NATIXIS : THIRD-QUARTER 2017 AND NINE-MONTH 2017 RESULTS
(Thomson Reuters ONE) -
Paris, November 7, 2017
Third-Quarter 2017 and Nine-Month 2017 Results
NET INCOME up 29% to ?383m in 3Q17 and 31% to ?1.151bn in 9M17
3Q17 Net revenues up 10% across core businesses, fueled by inveST. solutions
INVESTMENT SOLUTIONS: improving fee rates in Asset Management and sound
performance in insurance
* Asset Management: Net revenues up 18% in 3Q17 with fee rates expansion in
both Europe and the US driven by a positive mix effect. Net inflows of ?3bn
in 3Q17 (including ?5bn on long-term products) and AuM standing at ?813bn at
end-September 2017 (including ?23bn transfer out of CNP life insurance
assets). Strategic reinforcement in the Asia-Pacific region with the
acquisition of a 51.9% stake in Australian asset manager Investors Mutual
Ltd.
* Insurance: Overall turnover of ?2.5bn, up 31% vs. 3Q16, excluding
reinsurance agreement with CNP. Acquisition of the remaining 40% of BPCE
Assurances from Macif and Maif((1)).
CIB: acceleration in investment banking activities and m&a
* Global finance & Investment banking: Net revenues down slightly in 3Q17 (-
1% YoY) and up 8% in 9M17. Investment Banking and M&A revenues up 13% in
3Q17 (+44% in 9M17 of which +82% for M&A).
* Global markets: Net revenues up 17% (excluding CVA/DVA) in 9M17, despite a
slowdown in 3Q17 (-9% YoY due to last year's relatively high basis of
comparison as 3Q16 benefited from post Brexit volatility).
SFS: net revenues up 5% vs. 3Q16
* Strong business momentum in Specialized financing (Net revenues up 6% YoY in
3Q17).
* Revenues from Payments up 4% vs. 3Q16. Finalization of the Dalenys
acquisition.
sharp increase in profitability in 3Q17 and 9M17((2) )
* Core businesses net revenues up 10% in 3Q17 (?2.1bn) and 12% in 9M17
(?6.6bn)
* Cost-income ratio improving by 250bps vs. 9M16 at 68.1%
* Marked contraction in the cost of risk for core businesses to 14bps in 3Q17
and 23bps in 9M17
* Core businesses ROE of 13.2% in 3Q17 (+90bps vs. 3Q16) and 15.1% in 9M17
(+210bps vs. 9M16)
* Natixis ROTE of 10.3% in 3Q17 (+130bps vs. 3Q16) and 12.2% in 9M17 (+230bps
vs. 9M16)
further decline in rwa and Reinforcement of the cet1 ratio
* ?111.7bn of RWA, down 3% since the beginning of the year. CET1 ratio((3) )of
11.5% at end-September 2017 (+20bps vs. end-June 2017) factoring in a
minimum dividend payout of 50%.
(1) Transaction announced on September 7, 2017 and subject to approval from ACPR
(2) Excluding exceptional items and the IFRIC 21 impact for cost income ratio,
ROE, and ROTE (2) Based on CRR-CRD4 rules published on June 26, 2013, including
the Danish compromise - no phase-in except for DTAs on loss carry-forwards (4)
Subject to confirmation of the pre-notification received from the ECB
The Board of Directors approved Natixis' accounts for the third quarter of 2017
on November 7, 2017.
For Natixis, the main features of 3Q17 were:
* a 10% YoY increase in net revenues for core businesses, to ?2.068bn. Partly
driven by a positive momentum at Coface, Natixis grew overall revenues 15%
YoY to ?2.205bn.
The Investment Solutions business experienced a 17% YoY increase in revenues
fueled by solid activity levels and improved product-mix in both Asset
Management (net revenues +18% YoY to ?716m) and Insurance (net revenues +12% YoY
to ?174m).
Asset Management recorded ?3bn of net inflows in 3Q17, with ?5bn inflows on high
value-added long-term products outweighing ?2bn outflows on money-market
products. Assets under management reached ?813bn at end-September, including the
transfer out of ?23bn of CNP Assurances assets during the quarter.
In Insurance, overall turnover (excluding reinsurance agreement with CNP)
progressed 31% YoY to ?2.5bn, driven by a sound momentum in all segments.
Net revenues from Corporate & Investment Banking rose 4% YoY. Excluding non-
recurring items, they declined 5% YoY to ?787m. 3Q17 witnessed lower client
activity in capital markets relative to 3Q16 which benefited from the high
volatility sparked by the Brexit vote at the end of June 2016. Investment
Banking and M&A fared well, with revenues expanding 13% YoY.
Specialized Financial Services grew net revenues 5% to ?341m, with Specialized
Financing rising 6% and Financial Services 3%.
* a cost-income ratio, excluding IFRIC21((1)), of 70% in 3Q17, down 80bps YoY,
* a drop of provisions for credit losses across core businesses to ?28m vs.
?62m in 3Q16, reflecting a significant improvement in Corporate & Investment
Banking,
* a 29% growth in net income (group share) to ?383m,
* core businesses ROE((1) )of 13.2% excluding IFRIC 21,
* a CET1 ratio((2)) of 11.5% at end-September 2017,
* a leverage ratio((1)) of 4.2% à end-September 2017.
