703)(1,660) 3%3%0%
o/w expenses excluding SRF (1,550)(1,515) (1,533)(1,500) 2%2%(1)%
Gross operating income 412518 410561 (20)%(27)%(30)%
  o/w GOI excluding SRF 582678 580721 (14)%(19)%(22)%
Provision for credit losses (31)(36) (31)(36)    
Net operating income 381482 379526 (21)%(28)% 
Associates and other items 68513 313    
Pre-tax profit 1,066495 382539 115%(29)% 
Income tax (215)(175) (137)(190)    
Minority interests (86)(60) (53)(61)    
Net income - group share 764260 192288 194%(33)% 

Natixis’ underlying net revenues are higher or stable vs. 1Q18 for the vast majority of the businesses with Payments up +11% YoY, Insurance up +7% YoY, Investment banking/M&A up +6% YoY and strong resilience for Global finance as well as AWM. Such results are partially offsetting Global markets evolution set against a high 1Q18 and challenging market conditions.

Underlying expenses are flat at constant exchange rate despite investments being made to prepare the future levers of growth. Excluding the SRF contribution of €170m (+7%YoY) fully booked in 1Q due to IFRIC 21, expenses are well under control and down -1% YoY at constant exchange rate. The underlying cost/income ratio2 is at 73.0%, up +550bps vs. 1Q18.

The underlying cost of risk is slightly down YoY, remaining at low levels. Expressed in basis points of loans outstanding (excluding credit institutions), the businesses’ underlying cost of risk worked out to 18bps in 1Q19.

The underlying tax rate is at ~36% in 1Q19 due to the non-deductibility of the SRF contribution. The guidance is maintained at <30% for 2019

Net income (group share), adjusted for IFRIC 21 and excluding exceptional items reached €334m in 1Q19. Accounting for exceptional items (+€572m net of tax in 1Q19) and IFRIC 21 impact (-€142m in 1Q19), the reported net income (group share) in 1Q19 is at €764m.

Natixis delivered a 10.2% underlying RoTE6 excluding IFRIC 21 impact and an average 13.2% over New Dimension7. The businesses’ underlying RoE2 reached 12.3% and an average 14.6%over New Dimension3.

Following Natixis’ change of perimeter after the disposal of the retail banking activities, ~€50m of additional cost savings have been identified on top of the ~€250m existing target, raising the 2020 cost savings target to ~€300m. These savings will be fully captured by the end of 2020 (~€15m by end-2019 and ~€50m by end-2020) and will impact all the business lines. The cost savings initiative notably includes Natixis’ real estate/location strategy, further internalization of IT staff and reduction of other running costs. By the end of 2018, ~€180m of cost savings had been fully captured of which ~€145m were prorata temporis, i.e. ~€35m of cost savings are to be crystallized through the 2019 P&L thanks to 2018 initiatives, on top of ongoing projects. Additional ~€30m of one-off investment expenses to be booked in 2019 in exceptional items.

1Q19 RESULTS
Exceptional items

€m  1Q191Q18
Exchange rate fluctuations on DSN in currencies (Net revenues)Corporate center19(28)
Transformation & Business Efficiency Investment costs (Expenses)Business lines & Corporate center(17)(13)
Fit to Win investments & restructuring expenses (Expenses)Corporate center0(2)
Disposal of subsidiary in Brazil (Gain or loss on other assets)CIB(15) 
Capital gain - Disposal of retail activities (Gain or loss on other assets)Corporate center697 
Total impact on income tax (79)15
Total impact on minority interests (33)1
Total impact on net income (gs) 572(27)

€586m positive net impact from the disposal of the retail banking activities: €697m capital gain minus €78m income tax
minus €33m minority interests

TRANSFORMATION & BUSINESS EFFICIENCY

Investment costs by reporting line

€m 1Q191Q18
AWM(5)(1)
CIB(3)(2)
Insurance00
Payments00
Financial Investments00
Corporate center(9)(10)
Impact on expenses(17)(13)


Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p3)

Asset & Wealth Management

€m  1Q191Q181Q19
vs. 1Q18
1Q19
vs. 1Q18
constant FX
Net revenues 773799(3)%(7)%
  o/w Asset management8 742762(3)%(7)%
  o/w Wealth management 3137(16)%(16)%
Expenses (553)(548)1%(4)%
Gross operating income 220252(12)%(16)%
Provision for credit losses 10  
Associates and other items (2)0  
Pre-tax profit 219251(13)% 
 

Cost/income ratio2
 71.0%68.0%+3.0pp 
RoE after tax2 12.1%14.0%(1.9)pp 

Underlying net revenues from Asset & Wealth Management (AWM) are up +1% YoY in 1Q19 excluding AM performance fees (-4% YoY at constant exchange rate), illustrating the resilience of our model. Asset management underlying net revenues down -6% YoY in North America (€372m) and up +14% in Europe (€171m) over 1Q19. Wealth management underlying revenues are down -16% YoY in 1Q19, due to the perimeter effect from the disposal of Selection 1818.

