The Board of Directors of BNP Paribas met on 1st August 2011. The meeting was chaired by Michel Pébereau and the Board examined the Group’s results for the second quarter of the year and approved the interim accounts.
Net quarterly profits of 2.1 billion euros
In the second quarter of the year, BNP Paribas confirmed the effectiveness of its diversified and integrated business model anchored to retail banking and posted net profits (attributable to equity holders) of 2,128 million euros, up 1.1% compared to the second quarter 2010 despite the impact of the provision for Greece.
Against a backdrop of turbulent markets, revenues grew in all three operating divisions: Retail Banking (+1.5% with 100% of the domestic networks’ private banking businesses, excluding PEL/CEL effects), Investment Solutions (+6.8%) and Corporate and Investment Banking (+5.7%). However, the Corporate Centre reported sharply lower revenues: 534 million euros compared to 1,071 million euros in the second quarter 2010 in which they were exceptionally high, in particular due to a +235 million euros own debt revaluation. Overall revenues, which totalled 10,981 million euros, edged down 1.7% compared to the second quarter 2010.
Operating expenses, which came to 6,602 million euros, were up 2.9% compared to the second quarter 2010. Excluding the effect of “systemic” taxes introduced in 2011 in a number of European countries, their rise was limited to 2.1%.
Gross operating income was down 8.0% compared to the second quarter 2010. For the operating divisions alone, it was up 3.7% despite the effect of “systemic” taxes.
The cost of risk, which was 1,350 million euros, was affected this quarter by the provision set aside for Greek government bonds that are eligible under the Greek assistance programme.
The Greek assistance programme, to which BNP Paribas has committed, pertains to government bonds that mature before 31 December 2020. It will result in a 21% loss for the private holders of these bonds. BNP Paribas holds 2.3 billion euros in Greek government bonds that mature before 31 December 2020. Therefore, the Group set aside a provision for 21% of this amount as well as for the corresponding effect on the portfolio of insurance businesses, or a total of 534 million euros. Furthermore, certain minority interests consolidated under the equity method in the insurance sector had a negative impact to the tune of 26 million euros.
Excluding this one-time effect, the cost of risk continues the downward trend observed in previous quarters (-24.5%), amounting to 48bp of outstanding customer loans compared to 66bp in the second quarter 2010.
For the first half of the year as a whole, the Group’s revenues totalled 22,666 million euros, a level comparable to the first half 2010 (-0.2%). Affected by the impact of “systemic” taxes, operating expenses were up 2.5% (excluding this effect, the rise is limited to 1.7%). Gross operating income was down 3.7% at 9,336 million euros. Despite the impact of the provision set aside in connection with the Greek assistance programme, the cost of risk was down 6.2% during the period and net income (attributable to equity holders) totalled 4,744 million euros, up +8.1% compared to the first half 2010.
Half-yearly net earnings per ordinary share was 3.8 euros (+7.3% compared to the first half 2010). Annualised return on equity this semester was 13.8%, slightly higher than in the first half 2010 (+0.1pt).
The integration of BNP Paribas Fortis and BGL BNP Paribas is still ongoing. In the first half of the year, 300 million euros in synergies were booked and were added to the 598 million euros already booked by the end of 2010. IT migration in Turkey was completed three months ahead of schedule. Thus, total synergies are ahead of the new plan, which raised the new target to an aggregate total of 1,2 billion euros of synergies.