Laurent Mignon, Natixis Chief Executive Officer, said: "Our solid third-quarter
results and good performances since the start of 2017 testify to the success of
our New Frontier strategic plan due for completion at year-end. During the
course of the plan, we have achieved our goal of becoming an exclusively client-
focused bank that delivers high value-added and non-capital intensive solutions.
We have expanded our international footprint in asset management and Corporate &
Investment Banking, set up a single insurance arm to serve Groupe BPCE and its
two large networks, and continued to develop synergies with them in terms of
services and specialized financings.
I would like to thank all of our staff for their work and general dynamism
during this period. Their efforts have ensured Natixis is now widely recognized
for the strength of its expertise, and enjoys both financial solidity and strong
profitability. These achievements provide a sound basis to begin executing on
our new strategic plan which will be unveiled on November 20."
1. See note on methodology
2. Based on CRR-CRD4 rules published on June 26, 2013, including the Danish
compromise without phase-in except for DTAs on tax-loss carryforwards
1 - Natixis 3Q17 and 9M17 results
---------------------------------------- -------------------------------------
3Q17 3Q17 9M17 9M17
?m o/w o/w o/w o/w
reported vs. recurring exceptional reported vs. recurring exceptional
3Q16 9M16
------------ ---------- ----------------------------- -------------------------------------
Net 2,205 15% 2,231 (26) 6,961 12% 7,047 (86)
revenues
o/w core 2,068 10% 2,068 6,585 12% 6,585
businesses
Expenses (1,530) 6% (1,515) (15) (4,895) 7% (4,842) (54)
------------ ---------- ----------------------------- -------------------------------------
Gross
operating 674 41% 715 (41) 2,066 27% 2,205 (139)
income
Provision
for credit (55) (20)% (55) (193) (21)% (193)
losses
------------ ---------- ----------------------------- -------------------------------------
Pre-tax 623 21% 664 (41) 1,917 29% 2,056 (139)
profit
Income tax (181) (2)% (194) 13 (650) 15% (695) 45
Minority (59) 73% (59) (116) (116)
interests
------------ ---------- ----------------------------- -------------------------------------
Net income
- group 383 29% 411 (28) 1,151 31% 1,245 (94)
share
1.1 exceptional items
?m 3Q17 3Q16 9M17 9M16
------------------------------------------------------------------ -----------
Exchange rate fluctuations Corporate
on DSN in currencies center (26) (3) (86) (10)
(Net revenues)
------------------------------------------------------------------ ------------
Transformation & Business
Efficiency Investment Business lines & (15) (35)
costs((1)) Corporate center
(Expenses)
------------------------------------------------------------------ ------------
Non-recurring additional
Corporate Social Solidarity
Contribution resulting from Insurance (19)
agreement with CNP
(Expenses)
------------------------------------------------------------------ ------------
Goodwill impairment on
Coface Financial investments (75)
(Change in value of
goodwill)
------------------------------------------------------------------ ------------
SWL litigation CIB (69) (69)
(Net revenues)
------------------------------------------------------------------ ------------
FV adjustment on own senior Corporate
debt center (110) (136)
(Net revenues)
------------------------------------------------------------------ ------------
Gain from disposal of
operating property assets Corporate 97 97
(Gain or loss on other center
assets)
------------------------------------------------------------------ ------------
Impact in income tax 13 29 45 41
------------------------------------------------------------------ ------------
Impact in minority 44
interests
------------------------------------------------------------------ ------------
------------------------------------------------------------------ ------------
Total impact in net income (28) (56) (94) (109)
(gs)
------------------------------------------------------------------ ------------
1. o/w ?9m in Corporate Center in 3Q17 and ?25m in 9M17
1.2 3Q17 results
Excluding exceptional items((1)) 3Q17
3Q17 3Q16
?m vs. 3Q16
-------------------------------------- --------------------- -----------
Net revenues 2,231 2,106 6%
o/w core businesses 2,068 1,955 6%
Expenses (1,515) (1,447) 5%
-------------------------------------- --------------------- -----------
Gross operating income 715 659 9%
Provision for credit losses (55) (69) (20)%
-------------------------------------- --------------------- -----------
Pre-tax profit 664 601 10%
Income tax (194) (213) (9)%
Minority interests (59) (34) 73%
-------------------------------------- --------------------- -----------
Net income - (gs) - restated 411 354 16%
3Q17
?m 3Q17 3Q16
vs. 3Q16
-------------------------------------- --------------------- -----------
Restatement of IFRIC 21 impact (42) (39)
Net income - (gs) - restated excl.
369 315 17%
IFRIC impact
-------------------------------------- --------------------- -----------
ROTE excl. IFRIC 21 impact 10.3% 9.0% +1.3pp
1. See page 3
Unless stated otherwise, the following comments refer to results excluding
exceptional items (see detail p3).
Natixis posted ?2.231bn in net revenues in 3Q17, a 6% increase YoY.
Net revenues from core businesses also progressed 6% YoY, reaching ?2.068bn.
Asset Management (+18%), Insurance (+12%) and Specialized Financing (+6%) all
experienced significant growth.
One year after the launch of the Fit-to-Win strategic plan, Coface registered a
marked improvement in activity levels. Coface net revenues were up 35% YoY in
3Q17 and fueled a 25% increase in revenues from the Financial Investments
segment.