The Asset management fee rate excluding performance fees (€32m in 1Q19; ~5% of 1Q19 AM revenues vs. €65m in 1Q18; ~9% of 1Q18 AM revenues) stood at ~30bps in 1Q19, in line with New Dimension target, the 4Q18 market effect impacting the weight of average AuM from North America in the mix. In Europe, the fee rate stood at 16bps (27bps excl. Life insurance General Accounts) in 1Q19, the increase being primarily driven by the higher share of alternative strategies (liquid and illiquid). In North America, the fee rate stood at 38bps with a lower share of average AuM from Harris following the 4Q18 market effect.

Asset management net inflows positive at +€1bn in 1Q19 with net inflows on LT products of a similar amount in March. As anticipated in New Dimension, the momentum for alternative strategies (liquid and illiquid) remains strong with close to €2bn net inflows in 1Q19 as opposed to strategies such as Core Fixed Income. In Europe (including Dynamic Solutions), net inflows reached +€4bn in 1Q19 and are positive across a vast majority of our European affiliates. In North America, 1Q19 saw net outflows of -€3bn with a recovery post 4Q18 and flows coming back to positive territory, notably for Harris, in March.

Asset management AuM reached €855bn as at March 31, 2019 and are up +6% QoQ, starting 2Q19 above their 2Q18 average level. The +€38bn positive market effect is largely driven by North America while AuM also benefited from a +€7bn FX/perimeter effect. Wealth management AuM reached €27.0bn as at March 31, 2019 with positive net inflows in 1Q19.

Expenses are down -4% YoY at constant exchange rate in 1Q19 with AM variable costs adjusting to the revenue environment and investments being made to prepare the next levers of growth.

The underlying RoE2 reached 12.1% in 1Q19 vs. 14.0% in 1Q18 and 11.5% in 1Q17. The underlying cost/income ratio2 reached 71.0% in 1Q19 vs. 68.0% in 1Q18.

Fiera Capital Corporation and Natixis Investment Managers today announced they have entered into a long-term strategic partnership that will establish Fiera Capital as Natixis’ preferred Canadian distribution platform, giving Fiera Capital’s clients access to Natixis’ wide range of highly active investment strategies. As part of the agreement, Natixis has strengthened its commitment to the Canadian market through the acquisition of an 11.0% stake in Fiera Capital (limited impact on Natixis’ CET1 ratio), and Natixis Investments Managers’ CEO, Jean Raby, will join Fiera Capital’s board of directors (see ad-hoc press release).

Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p3)

Corporate & Investment Banking

€m 1Q191Q181Q19
vs. 1Q18
1Q19
vs. 1Q18
constant FX
Net revenues 807944(15)%(17)%
Net revenues excl. CVA/DVA 816943(13)%(16)%
Expenses (579)(565)3%0%
Gross operating income 228379(40)%(42)%
Provision for credit losses (30)(31)  
Associates and other items 26  
Pre-tax profit 201355(44)% 
 

Cost/income ratio9
 68.7%57.5%+11.2pp 
RoE after tax1 9.6%17.1%(7.5)pp 

Underlying net revenues are down -15% YoY in 1Q19 (-17% YoY at constant exchange rate) with contrasted performances. Up in Investment banking/M&A, stable in Global finance, both businesses featuring sustained pipeline beyond 1Q19. Such performances are partially offsetting Global markets evolution set against a high 1Q1, especially for FICT and with a slow start to the year followed by improving market conditions towards quarter-end.

