BNP Paribas posted a very good performance in the second quarter of 2015 in a context of a gradual pick-up in growth in Europe. The Group demonstrated the strength of its integrated business model by building on a solid and diversified customer base.
The Group generated net income attributable to equity holders of €2,555 million in the second quarter of 2015 (vs. €-4,218 million in 2Q14). Excluding one-off items, it was up sharply by 13.7%.
The main characteristics of the BNP Paribas Group are:
1) An integrated business model based on two main activities : Retail Banking & Services (around 3/4 of the Group’s 2014 revenues) and Corporate and Institutional Banking (around 1/4 of the Group’s 2014 revenues).
Retail Banking & Services (RB&S) includes:
- Domestic Markets comprising the Group’s 4 retail banking networks in the eurozone (French Retail Banking, BNP Paribas Fortis in Belgium, BNL bc in Italy, BGL BNP Paribas in Luxembourg) and 3 specialised business lines Arval (full-service vehicle leasing), ), BNP Paribas Personal Investors (savings and online brokerage) and BNP Paribas Leasing Solutions.
- International Financial Services comprising International Retail Banking (the Group’s retail banks outside the eurozone), BNP Paribas Personal Finance (consumer finance), BNP Paribas Cardif (insurance), BNP Paribas Wealth Management (private banking), BNP Paribas Investment Partners (asset management) and BNP Paribas Real Estate (real estate services),
Corporate and Institutional Banking (CIB) includes:
- Corporate Banking (Corporate finance solutions)
- Global Markets (all market activities)
- Securities Services
This integrated business model helps to meet the needs of clients more effectively by offering them a comprehensive range of products. It also makes it possible to generate cross-selling revenues (approximately 20% of the revenues for 2014) and diversify risks.
2) A diversified geographical footprint with a presence in 75 countries* including four domestic markets (France, Belgium, Italy and Luxembourg) where retail banking boasts strong positions. In each of these four countries, the high households savings rate (above 10%) as well as relatively low levels of corporate and household indebtedness (less than 80% of GDP) translate into favourable conditions for the activity of the Group.
3) The capacity to serve a diversified client base, at the heart of BNP Paribas’ business model:
- more than 26 million individuals and professionals and small businesses as well as 1 million corporates and institutional institutions in the retail networks;
- more than 16 million active BNP Paribas Personal Finance (consumer finance) customers.
4) A full range of innovative solutions adapted to clients’ needs:
- payment systems, deposit management, traditional and specialised financing;
- savings and protection products, wealth and asset management, and real estate services;
- cash management, flow interest rate and foreign exchange products, as well as investment banking solutions such as access to the capital markets, structured financing, advisory services and hedging solutions on all asset classes and custodian and securities services.
Finally, thanks to its global footprint, the BNP Paribas Group supports its clients in the expansion of their business in all continents.
5) A rock-solid balance sheet with a fully-loaded Basel 3 common equity Tier 1 (CET1) (core capital over risk-weighted assets) of 10.6% as at 30 June 2015. At the same date, the fully loaded Basel 3 leverage ratio (calculated on total Tier 1 capital) stood at 3.7%, well above the regulatory threshold of 3%.
BNP Paribas has a high level of core capital (CET1) which has more than doubled since 2008.
6) The commitment to helping clients to realise their professional and personal projects. In a context of a gradual recovery in loan requests in Europe, Domestic Markets’ outstanding loans rose by 1.5% compared with the second quarter of 2014.
7) A strong liquidity position underpinned by diversified sources of funding.
The Group’s immediately available liquidiy reserve totalled €290 billion, representing more than one year’s coverage of short-term wholesale funding.
8) A stronger base of deposits. Domestic Markets’ outstandings were up by 6.3% compared with the second quarter of 2014 (+4.3% excluding the acquisition of DAB Bank in Germany).
9) A rigorous and effective risk management policy: The Group’s cost of risk was 5.6% higher than the same quarter of 2014, at €903 million (51 basis points of outstanding customer loans), due to the scope effect related to the acquisitions made in 2014. Excluding this effect, it was slightly lower.
10) A strong capacity to create value throughout the cycle: The net book value per share was €68.8 , equivalent to a compound annual growth rate (CAGR) of 6.5% since the end of 2008.