Operating expenses came out at ?1.515bn in 3Q17, a 5% YoY increase that is below
revenue growth, resulting in a cost-income ratio excluding IFRIC 21 falling
80bps vs. 3Q16 to 70%.
Gross operating income rose 9% to ?715m in 3Q17 vs. 3Q16.
Provisions for credit losses declined 20% YoY to ?55m despite a ?22m provision
allocated to the general reserve in the Corporate Center. Expressed in basis
points relative to the loan book (excluding credit institutions), provisions for
credit losses across core businesses worked out to 14bps in 3Q17 vs. 30bps in
3Q16, the marked improvement being fueled by Corporate & Investment Banking.
Tax expense dropped 9% YoY in 3Q17, with the effective tax rate equating to 29%.
The 73% YoY rise in minority interests stemmed from the much-improved
contribution from Coface and higher performance fees generated by certain
European asset management affiliates.
Net income (group share) adjusted for IFRIC 21 impacts and excluding exceptional
items came out at ?369m in 3Q17, a 17% YoY increase. Including exceptional items
(-?28m impact net of tax in 3Q17) and IFRIC 21 (+?42m impact in 3Q17), reported
net income (group share) progressed 29% YoY to ?383m.
Excluding IFRIC 21, Natixis' ROTE equated to 10.3% and core businesses ROE
amounted to 13.2%, up 130bps and 90bps respectively, relative to 3Q16.
1.3 9M17 results
Excluding exceptional items((1)) 9M17
9M17 9M16
?m vs. 9M16
-------------------------------------- --------------------- -----------
Net revenues 7,047 6,414 10%
o/w core businesses 6,585 5,964 10%
Expenses (4,842) (4,574) 6%
-------------------------------------- --------------------- -----------
Gross operating income 2,205 1,839 20%
Provision for credit losses (193) (245) (21)%
-------------------------------------- --------------------- -----------
Pre-tax profit 2,056 1,679 22%
Income tax (695) (608) 14%
Minority interests (116) (84) 38%
-------------------------------------- --------------------- -----------
Net income - (gs) - restated 1,245 987 26%
9M17
?m 9M17 9M16
vs. 9M16
-------------------------------------- --------------------- -----------
Restatement of IFRIC 21 impact 42 39 7%
Net income - (gs) - restated excl.
1,287 1,026 25%
IFRIC impact
-------------------------------------- --------------------- -----------
ROTE excl. IFRIC 21 impact 12.2% 9.9% +2.3pp
1. See page 3
Unless stated otherwise, the following comments refer to results excluding
exceptional items (see detail p3).
Natixis posted net revenues of ?7.047bn in 9M17, a 10% increase compared to the
year-earlier period.
During the first nine months of the year, core businesses net revenues increased
by 10% to ?6.585bn, driven by solid performances in Global Markets in 1H17 and
robust momentum in Asset Management and Insurance since the beginning of the
year.
Net revenues from Financial Investments inched up 1% YoY and reflected the
completion of the process of divesting Corporate Data Solutions entities in
2Q17 and the continued improvement in Coface revenues since the beginning of the
year, testifying to the measures implemented as part of the Fit-to-Win strategic
plan.
Operating expenses amounted to ?4.842bn vs. ?4.574bn in 9M16.
The cost-income ratio excluding IFRIC 21 fell 2.5pp YoY in 9M17 and reached
68.1%.
Gross operating income rose 20% YoY to ?2.205bn.
Natixis overall provisions for credit losses totaled ?193m, a 21% decrease
relative to 9M16. This drove a 22% improvement in pre-tax profit to ?2.056bn
during the same period.
The effective tax rate of 34% in 9M17 is in line with the annual trajectory.
Net income (group share), adjusted for IFRIC 21 impacts and excluding
exceptional items, came out at ?1.287bn in 9M17, a 25% increase YoY. Including
exceptional items (-?94m impact net of tax in 9M17) and IFRIC 21 (-?42m impact
in 9M17), reported net income (group share) progressed 31% YoY to ?1.151bn.
Excluding IFRIC 21, Natixis' ROTE equated to 12.2% and core businesses ROE
amounted to 15.1%, up 230bps and 210bps respectively, relative to 9M16.
2 - Financial structure
Natixis' Basel 3 CET1 ratio((1) )worked out to 11.5% at September 30, 2017.
Based on a Basel 3 CET1 ratio of 11.3% at June 30, 2017, the respective impacts
in the third quarter of 2017 were as follows:
* effect of allocating net income (group share) to retained earnings in
3Q17: +34bps,
* planned dividend for 3Q17: -16bps,
* RWA, FX and other effects: +3bps.
Basel 3 capital and risk-weighted assets((1)) amounted to ?12.9bn and ?111.7bn
respectively at September 30, 2017.
EQUITY CAPITAL - TIER ONE CAPITAL - BOOK VALUE PER SHARE
Equity capital (group share) totalled ?19.7bn at September 30, 2017, of which
?2.1bn was in the form of hybrid securities (DSNs) recognized in equity capital
at fair value (excluding capital gain following reclassification of hybrids).
Core Tier 1 capital (Basel 3 - phase-in) stood at ?12.8bn and Tier 1 capital
(Basel 3 - phase-in) at ?14.6bn.