Global markets net revenues excl. CVA/DVA are up QoQ in 1Q19 both for FICT and Equity and down -28% YoY at constant scope vs. a high 1Q18. FICT net revenues are down -34% YoY in 1Q19 on the back of less favorable market conditions across Rates and FX offsetting a positive momentum on Credit and with a solid performance from the Americas platform. We remain highly selective on profitable deals while 1Q18 FICT revenues were close to historic highs creating a high base effect. Equity net revenues are down -13% YoY in 1Q19 excluding cash equity with a solid recovery post 4Q18. The hedging program on the Asian derivatives book designed to protect this book from negative market impacts has been fully completed with no additional negative P&L impact. Global finance net revenues are largely flat YoY with a strong performance from Energy & Natural Resources (ENR) as well as Infrastructure and Aviation within Real Assets (RA), offsetting lower revenues in Real Estate on a historically high 1Q18 that was mainly driven by the Americas platform performance. New loan production remains robust with ENR up +32% YoY and RA up +50% YoY with a strong momentum for Infrastructure (more that x2 YoY). The distribution rate on Real Assets is close to 70% in 1Q19 (~65% in 1Q18). Investment banking and M&A net revenues are up +6% YoY including a good performance in ECM, sustained ASF activity and double-digit growth in M&A thanks to the successful integration of Fenchurch and Vermillion. The proportion of revenues generated from service fees10 is up at 41% in 1Q19 vs. 38% 1Q18.

The underlying expenses are flat YoY at constant exchange rate despite investments being made to develop our sectorial expertise as well as the expansion of our high-expertise, asset-light M&A boutique model. The underlying cost/income ratio1 reached 68.7% in 1Q19 vs. 57.5% in 1Q18.

The underlying cost of risk is stable YoY.

The underlying RoE1 of CIB reached 9.6% in 1Q19 vs. 17.1% in 1Q18. RWA are under control (up <1% QoQ, in part due to IFRS 16).

Strengthening of our multi-boutique model in M&A with the acquisition of a majority stake in Azure Capital Limited, an Australia-based M&A boutique reinforcing our presence in APAC in an attractive market for domestic and offshore investors with a strong focus on Energy & Natural Resources as well as Infrastructure to leverage on our sectorial approach with Australia being a strategic country for most of our sectors of expertise (see ad-hoc press release).

Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p3)

Insurance

€m  1Q191Q181Q19
vs. 1Q18
Net revenues 2182047%
Expenses (125)(118)6%
Gross operating income 93868%
Provision for credit losses 00 
Associates and other items 03 
Pre-tax profit 93895%
 

Cost/income ratio11
 51.7%50.9%+0.8pp
RoE after tax1 33.4%33.1%+0.3pp

Underlying net revenues are up +7% YoY in 1Q19 driven by both Life and P&C.

Underlying expenses are up +6% YoY in 1Q19, translating into a positive jaws effect and an underlying cost/income ratio1 below the ~54% 2020 target at 51.7% (50.9% in 1Q18).

The underlying gross operating income is up +8% YoY in 1Q19.

The underlying RoE1 continues to improve at 33.4% in 1Q19 (33.1% in 1Q18), above the ~30% target set for New Dimension by 2020.

The Global turnover12 reached €3.3bn in 1Q19, down -6% YoY (Life and Personal protection €3.0bn, down -7% YoY and P&C €0.4bn, up +4% YoY). Net inflows2 in Life insurance reached €1.7bn in 1Q19 of which 36% in the form of unit-linked products (29% of gross inflows with the gap widening vs. the French market13). Assets under management in Life insurance reached €63.0bn as at end-March 2019 (+5% QoQ) of which 24% in the form of unit-linked products (€15.2bn, up +8% QoQ).The P&C combined ratio worked out to 92.5% in 1Q19, up +0.2pp YoY. The equipment rate for the Banques Populaires moved up +0.6pp QoQ at 26.0% and +0.5pp QoQ for the Caisses d’Epargne at 29.1%.

Natixis to take over P&C new business for the Banques Populaires’ private customers as of 2020, as part of Groupe BPCE’s renewed partnership with Covéa announced today. Natixis Assurances is becoming a fully-fledged insurer for Groupe BPCE networks through the deployment of a single industrial model for the Banques Populaires and Caisses d’Epargne. BPCE Assurances, subsidiary 100% owned by Natixis Assurances since 2017, will take over the Auto and Household new business for the Banques Populaires’ private customers from BPCE IARD, entity co-owned (50%/50%) by Natixis Assurances and Groupe Covéa (through MAAF). Progressive roll-out starting in 2020 with revenue accretion as soon as year 1, paving the way for future growth beyond 2020 (see ad-hoc press release).

Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p3)

Payments

€m  1Q191Q181Q19
vs. 1Q18
Net revenues 1039311%
Expenses (88)(79)10%
Gross operating income 161414%
Provision for credit losses 00 
Associates and other items 00 
Pre-tax profit 161414%
 

Cost/income ratio14
 84.1%84.5%-0.4pp
RoE after tax1 12.5%13.4%-0.9pp

Underlying net revenues are up +11% YoY in 1Q19 and 41% of 1Q19 revenues have been with direct clients.

