Third Quarter 2012 Results
Growth in Natixis’ revenues and earnings capacity
Further strengthening of the financial structure ahead of Basel 3
Increase in the revenues of the core businesses:1 +17% vs Q3-11
- Wholesale Banking: strong rebound in revenues: +25% vs Q3-11 (+18% at constant exchange rates), good performances in Fixed Income and Structured Finance
- Investment Solutions: revenues up 16% vs Q3-11 (+9% at constant exchange rates) thanks to the growth of asset management in the United States
- SFS: revenues up 3% vs Q3-11, further deployment of offers in the Groupe BPCE networks
Robust results excluding non-operating items
- Growth in Natixis’ net revenues:2 up 11% vs Q3-11 (excluding P3CI interest) at €1,541m, excluding non-operating items
- Expenses under control2,3(excluding the fiscal surcharge4): up only 3% vs Q3-11 and down 5% vs Q2-12, thanks notably to the effects of the Operational Efficiency Program
- Increase in net income (Group share) excluding non-operating items: up 27% vs Q3-11 (excluding P3CI interest) and 14% vs Q2-12 at €298m
- Reported net income (Group share) of €142m, including -€156m in non-operating items (mainly the value adjustment of own senior debt)
Reinforcement of the financial structure
- Core Tier 1 ratio of 11.4% as of September 30, 2012, increases of 50 bp vs June 30, 2012 and 120 bp over the first nine months, confirming progress toward Basel 3
- The program aimed at achieving an additional reduction in the consumption of scarce resources,5 announced on November 9, 2011, had been very largely completed by end- September 2012
Implementation of an Operational Efficiency Program
- Goal of a cumulative reduction of more than €300m in expenses by end-2014
- Reduction in expenses releasing additional leeway for the growth of the core businesses1
Natixis’ full regulated disclosures are available on the www.natixis.com website, on the Investor Relations page. The quarterly financial disclosures include this statement and the presentation of the third-quarter 2012 results, intended for analysts.
Specific information on exposures (FSF recommendations) is disclosed in the presentation of results for analysts.
The Board reviewed Natixis’ consolidated results for the third quarter of 2012 on November 14, 2012.
The market environment improved during Q3-12 but the economic environment remains uncertain, particularly in Europe.
In this context, Natixis’ businesses performed well, while the bank continued to adapt its business model. The implementation of the New Deal strategy began Natixis’ refocus on its three core businesses. A significant reduction in the risk profile and the consumption of scarce resources has been achieved since the end of 2008: risk-weighted assets have been reduced by 41%, and Wholesale Banking and GAPC assets to refinance (short and long term) by 44%. At the same time, the core businesses have grown their business while keeping their cost/income ratios under control, achieving an improvement from 65.8% in 2009 to 65.3% in first nine months 2012.
Q3-12 was characterized notably by:
- Further improvement in solvency. As of September 30, 2012, the Core Tier 1 ratio was 11.4%, implying the organic generation of 50 basis points in Q3-12.
- Further asset disposals in Wholesale Banking (€0.6bn in Q3-12 (€1.4bn in 9M-12)) and GAPC (€0.6bn in Q3-12 (€2.6bn in 9M-12)), with limited haircuts.
- Further reduction in Wholesale Banking and GAPC liquidity requirements: -€4.7bn in Q3-12. On a cumulative basis, the reduction since September 30, 2011 stands at more than €14bn at constant exchange rates. The additional program to reduce liquidity requirements announced on November 9, 2011 has been virtually completed, a year ahead of schedule.
- Reduction of €3.1bn in risk-weighted assets over the quarter. Since end-September 2011, the reduction totals more than €9bn at constant exchange rates (excluding CRD3, CCI and P3CI). The reduction in risk-weighted assets continues with the implementation of the Originate-to-Distribute model.
- Launch of an Operational Efficiency Program to rein in expenses, aiming to optimize Natixis’ model in a challenging and unstable environment, in economic terms and in respect of financial regulations.
- Good performance by the core businesses (Wholesale Banking, Investment Solutions and SFS), whose net revenues totaled €1,449m in Q3-12, up 17% vs Q3-11. The cost/income ratio of the core businesses was 65.3% in 9M-12, vs 64.4% in 9M-11, despite the continuation of selective investments.
- Net revenues excluding non-operating items of €1,541m, up 11% vs Q3-11 (excluding P3CI impact).
- Net income (Group share) excluding non-operating items of €298m, up 27% vs Q3-11 (excluding P3CI impact) and 14% vs Q2-12.
- Reported net income (Group share) of €142m, including -€156m in non-operating items (mainly the value adjustment of own senior debt).
Laurent Mignon, CEO of Natixis, said: “This quarter confirms the commercial momentum of Natixis’ three core businesses and their ability to generate good levels of profitability. We continue to reinforce our financial structure and are completing the plan announced a year ago to further reduce the consumption of scarce resources. The deployment of the ‘Originate-to-Distribute’ model in Wholesale Banking allows us to intensify our development in the service of our customers.”
1 Wholesale Banking, Investment Solutions, Specialized Financial Services. 2 Excluding GAPC. 3 At constant exchange rates. 4 Systemic banking tax surcharge and forfait social. 5 Capital and liquidity.