Natixis' risk-weighted assets totalled ?111.7bn at September 30, 2017 (Basel 3 -
phase-in), breakdown as follows:
* Credit risk: ?78.0bn
* Counterparty risk: ?7.2bn
* CVA risk: ?2.2bn
* Market risk: ?10.3bn
* Operational risk: ?14.0bn
Under Basel 3 (phase-in), the CET1 ratio amounted to 11.4%, the Tier 1 ratio to
13.1% and the total solvency ratio to 15.3% at September 30, 2017.
Book value per share was ?5.54 at September 30, 2017 based on 3,136,961,140
shares excluding treasury stock (the total number of shares stands at
3,137,360,238). Tangible book value per share (after deducting goodwill and
intangible assets) was ?4.43.
LEVERAGE RATIO ((2))
The leverage ratio worked out to 4.2% at September 30, 2017.
OVERALL CAPITAL ADEQUACY RATIO
As at September 30, 2017, the financial conglomerate's capital excess was
estimated at around ?3bn.
1. Based on CRR-CRD4 rules as reported on June 26, 2013, including the Danish
compromise - without phase-in except for DTAs on tax-loss carryforwards
2. See note on methodology
3. - results by Business line
Investment Solutions
Data excludes exceptional items((1))
9M17 vs. 9M16.
?m 3Q17 3Q16 3Q17 9M17 9M17 constant
vs. 3Q16 vs. 9M16 exchange
rate
-------------------------------------------------------------------------------
Net revenues 940 804 17% 2,750 12% 12%
o/w Asset 716 609 18% 2,079 12% 12%
management
o/w Insurance 174 155 12% 538 13%
o/w Private Banking 36 34 7% 100 (1)%
Expenses (622) (558) 11% (1,866) 8% 8%
-------------------------------------------------------------------------------
Gross operating 318 246 29% 884 21% 20%
income
Provision for credit 0 0 0
losses
Gain or loss on other 0 0 9 (52)%
assets
-------------------------------------------------------------------------------
Pre-tax profit 319 249 28% 902 19% 19%
-------------------------------------------------------------------------------
Cost/income 66.7% 69.8% -3.1pp 67.7% -2.3pp
ratio((1))
ROE after tax((1)) 15.2% 12.9% +2.3pp 14.7% +1.0pp
1. See note on methodology and excluding IFRIC 21 impact on the calculation of
the cost-income ratio and ROE
During 3Q17, the Investment Solutions business recorded a significant revenues
increase in Asset Management (net revenues +18% YoY), partly driven by improved
fee rates in both Europe and the US, and in Insurance (+12% YoY), fueled by
solid activity levels in both life and non-life segments.
On a year-on-year basis, net revenues from Investment Solutions progressed 17%
in 3Q17 and 12% in 9M17 to reach ?940m and ?2.750bn respectively. Over the same
periods, operating expenses increased by 11% and 8% respectively, resulting in a
3.1pp drop in the cost-income ratio in 3Q17 and 2.3pp in 9M17, excluding IFRIC
21 impacts.
Gross operating income improved 29% YoY in 3Q17 and 21% in 9M17.
The "Gain or loss on other assets" line included ?9m of proceeds from the
divestment of the Caspian private equity funds in 1Q17.
ROE after tax and excluding IFRIC 21 amounted to 15.2% in 3Q17, up 2.3pp
compared to 3Q16. The 9M17 ratio was 1.0pp higher than in 9M16.
Net revenues from Asset Management progressed 18% YoY in 3Q17 to reach ?716m
(+21% at constant exchange rates) and included increases of 40% in Europe to
?228m and 6% in the US to ?393m.
Expenses remained under control, rising 13% in 3Q17 and 8% in 9M17 relative to
the respective year-earlier periods.
Gross operating income advanced 29% in 3Q17 and 21% in 9M17.
In 3Q17, margins excluding performance fees reached 30.1bps (+2.2bps YoY) and
progressed by 1.8bps in Europe to 14.5bps and 0.9bps in the US to 39.3bps. In
9M17, margins worked out to 28.8bps, up 0.5bps YoY.
This margin growth was driven by an improved mix linked to the ?3bn overall net
inflows recorded in 3Q17, resulting from ?2bn outflows on money-market products
and ?5bn inflows on long-term products. Out of these inflows, ?4bn were booked
by European affiliates on higher value-added products such as alternative funds,
equities and real assets.
Assets under management amounted to ?813bn at end-September. During the quarter,
positive market effects (impact of +?13bn) offset negative exchange-rate
movements (impact of -?14bn). The decline in AuM relative to June 30 is linked
to the transfer out of ?23bn of CNP life insurance assets, with a limited impact
on revenues of -?1.6m for a full year.
Natixis announced on October 3, 2017 the acquisition of a majority stake (51.9%)
in Investors Mutual Limited (IML) in Australia, which becomes a new affiliate of
Natixis Global Asset Management.
With IML, a well-established asset manager with AuM of AU$9.1bn (?6.1bn),
Natixis Global Asset Management achieves its first major acquisition in
Australia and increases its exposure to the local retail market and the
Australian superannuation industry. In addition, with IML, Natixis Global Asset
Management is reinforcing its distribution platform in Australia, following the
establishment of an office in Sydney in 2015. This marks an important step in
Natixis Global Asset Management's ambition to expand its presence in Australia
and APAC as a whole.