  • Payment Processing & Services: Steady +6% YoY revenue growth in Natixis Payments’ historical activities in 1Q19. Number of card transactions processed up +9% YoY in 1Q19 and progressive ramp-up of Instant Payment
  • Merchant Solutions: Solid business volumes generated by Dalenys (medium/large corp.) and PayPlug (SME), up +26% YoY in 1Q19. Synergies ongoing between entities and within Groupe BPCE with the deployment of PayPlug and Android POS platform within the Caisses d’Epargne network. Partnership with Retailtech Wynd to offer unique omnichannel solution.
  • Prepaid & Issuing Solutions: Robust growth in 1Q19 driven by meal vouchers and the contribution of our Benefits & Rewards activity (Titres Cadeaux and Comitéo). Set up of a Payment in a Box solution around the S-Money platform and Natixis’ partnership with Visa. Number of mobile payments more than x2.4 vs. 1Q18

      
Underlying expenses are up +10% YoY in 1Q19, translating into a positive jaws effect and an underlying gross operating income growth of +14% YoY in 1Q19 despite investments still being made. The underlying cost/income ratio1 reached 84.1% in 1Q19 vs. 84.5% in 1Q18.

The underlying RoE1 of Payments reached 12.5% in 1Q19 vs. 13.4% in 1Q18.


Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p3)

Financial investments

€m  1Q191Q181Q19
vs. 1Q18
Net revenues 1931902%
Coface 175177(1)%
Other 181340%
Expenses (133)(128)4%
Gross operating income 6062(3)%
Provision for credit losses (2)(6) 
Associates and other items 02 
Pre-tax profit 5858(1)%

The net combined ratio15 of Coface reached 74.5% in 1Q19 vs. 72.5% in 1Q18 with a cost ratio moving from 32.7% to 31.9% and a loss ratio moving from 39.8% to 42.6%.

Corporate Center

€m 1Q191Q181Q19
vs. 1Q18
Net revenues 19(9) 
Expenses (225)(222)2%
SRF (170)(160)7%
Other (55)(62)(11)%
Gross operating income (207)(231)(10)%
Provision for credit losses 01 
Associates and other items 21 
Pre-tax profit (204)(229)(11)%

Underlying net revenues from the Corporate Center are up +€28m YoY in 1Q19 due to positive FVA (Funding Value Adjustment) impacts.

Underlying expenses excluding the SRF contribution are down -11% YoY. SRF final contribution for 2019 up €10m YoY.

The P&L drag at the pre-tax profit level has been reduced by €35m YoY in 1Q19 excluding SRF.


FINANCIAL STRUCTURE

Basel 3 fully-loaded ratios16
Natixis’ Basel 3 fully-loaded CET1 ratio worked out to 11.6% as at March 31, 2019.

  • Basel 3 fully-loaded CET1 capital amounted to €11.1bn
  • Basel 3 fully-loaded RWA amounted to €96.4bn

Based on a Basel 3 fully-loaded CET1 ratio of 10.8% as at December 31, 2018, the respective 1Q19 impacts were as follows:

  • IFRS 16 FTA impact: -11bps
  • Effect of allocating net income (group share) to retained earnings in 1Q19: +16bps (o/w -13bps from IFRIC 21)
  • 1Q19 ordinary dividends: -8bps
  • Disposal of retail banking activities: +70bps (+226bps minus -156bps of special dividend)
  • RWA and other effects: +8bps

Pro forma for strategic operations announced today (Fiera Capital Corporation, Azure Capital Limited: ~5bps CET1 ratio impact combined) and already announced (WCM Investment Managers and Massena Partners: ~15bps CET1 ratio impact combined), as well as the Irrevocable Payment Commitment deduction from capital (IPC), Natixis Basel 3 fully-loaded CET1 ratio pro forma would be 11.3% (vs. a pro forma ratio of 11.1% at the end of December 2018).

Basel 3 regulatory ratios1
As at March 31, 2019, Natixis’ Basel 3 regulatory capital ratios stood at 10.9% for the CET1, 13.1% for the Tier 1 and 15.5% for the total capital ratio.

  • Core Tier 1 capital stood at €10.5bn and Tier 1 capital at €12.6bn
  • Natixis’ RWA totaled €96.4bn, breakdown as follows:
    • Credit risk: €65.2bn
    • Counterparty risk: 6.5bn
    • CVA risk: €1.5bn
    • Market risk: €9.9bn
    • Operational risk: €13.3bn

Book value per share
Equity capital (group share) totaled €20.8bn as at March 31, 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 €5.16 as at March 31, 2019 based on 3,150,673,938 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 €3.90.

