The Board of Directors of BNP Paribas met on 13 February 2013. The meeting was chaired by Baudouin Prot and the Board examined the Group’s results for the fourth quarter and approved the 2012 financial statements.
ADAPTATION PLAN COMPLETED AND SOLID RESULTS IN A CHALLENGING ECONOMIC ENVIRONMENT
This year, the Group completed its plan to adapt to new regulations ahead of the schedule announced: CIB’s funding needs in US dollars were reduced by 65 billion dollars by April 2012 and the Group surpassed its goal of increasing the fully-loaded Basel 3 common equity Tier 1 ratio1 by 100 basis points by the end of September 2012. The ratio was 9.9% as at 31 December 2012, illustrating the Group’s high level of solvency. The risk-weighted assets were cut by 62 billion euros since 31 December 2011.
BNP Paribas achieved this year solid results in a challenging economic environment: the eurozone slid back into recession (GDP: -0.4%) and the crisis in the capital markets carried on throughout most of the year. Against this backdrop, revenues totalled 39,072 million euros, down 7.8% compared to 2011. It includes this year the impact of four significant exceptional items, which total -1,513 million euros: losses from the sale of sovereign bonds (-232 million euros), losses from the sale of loans (-91 million euros), own credit adjustment (-1,617 million euros) and a one-off amortisation of a part of Fortis PPA due to early redemptions (+427 million euros). The revenues of the operating divisions edged up 0.8%, showing their good resilience, with a rise of 0.4% for Retail Banking2, 4.8% for Investment Solutions and a 1.8% drop for CIB.
Operating expenses, which totalled 26,550 million euros, were under control, up slightly 1.7%. They were down 0.1% in Retail Banking2, up 1.4% in Investment Solutions and 2.4% at CIB (-1.1% at constant scope and exchange rates).
Gross operating income was thus down 23.0% during the period to 12,522 million euros. It was up however 0.8% in the operating divisions.
The Group’s cost of risk, which came to 3,941 million euros or 58 basis points of outstanding customer loans, was down 42.0% compared to 2011 which included the 3,241 million euro impact due to the Greek assistance programme. Excluding the impact of provisions set aside for Greek bonds, the cost of risk was up moderately 9.2%.
Non operating items came to 1,791 million euros. They include the impact of two exceptional items to the tune of 1,445 million euros: the 1,790 million euro capital gain booked in connection with the sale of a 28.7% stake in Klépierre S.A. and 345 million euros in impairments, of which 298 million euros was an impairment of BNL bc’s goodwill due to the expected increase in the Bank of Italy’s capital requirements (local common equity Tier 1 ratio increased from 7% to 8%).
Pre-tax income totalled 10,372 million euros, up 7.5% compared to last year with a negligible net impact of exceptional items: -68 million euros. The operating divisions posted 11,574 million euros in pre-tax income, up 0.8% compared to 2011.
In a still unfavourable environment, BNP Paribas generated this year 6,553 million euros in net income, up from the 2011 level (6,050 million euros), thanks to the broad diversification of its businesses. At 8.9%, return on equity was virtually flat compared to last year when it was 8.8%.
Net earnings per share was €5.16 compared to €4.82 in 2011. The net book value per share1 was €60.8, up 4.5% compared to last year and its compounded annualised growth rate was 6.5% since31 December 2008, demonstrating BNP Paribas’ ability to continue to grow the net asset value per share throughout the cycle.
The Board of Directors will propose to shareholders at the Shareholder Meeting to pay out a dividend of €1.50 per share, which equates to a 29.7% pay-out ratio, to be paid out in cash. This allocation of earnings will enable the Group to reinvest over two-thirds of its profits in business development initiatives and in efforts to support its clients.
In the fourth quarter 2012, the Group’s revenues totalled 9,395 million euros, down 3.0% compared to the fourth quarter 2011. It includes this quarter the negative impact of own credit adjustment (-286 million euros compared to +390 million in the fourth quarter 2011) and the net balance of loans sold in connection with CIB’s adaptation plan (-27 million euros compared to -148 million euros in the fourth quarter 2011). The operating divisions posted good performance with 7.3% growth in revenues compared to the fourth quarter 2011, which was marked by the sovereign debt crisis.
Operating expenses rose 1.9% to 6,802 million euros and gross operating income came to 2,593 million euros, down 13.8% compared to the fourth quarter 2011. It rose sharply (32.3%) in the operating divisions.
The cost of risk, at 1,199 million euros or 72 basis points of outstanding customer loans, was down by 21.0% compared to the same period a year earlier which included a 567 million euro impact due to the Greek assistance programme. In an unfavourable economic environment, it was up by 17 basis points compared to the third quarter 2012. This increase is due, in particular, to a provision set aside for one specific loan at CIB (6 basis points) and one-off increases in provisions at Personal Finance (2 basis points).
Given 345 million euros in one-off impairments (see above), the Group’s net income attributable to equity holders was 514 million euros in the fourth quarter 2012, down 32.8% compared to the same period a year earlier. Excluding one-off items, the Group’s net income attributable to equity holders was 1,051 million euros.