In Insurance, overall turnover excluding reinsurance agreement with CNP amounted
to ?8.9bn in 9M17, up 63% YoY. Growth was driven by increases of 11% in the
Personal Protection and Payment Protection segment and 8% in the Property &
Casualty segment. In Life Insurance, turnover jumped 84% YoY in 9M17, reflecting
the successful rollout of the new product range in the Caisse d'Epargne
networks.
Unit-linked instruments accounted for 49% of Life Insurance net inflows in 9M17
(+15pp YoY) and 35% of gross inflows, well above the 28% average for the market
as a whole (source: FFA at end-September 2017).
Insurance AuM expanded 15% and reached ?53bn at end-September 2017.
On September 7, 2017, Natixis announced the signature of an agreement((1)) for
Natixis Assurances to acquire 40% of BPCE Assurances from Macif (25%) and Maif
(15%). Following this transaction, Natixis Assurances will be BPCE Assurances'
sole shareholder.
BPCE Assurances is France's third-largest bancassurer((2) )and markets Property
& Casualty insurance products for Caisses d'Epargne customers and health
insurance products for Caisses d'Epargne and Banque Populaire customers.
1. Completion of the transaction subject to approval from the France's
Autorité de Contrôle Prudentiel et de Résolution (2) Argus de l'Insurance -
2016 bancassurance rankings
Corporate & Investment Banking
Data excludes exceptional items((1))
3Q17 9M17 9M17
?m 3Q17 3Q16
vs. 3Q16 vs. 9M16
------------------------------------------------------------------------------
Net revenues 787 826 (5)% 2,803 12%
Net revenues excl. CVA/DVA 780 813 (4)% 2,774 13%
o/w Global Markets 361 397 (9)% 1,500 17%
o/w Global Finance & IB 406 412 (1)% 1,279 8%
Expenses (500) (468) 7% (1,614) 10%
------------------------------------------------------------------------------
Gross operating income 288 358 (20)% 1,189 15%
Provision for credit losses (16) (50) (67)% (94) (46)%
------------------------------------------------------------------------------
Pre-tax profit 274 310 (12)% 1,103 27%
------------------------------------------------------------------------------
Cost/income ratio((1)) 64.6% 58.0% +6.6pp 57.2% -1.0pp
ROE after tax((1)) 11.5% 11.5% stable 15.5% +4.1pp
1. See note on methodology and excluding IFRIC 21 impact on the calculation of
the cost-income ratio and ROE
After the robust momentum observed in 1H17, net revenues from Corporate &
Investment Banking declined in 3Q17 relative to 3Q16. The slowdown came from
Capital Markets whilst Investment Banking and M&A activities continued to make
strong progress. For 9M17 as a whole, CIB posted ?2.803bn in net revenues, up
12% YoY.
International platforms raised their contribution to overall CIB revenues from
54% in 9M16 to 57% in 9M17, driven by strong momentum on the Asia-Pacific
platform, where revenues climbed 44% YoY in 9M17.
Operating expenses amounted to ?1.614bn in 9M17 vs. ?1.462bn a year earlier
while the cost-income ratio excluding IFRIC 21 declined 1.0pp YoY to 57.2%.
Gross operating income made solid progress, advancing 15% YoY to ?1.189bn in
9M17, despite a lower 3Q17.
Provisions for credit losses continued to come down to reach ?16m in 3Q17 (-
67% vs. 3Q16) and ?94m in 9M17 (-46% vs. 9M16).
Pre-tax profit climbed 27% YoY in 9M17.
ROE after tax and excluding IFRIC 21 came out unchanged at 11.5% in 3Q17
relative to a year earlier and rose 4.1pp again on a YoY basis in 9M17, thanks
notably to a tight grip on RWAs (-7% YoY).
Excluding CVA/DVA effects, net revenues from Global Markets increased 17% YoY to
?1.500bn in 9M17. This growth was achieved despite a slowdown in 3Q17,
particularly in FIC-T, due to last year's relatively high basis of comparison as
3Q16 benefited from the volatility that followed the Brexit vote at end-June
2016.
FIC-T posted net revenues of ?259m in 3Q17 and ?1.017bn in 9M17 (+13% vs.
9M16). The Rates segment saw revenues increase 31% YoY in 9M17, fueled by robust
client activity. The Securities Financing Group((1) )and GSCS segments also
performed strongly over the period, expanding revenues by 39% and 10%
respectively.
Equities grew net revenues by 26% YoY in 9M17, despite weak volatility in 3Q17
which led to a 4% decline in revenues vs. 3Q16.
Net revenues from Global Finance & Investment Banking progressed 8% YoY in 9M17
to reach ?1.279bn and were relatively stable YoY in 3Q17.
Within Global Finance, origination activities lifted revenues 11% YoY in 9M17.
New structured financing production remained relatively flat during the period,
though GEC and Real Estate Finance both enjoyed strong momentum. Aviation,
Export & Infrastructure finance also fared very well in 3Q16 (new production up
47% in 3Q17 vs. 3Q16).
Investment Banking and M&A expanded revenues by 44% in 9M17 vs. 9M16, with M&A
standalone showing an 82% increase during the same period.