Leverage ratio1

The leverage ratio worked out to 4.1% as at March 31, 2019.

Overall capital adequacy ratio
As at March 31, 2019, the financial conglomerate’s excess capital was estimated at around €3.8bn (based on own funds including current financial year’s earnings).


APPENDICES

Note on methodology:

The results at 31/03/2019 were examined by the board of directors at their meeting on 09/05/2019.
Figures at 31/03/2019 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 in 1Q19: Calculations based on quarter-end balance sheet 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:

€m31/03/2019
Goodwill3,839
Restatement for Coface minority interests(162)
Restatement for AWM deferred tax liability & others(339)
Restated goodwill3,338


€m31/03/2019
Intangible assets679
Restatement for Coface minority interest & others(49)
Restated intangible assets630

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. All impacts since the beginning of the financial year 2016 are recognized in equity, even those that had impacted the income statement in the interim financial statements for March, June and September 2016

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-out17)

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 1Q19 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 5. 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 takes into account ¼ of the annual duties and levies concerned by this accounting rule

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


Natixis - Consolidated P&L (restated)

€m1Q182Q183Q184Q181Q19 1Q19
vs. 1Q18
Net revenues2,1932,3602,1562,0402,132 (3)%
Expenses(1,675)(1,528)(1,499)(1,656)(1,720) 3%
Gross operating income 518832658383412 (20)%
Provision for credit losses(36)(41)(93)(23)(31)  
Associates736133  
Gain or loss on other assets64044682  
Change in value of goodwill00000  
Pre-tax profit4957985704181,066 115%
Tax(175)(234)(154)(110)(215)  
Minority interests(60)(57)(59)(127)(86)  
Net income (group share) 260507358181764 194%

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

1Q19

€m 1Q19
underlying
 Exceptional items 1Q19
restated
Residual contribution from perimeter sold 1Q19
reported
Net revenues2,113  19  2,132 22 2,154
Expenses(1,703)  (17) (1,720)(23) (1,742)
Gross operating income 410  2  412 0 412
Provision for credit losses(31)   (31)0 (31)
Associates3   30 3
Gain or loss on other assets0  682 6820 682
Pre-tax profit382  684 1,066 0 1,066
Tax(137) (78) (215)0 (215)
Minority interests(53)  (34) (86)0 (86)
Net income (group share)192  572  764 0 764

1Q18

€m 1Q18
underlying
 Exceptional items 1Q18
restated
Contribution from perimeter sold 1Q18
reported
Net revenues2,221 (28) 2,193220 2,412
Expenses(1,660) (15) (1,675)(120) (1,795)
Gross operating income 561 (43) 518100 618
Provision for credit losses(36)   (36)(8) (43)
Associates13   130 13
Gain or loss on other assets0   00 0
Pre-tax profit539 (43) 49592 587
Tax(190) 15 (175)(29) (204)
Minority interests(61) 1 (60)0 (60)
Net income (group share)288 (27) 26063 323




Natixis - IFRS 9 Balance sheet


Assets (in €bn) 31/03/201931/12/2018
Cash and balances with central banks20.324.3
Financial assets at fair value through profit and loss18219.3214.1
Financial assets at fair value through Equity11.110.8
Loans and receivables1119.296.6
Debt instruments at amortized cost1.51.2
Insurance assets104.3100.5
Non-current assets held for sale0.025.6
Accruals and other assets15.916.8
Investments in associates0.70.7
Tangible and intangible assets2.31.1
Goodwill3.83.8
Total498.4495.5


Liabilities and equity (in €bn) 31/03/201931/12/2018
Due to central banks0.00.0
Financial liabilities at fair value through profit and loss1211.9208.2
Customer deposits and deposits from financial institutions1 101.8109.2
Debt securities45.735.0
Liabilities associated with non-current assets held for sale0.09.7
Accruals and other liabilities17.817.0
Insurance liabilities93.489.5
Contingency reserves1.71.7
Subordinated debt4.04.0
Equity attributable to equity holders of the parent20.819.9
Minority interests1.41.3
Total498.4495.5

Natixis - 1Q19 P&L by business line

€m AWMCIBInsurancePaymentsFinancial investmentsCorporate Center 1Q19
 restated
Net revenues773 807 218 103 193 37  2,132
Expenses(558)(582)(125)(88)(133)(234) (1,720)
Gross operating income 216 225 93 16 60 (196) 412
Provision for credit losses1(30)00(2)0 (31)
Net operating income 216 195 93 16 58 (196) 381
Associates and other items(2)(12)000699 685
Pre-tax profit214 183 93 16 58 503  1,066
    Tax (215)
     Minority interests (86)
     Net income (gs)  764

Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See page 12 for the reconciliation of the restated figures with the accounting view


Asset & Wealth Management

€m1Q182Q183Q184Q181Q19 1Q19
vs. 1Q18
Net revenues7998428411,032773 (3)%
Asset Management19762805805998742 (3)%
Wealth management3737363431 (16)%
Expenses(548)(569)(584)(642)(558)  2%
Gross operating income 251273257389216 (14)%
Provision for credit losses0(1)(1)01  
Net operating income 251272256390216 (14)%
Associates00020  
Other items0(3)(2)41(2)  
Pre-tax profit251269255433214 (15)%
Cost/Income ratio68.6%67.6%69.4%62.3%72.1%  
Cost/Income ratio excl. IFRIC 2168.1%67.7%69.6%62.4%71.6%  
RWA (Basel 3 - in €bn)11.711.812.512.312.5  6%
Normative capital allocation (Basel 3)4,1434,0654,1504,3634,364  5%
RoE after tax (Basel 3)2013.7%15.2%13.9%19.6%11.5%  
RoE after tax (Basel 3) excl. IFRIC 21214.0%15.1%13.8%19.5%11.8%  


Corporate & Investment Banking

€m1Q182Q183Q184Q181Q19 1Q19
vs. 1Q18
Net revenues944976828518807 (15)%
Global markets52745733414366 (31)%
  FIC-T 378299252231251  
  Equity14814597(219)125  
Equity excl. cash14314097(219)125  
Cash equity54000  
  CVA/DVA desk113(15)2(9)  
Global finance21341394341362337 (1)%
Investment banking2282857812687  6%
Other (7)41741616  
Expenses(566)(551)(525)(559)(582)  3%
Gross operating income 378425302(41)225 (41)%
Provision for credit losses(31)(37)(98)(9)(30)  
Net operating income 347388204(50)195 (44)%
Associates43332  
Other items3000(15)  
Pre-tax profit353391207(47)183 (48)%
Cost/Income ratio60.0%56.4%63.5%107.9%72.2%  
Cost/Income ratio excl. IFRIC 2157.7%57.2%64.4%109.4%69.1%  
RWA (Basel 3 - in €bn)59.761.761.261.161.8  4%
Normative capital allocation (Basel 3)6,4356,4166,6766,6316,634  3%
RoE after tax (Basel 3)2316.0%17.6%9.0%NR7.6%  
RoE after tax (Basel 3) excl. IFRIC 21317.0%17.2%8.7%NR8.6%  


Insurance

€m1Q182Q183Q184Q181Q19 1Q19
vs. 1Q18
Net revenues204193192201218  7%
Expenses(118)(108)(103)(118)(125)  6%
Gross operating income 8685898393  8%
Provision for credit losses00000  
Net operating income 8685898393  8%
Associates30390  
Other items00000  
Pre-tax profit8985929193  5%
Cost/Income ratio58.0%56.1%53.8%58.9%57.5%  
Cost/Income ratio excl. IFRIC 2151.1%58.5%56.2%61.2%51.7%  
RWA (Basel 3 - in €bn)7.37.07.17.38.0  10%
Normative capital allocation (Basel 3)853868828841858  1%
RoE after tax (Basel 3)2428.6%26.4%30.3%30.7%29.4%  
RoE after tax (Basel 3) excl. IFRIC 21133.0%24.9%28.8%29.2%33.3%  


Payments

€m1Q182Q183Q184Q181Q19 1Q19
vs. 1Q18
Net revenues939596105103  11%
Expenses(79)(88)(84)(90)(88)  10%
Gross operating income 147121516  14%
Provision for credit losses000(2)0  
Net operating income 147121316  13%
Associates00000  
Other items01000  
Pre-tax profit148121316  14%
Cost/Income ratio85.2%92.2%87.6%85.7%84.8%  
Cost/Income ratio excl. IFRIC 2184.5%92.4%87.9%85.9%84.1%  
RWA (Basel 3 - in €bn)1.01.21.01.11.1  13%
Normative capital allocation (Basel 3)295300352332356  21%
RoE after tax (Basel 3)2512.8%7.4%9.6%10.1%12.0%  
RoE after tax (Basel 3) excl. IFRIC 21113.4%7.2%9.4%9.9%12.5%  