(1) Merger of the Fixed Income and Treasury businesses' repo and collateral
management activities
Specialized Financial Services
Data excludes exceptional items((1))
3Q17 9M17 9M17
?m 3Q17 3Q16
vs. 3Q16 vs. 9M16
----------------------------------------------------------------------------
Net revenues 341 325 5% 1,032 2%
Specialized financing 214 203 6% 651 4%
Financial services 126 122 3% 381 stable
Expenses (227) (215) 5% (685) 4%
----------------------------------------------------------------------------
Gross operating income 114 110 4% 347 stable
Provision for credit losses (13) (12) 10% (49) 17%
----------------------------------------------------------------------------
Pre-tax profit 101 98 3% 298 (12)%
----------------------------------------------------------------------------
Cost/income ratio((1)) 67.2% 67.0% +0.2pp 66.1% +0.9pp
ROE after tax((1)(2)) 14.5% 14.4% +0.1pp 14.8% -1.5pp
1. See note on methodology and excluding IFRIC 21 impact on the calculation of
the cost-income ratio and ROE
2. Excluding capital gain on real-estate asset in 2Q16
Net revenues from Specialized Financial Services grew 5% YoY in 3Q17, with
Specialized Financing rising 6% and Financial Services 3% in the same period.
For 9M17 as whole, net revenues increased 2% to ?1.032bn.
In 3Q17, revenues progressed 13% YoY in Sureties & Guarantees and 6% in Leasing
and Consumer Finance. Employee Savings Schemes and Payments improved net
revenues by 6% and 4% respectively, during the same period.
Operating expenses in Specialized Financial Services increased 5% YoY in 3Q17.
After restating for changes in the scope of consolidation, expenses rose 3% and
the cost-income ratio excluding IFRIC 21 declined 80bps YoY to 66.2%.
Provisions for credit losses worked out to ?13m in 3Q17 and ?49m in 9M17.
Pre-tax profit amounted to ?101m in 3Q17, up 3% vs. 3Q16.
ROE after tax and excluding IFRIC 21 equated to 14.8% in 9M17 vs. 16.3% in 9M16
excluding the ?31m gain on the divestment of a building booked in 2Q16 under
"Other assets". ROE was unchanged in 3Q17 at 14.5%.
Financial Investments
Data excludes exceptional items((1))
3Q17 9M17 9M17
?m 3Q17 3Q16
vs. 3Q16 vs. 9M16
-----------------------------------------------------------------------------
Net revenues 171 137 25% 480 1%
Coface 161 119 35% 438 7%
Corporate Data Solutions 0 8 10 (69)%
Other 10 10 3% 31 (8)%
Expenses (135) (151) (11)% (433) (7)%
-----------------------------------------------------------------------------
Gross operating income 36 (14) 47
Provision for credit losses (4) (7) (46)% (14) (56)%
Gain or loss on other assets 0 7 22 27%
-----------------------------------------------------------------------------
Pre-tax profit 33 (17) 57
-----------------------------------------------------------------------------
(1) See note on methodology
Net revenues from Financial Investments grew 25% YoY in 3Q17, buoyed by markedly
higher revenues at Coface, testifying to the initial benefits of the measures
implemented as part of the Fit-to-Win plan. The strategy of divesting Corporate
Data Solutions entities was completed by the sale of Ellisphère in 2Q17 which
generated a ?22m gain booked under "Gain or loss on other assets".
Pre-tax profit amounted to ?57m in 9M17 vs. a ?7m loss in 9M16.
In 3Q17, Coface net revenues advanced 56% YoY at constant scope and exchange-
rate (+35% in current terms) and reached ?163m. Claims expense was well down,
particularly in Asia and North America, with the loss ratio falling to 46.3% in
3Q17 vs. 72.4% in 3Q16. The cost ratio worked out to 35.4% vs. 36.9% in 3Q16,
excluding the public guarantee management business. All in all, the combined
ratio net of reinsurance amounted to 81.6%.
In 9M17, Coface net revenues advanced 19% YoY at constant scope and exchange-
rate (+7% in current terms) and reached ?439m. Excluding the public guarantee
management business - sold on January 1, 2017 - the combined ratio net of
reinsurance would have worked out to 89.8% in 9M17, 10pp lower than the 99.8% in
9M16. The loss ratio was down 10.2pp relative to 9M16 at 54.4% thereby leading
to a full-year 2017 target of below 54% (vs. 58% previously). Cost savings
amounted to ?12m in 9M17 and were ahead of the trajectory set out in the plan.
Coface confirmed the objectives included in the strategic plan, namely ?30m of
cost savings in 2018 and a combined ratio of 83% throughout the cycle.
Appendices
Note on methodology:
The results at 09/30/2017 were examined by the board of directors at their
meeting on 11/07/2017.
Figures at 09/30/2017 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.
2016 figures are presented pro forma of new intra-pole organizations:
1. CIB: The 1H16 quarterly series have been restated for the change in CIB
organization announced on March 15, 2016. The new presentation of businesses
within CIB mainly takes into account the creation of a new business line:
Global Finance & Investment banking housing all financing businesses
(structured & plain vanilla financing), as well as M&A, Equity Capital
Markets, and Debt Capital Markets.
2. SFS: Within Financial services, transfer of the Intertitres activity from
Employee savings scheme to the Payments business. Employee savings scheme
becomes Employee savings plans. The 2016 series have been restated
accordingly to this new organization.