Financial investments

€m1Q182Q183Q184Q181Q19 1Q19
vs. 1Q18
Net revenues 190 174 197 181 193  2%
Coface 177 156 180 165 175  
Others 13 18 17 16 18  
Expenses(130)(125)(131)(140)(133)  2%
Gross operating income  59 49 66 41 60  1%
Provision for credit losses(6)113(2)  
Net operating income  54 50 67 44 58  8%
Associates 0 0 0 0 0  
Other items 2 3 0 0 0  
Pre-tax profit56 53 67 44 58   3%
RWA (Basel 3 - in €bn)5.35.65.55.65.7  6%

Corporate Center

€m1Q182Q183Q184Q181Q19 1Q19
vs. 1Q18
Net revenues(37)793337  
Expenses(232)(87)(71)(107)(234)  1%
SRF(160)000(170)  7%
Others(73)(86)(71)(107)(64) (12)% 
Gross operating income (269)(7)(68)(104)(196) (27)%
Provision for credit losses1(4)4(15)0  
Net operating income (269)(11)(63)(118)(196) (27)%
Associates00000  
Other items122369926  
Pre-tax profit (268)(9)(62)(115)503  


1Q19 results: from data excluding non-operating items to restated data

€m 1Q19
underlying
 Exchange rate fluctuations on DSN in currencies Transformation & Business Efficiency investment costs Disposal of subsidiary in Brazil Capital gain - Disposal of retail banking activities  1Q19
restated
Net revenues2,113  19     2,132
Expenses(1,703)  (17)   (1,720)
Gross operating income 410  19 (17)   412
Provision for credit losses(31)      (31)
Associates3      3
Gain or loss on other assets0   (15)697 682
Pre-tax profit382  19 (17)(15)697  1,066
Tax(137) (6)5 (78) (215)
Minority interests(53)    (33) (86)
Net income (group share)192  13 (12)(15)586  764

Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See page 12 for the reconciliation of the restated figures with the accounting view


Natixis - 1Q19 capital & Basel 3 financial structure
See note on methodology

Fully-loaded                      
                                                          

€bn31/03/2019
Shareholder’s Equity20.8
Hybrid securities (Including capital gain following reclassification of hybrids as equity instruments)(2.1)
Goodwill & intangibles(3.8)
Deferred tax assets(0.7)
Dividend provision(2.5)
Other deductions(0.5)
CET1 capital11.1
CET1 ratio11.6%
Additional Tier 1 capital1.8
Tier 1 capital12.9
Tier 1 ratio13.4%
Tier 2 capital2.3
Total capital15.2
Total capital ratio15.8%
Risk-weighted assets96.4

Regulatory

€bn31/03/2019
Fully-loaded CET1 capital11.1
Current financial year’s earnings(0.8)
Current financial year’s accrued dividend0.1
CET1 capital10.5
CET1 ratio10.9%
Additional Tier 1 capital2.1
Tier 1 capital12.6
Tier 1 ratio13.1%
Tier 2 capital2.4
Total capital15.0
Total capital ratio15.5%
Risk-weighted assets96.4

IFRIC 21 effects by business line



Effect in expenses


€m1Q182Q183Q184Q181Q19
AWM(4)111(4)
CIB(22)777(24)
Insurance(14)555(13)
Payments(1)000(1)
Financial investments00000
Corporate center(119)404040(119)
Total Natixis(160)535353(161)

Historical figures restated for the disposal of the retail banking activities


Normative capital allocation and RWA breakdown - 31/03/2019

€bnRWA
EoP
% of
 total
Goodwill & intangibles
1Q19
Capital allocation 1Q19RoE
 after tax
1Q19
AWM12.515%3.14.411.5%
CIB62.074%0.26.67.6%
Insurance8.010%0.10.929.4%
Payments1.11%0.20.412.0%
Total (excl. Corporate center and Financial investments)83.7100%3.612.2 


RWA breakdown (€bn)31/03/2019
Credit risk65.2
Internal approach54.5
Standard approach10.7
Counterparty risk6.5
Internal approach5.6
Standard approach0.9
Market risk9.9
Internal approach4.4
Standard approach5.5
CVA1.5
Operational risk - Standard approach13.3
Total RWA96.4

Fully-loaded leverage ratio27
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

€bn31/03/2019
Tier 1 capital113.2
Total prudential balance sheet396.0
Adjustment on derivatives(38.0)
Adjustment on repos28(26.2)
Other exposures to affiliates(41.2)
Off balance sheet commitments36.1
Regulatory adjustments(5.1)
Total leverage exposures321.6
Leverage ratio4.1%


Net book value as at March 31, 2019

€bn31/03/2019
Shareholders’ equity (group share)20.8
Deduction of hybrid capital instruments(2.0)
Deduction of gain on hybrid instruments(0.1)
Distribution(2.5)
Net book value16.3
Restated intangible assets290.6
Restated goodwill13.3
Net tangible book value3012.3
 
Net book value per share5.16
Net tangible book value per share3.90

1Q19 Earnings per share

€m31/03/2019
Net income (gs)764
DSN interest expenses on preferred shares after tax(24)
Net income attributable to shareholders741
Earnings per share (€)0.24

Number of shares as at March 31, 2019

 31/03/2019
Average number of shares over the period, excluding treasury shares3,148,288,020
Number of shares, excluding treasury shares, EoP3,150,673,938
Number of treasury shares, EoP2,404,544


Net income attributable to shareholders

€m1Q19
 Net income (gs)764
 DSN interest expenses on preferred shares after tax(24)
 RoE & RoTE numerator741


Natixis RoTE31
€m31/03/2019 
Shareholders’ equity (group share)20,849 
DSN deduction(2,122) 
Dividend provision(2,551) 
Intangible assets(630) 
Goodwill(3,338) 
RoTE Equity end of period12,208 
Average RoTE equity (1Q19)12,208 
1Q19 RoTE annualized with no IFRIC 21 adjustment9.9% 
IFRIC 21 impact142 
1Q19 RoTE annualized excl. IFRIC 2114.5% 


 

 

Natixis RoE1
€m31/03/2019 
Shareholders’ equity (group share)20,849 
DSN deduction(2,122) 
Dividend provision(2,551) 
Exclusion of unrealized or deferred gains and losses recognized in equity (OCI)(429) 
RoE Equity end of period15,748 
Average RoE equity (1Q19)15,748 
1Q19 RoE annualized with no IFRIC 21 adjustment7.7% 
IFRIC 21 impact142 
1Q19 RoE annualized excl. IFRIC 2111.3% 

Doubtful loans32

€bn 31/12/2018
Pro forma excl. IFRS 5
31/03/2019
Under
 IFRS 9
Provisionable commitments331.71.7
Provisionable commitments / Gross debt1.8%1.5%
Stock of provisions341.31.3
Stock of provisions / Provisionable commitments76%76%


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 first 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 May 10th, 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 SouchetT + 33 1 58 55 41 10 Daniel WilsonT + 33 1 58 19 10 40
Noemie LouvelT + 33 1 78 40 37 87 Sonia Dilouya
Vanessa Stephan
T + 33 1 58 32 01 03
T + 33 1 58 19 34 16
     

www.natixis.com

Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See page 12 for the reconciliation of the restated figures with the accounting view 

1 Excluding exceptional items. Excluding exceptional items and excluding IFRIC 21 for cost/income, RoE and RoTE (see note on methodology)

2 See note on methodology

3 Adjusting for the non-recurring impact on 4Q18 revenues from Asian equity derivatives, net of tax

4 Proposal subject to the approval of the General Shareholders’ meeting on May 28, 2019

1Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See page 12 for the reconciliation of the restated figures with the accounting view

6 See note on methodology. Excluding exceptional items and excluding IFRIC 21

7 Adjusting for the non-recurring impact on 4Q18 revenues from Asian equity derivatives, net of tax

8 Asset management including Private equity and Employee savings plan
2 See note on methodology. Excluding exceptional items and excluding IFRIC 21

9 See note on methodology. Excluding exceptional items and excluding IFRIC 21

10 ENR, Real Assets, ASF

11 See note on methodology. Excluding exceptional items and excluding IFRIC 21

12 Excluding reinsurance agreement with CNP

13 Source: FFA

14 See note on methodology. Excluding exceptional items and excluding IFRIC 21

15 Reported ratios, net of reinsurance

16 See note on methodology

17 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

18 Including deposit and margin call

19 Asset management including Private equity and Employee savings plan

20 Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles

21 Including Film industry financing

22 Including M&A

23 Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles

24 Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles

25 Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles

26 Including €697m capital gain from the disposal of the retail banking activities

27 See note on methodology. Without phase-in - supposing replacement of existing subordinated issuances when they become ineligible

28 Repos with clearing houses cleared according to IAS32 standard, without maturity or currency criteria

29 See note on methodology

30 Net tangible book value = Book value – goodwill - intangible assets

31See 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

32 On-balance sheet, excluding repos, net of collateral

33 Net commitments

34 Specific and portfolio-based provisions


Attachment


Attachments

PR 1Q19