2017 presentation: transfer of short term treasury activities run by Treasury &
collateral management department from FIC-T in CIB to Financial Management
Division in 04/01/2017 in accordance with the French banking law. To ensure
comparability, in this presentation CIB refers to CIB including Treasury &
collateral management.
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 on the basis of
10% 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 3%.
Net book value: calculated by taking shareholders' equity group share, 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:
-------------
In ?m 09/30/2017
-----------------------------------------------------------------
Intangible assets 716
Restatement for Coface minority interest & others (47)
-----------------------------------------------------------------
Restated intangible assets 669
-----------------------------------------------------------------
-----------
In ?m 09/30/2017
-------------------------------------------------------------------------------
Goodwill 3,450
Restatement for Coface minority interests (165)
Restatement for Investment Solutions deferred tax liability & (477)
others
-------------------------------------------------------------------------------
Restated goodwill 2,808
-------------------------------------------------------------------------------
Own senior debt fair-value adjustment: calculated using a discounted cash-flow
model, contract by contract, including parameters such as swaps curve, 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.
Leverage ratio: based on delegated act rules, without phase-in except for DTAs
on tax-loss carryforwards 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 3. 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 and the ROE excluding
IFRIC 21 impact calculation in 9M17 takes into account three quarter of the
annual duties and levies concerned by this new 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.
3Q17 results: from data excluding exceptional items to reported data
+------------+
| |
---------------- ---------------------------------- | ---------- |
Exchange rate Transformation | |
3Q17 excl. fluctuations & Business | 3Q17 |
in ?m exceptional on DSN in Efficiency | reported |
items currencies Investment | |
costs | |
------------------------------ ---------------------------------- | ---------- |
Net revenues 2,231 (26) | 2,205 |
| |
Expenses (1,515) (15) | (1,530) |
------------------------------ ---------------------------------- | ---------- |
Gross | |
operating 715 (26) (15) | 674 |
income | |
| |
Provision for (55) | (55) |
credit losses | |
| |
Associates 5 | 5 |
| |
Gain or loss | |
on other | (1) |
assets (1) | |
------------------------------ ---------------------------------- | ---------- |
Pre-tax 664 (26) (15) | 623 |
profit | |
| |
Tax (194) 8 5 | (181) |
| |
Minority (59) | (59) |
interests | |
------------------------------ ---------------------------------- | ---------- |
Net income 411 (18) (10) | 383 |
(group share) | |
------------------------------ ---------------------------------- | ---------- |
| |
+------------+
9M17 results: from data excluding exceptional items to reported data
+------------+
| |
---------------------- ------------------------------------------ | ---------- |
Non- | |
recurring | |
additional | |
Exchange Transformation Corporate | |
9M17 excl. rate & Business Social | 9M17 |
in ?m exceptional fluctuations Efficiency Solidarity | reported |
items on DSN in Investment Contribution | |
currencies costs resulting | |
from | |
agreement | |
with CNP | |
------------------------ ------------------------------------------ | ---------- |
Net 7,047 (86) | 6,961 |
revenues | |
| |
Expenses (4,842) (35) (19) | (4,895) |
------------------------ ------------------------------------------ | ---------- |
Gross | |
operating 2,205 (86) (35) (19) | 2,066 |
income | |
| |
Provision | |
for credit (193) | (193) |
losses | |
| |
Associates 18 | 18 |
| |
Gain or | |
loss on 27 | 27 |
other | |
assets | |
------------------------ ------------------------------------------ | ---------- |
Pre-tax 2,056 (86) (35) (19) | 1,917 |
profit | |
| |
Tax (695) 28 11 6 | (650) |
| |
Minority (116) | (116) |
interests | |
------------------------ ------------------------------------------ | ---------- |
Net income | |
(group 1,245 (58) (24) (13) | 1,151 |
share) | |
------------------------ ------------------------------------------ | ---------- |
| |
+------------+
Natixis - Consolidated
--------------------------------------------------------------- -----------------------
3Q17 9M17
in ?m 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 vs. 9M16 9M17 vs.
3Q16 9M16
-------------------------------------------------------------------------- -----------------------
Net 2,063 2,211 1,924 2,520 2,347 2,410 2,205 15% 6,198 6,961 12%
revenues
Expenses (1,605) (1,522) (1,447) (1,664) (1,771) (1,594) (1,530) 6% (4,574) (4,895) 7%
-------------------------------------------------------------------------- -----------------------
Gross
operating 458 689 477 856 576 815 674 41% 1,624 2,066 27%
income
Provision
for credit (88) (88) (69) (60) (70) (67) (55) (20)% (245) (193) (21)%
losses
Associates 8 7 4 (6) 7 6 5 6% 19 18 (4)%
Gain or
loss on 29 31 104 12 9 18 (1) 164 27 (84)%
other
assets
Change in
value of 0 (75) 0 0 0 0 0 (75) 0
goodwill
-------------------------------------------------------------------------- -----------------------
Pre-tax 407 564 516 801 523 772 623 21% 1,486 1,917 29%
profit
Tax (172) (211) (184) (255) (214) (255) (181) (2)% (567) (650) 15%
Minority (34) 28 (34) (50) (28) (29) (59) 73% (40) (116)
interests
-------------------------------------------------------------------------- -----------------------
Net income
(group 200 381 298 496 280 487 383 29% 879 1,151 31%
share)
-------------------------------------------------------------------------- -----------------------
Natixis - Breakdown by Business division in 3Q17
---------------------------------------------- ---------
in ?m Investment CIB SFS Financial Corporate 3Q17
Solutions Investments Center reported
--------------------------------------------------------------------- ---------
Net revenues 940 787 341 171 (34) 2,205
Expenses (624) (502) (228) (135) (41) (1,530)
--------------------------------------------------------------------- ---------
Gross operating income 315 285 113 36 (75) 674
Provision for credit 0 (16) (13) (4) (22) (55)
losses
--------------------------------------------------------------------- ---------
Net operating income 315 268 100 33 (97) 619
Associates 2 3 0 0 0 5
Other items (1) 0 0 0 0 (1)
--------------------------------------------------------------------- ---------
Pre-tax profit 316 271 100 33 (98) 623
--------------------------------------------------------------------- ---------
Tax (181)
Minority interests (59)
----------------------- ---------
Net income (gs) 383
----------------------- ---------
IFRIC 21 effects by business line
Effect in Expenses
----------------------------------------------- ----------
in ?m 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 9M16 9M17
-------------------------------------------------------------------- ----------
Investment Solutions (11) 4 4 4 (28)( (1)) 9((2)) 9((2)) (4) (9)
CIB (31) 10 10 10 (28) 9 9 (10) (9)
Specialized (7) 2 2 2 (6) 2 2 (2) (2)
Financial Services
Financial (2) 1 1 1 (1) 0 0 (1) 0
Investments
Corporate center (57) 1 28 28 (92) 34 29 (28) (29)
-------------------------------------------------------------------- ----------
Total Natixis (107) 18 45 45 (156) 55 50 (45) (50)
-------------------------------------------------------------------- ----------
Effect in Net Revenues
----------------------------------------------- ----------
in ?m 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 9M16 9M17
-------------------------------------------------------------------- ----------
Specialized
Financial Services (2) 1 1 1 (1) 0 0 0 0
(Leasing)
-------------------------------------------------------------------- ----------
Total Natixis (2) 1 1 1 (1) 0 0 0 0
-------------------------------------------------------------------- ----------
1. -?14m in recurring expenses and -?14m in non-recurring expenses linked to
the additional Corporate Social Solidarity Contribution resulting from
agreement with CNP
2. ?4.7m in recurring expenses and ?4.7m in non-recurring expenses linked to
the additional Corporate Social Solidarity Contribution resulting from
agreement with CNP
Investment Solutions
------------------------------------------------------------------------
3Q17 9M17
in ?m 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 vs. 9M16 9M17 vs.
3Q16 9M16
------------------------------------------------------------------------------------
Net 825 832 804 904 891 920 940 17% 2,460 2,750 12%
revenues
Asset 626 623 609 689 667 696 716 18% 1,858 2,079 12%
Management
Private 34 33 34 35 34 30 36 7% 101 100 (1)%
Banking
Insurance 167 156 155 169 187 177 174 12% 478 538 13%
Expenses (590) (579) (558) (623) (645) (620) (624) 12% (1,727) (1,890) 9%
------------------------------------------------------------------------------------
Gross
operating 234 253 246 280 246 299 315 28% 733 860 17%
income
Provision
for credit 0 0 0 0 0 0 0 0 0
losses
------------------------------------------------------------------------------------
Net
operating 234 253 246 281 246 300 315 28% 734 860 17%
income
Associates 4 2 5 (10) 4 3 2 (59)% 11 9 (13)%
Other items 18 (2) (2) 2 9 0 (1) 14 8 (47)%
------------------------------------------------------------------------------------
Pre-tax 256 253 249 273 259 302 316 27% 759 877 16%
profit
------------------------------------------------------------------------------------
Cost/Income 71.6% 69.6% 69.4% 69.0% 72.4% 67.5% 66.5% 70.2% 68.7%
ratio
Cost/Income
ratio
excluding 70.2% 70.0% 69.8% 69.4% 69.3% 68.5% 67.5% 70.0% 68.4%
IFRIC 21
effect
RWA (Basel 16.4 17.0 17.3 18.1 18.0 17.4 17.6 2% 17.3 17.6 2%
3 - in ?bn)
Normative
capital 4,350 4,381 4,467 4,491 4,641 4,609 4,477 stable 4,399 4,575 4%
allocation
(Basel 3)
ROE after
tax (Basel 13.9% 14.0% 13.1% 12.3% 12.6% 14.4% 15.3% 13.7% 14.1%
3)((1))
ROE after
tax (Basel
3) 14.5% 13.8% 12.9% 12.1% 14.3% 13.8% 14.7% 13.7% 14.3%
excluding
IFRIC 21
effect((1))
1. Normative capital allocation methodology based on 10% of the average RWA-
including goodwill and intangibles
Corporate & Investment Banking
-----------------------------------------------------------------------
3Q17 9M17
in ?m 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 vs. 9M16 9M17 vs.
Unternehmensinformation / Kurzprofil:
Datum: 07.11.2017 - 17:35 Uhr
Sprache: Deutsch
News-ID 567032
Anzahl Zeichen: 65530
contact information:
Town:
Paris
Kategorie:
Business News
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"NATIXIS : THIRD-QUARTER 2017 AND NINE-MONTH 2017 RESULTS"
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