Paris, February 12, 2019
4Q18 and 2018 results
Confirmation of New Dimension 2020 targets
Reported net income at €1,577m in 2018 and €252m in 4Q18
Cash dividend of 0.78€ per share[1]
SUSTAINED growth and PROFITABILITY OF OUR Businesses
underlying net revenues[2] at €9.5bn in 2018 (+2% at constant FX) and €2.2bn in 4Q18
Businesses' underlying net revenues2 UP +5% at constant fx excluding non-recurring items announced ON december 18, 2018[3]
AWM - Net revenues and fee rate improving thanks to our active positioning
Underlying net revenues2 up +13% at constant FX in 2018 and up +12% in 4Q18 amidst volatile markets
Ninth consecutive year of fee rate increase at 31bps in 2018 vs. 29bps in 2017
Performance fees up +50% YoY in 2018 with €249m booked in 4Q18
Underlying RoE2 at 16.0% in 2018, in line with the New Dimension 2020 target (~16%)
CIB - Underlying RoE2 >10% in 2018 despite 4Q18 headwinds, thanks to our diversified expertise
Underlying net revenues2 down a modest -3% in 2018 at constant exchange rate, excluding the -€259m non-recurring drag on Asian equity derivatives in 4Q183
Underlying net revenues2 up in Global finance (+9% YoY at constant FX in 2018) and in IB/M&A (+4% YoY in 2018 of which +68% in 4Q18) offsetting, thanks to our sectorial approach, a decrease in Global markets, impacted by a challenging environment in 4Q18
Underlying RoE2 of 13.0% in 2018 excl. 4Q18 non-recurring impact3, close to the 2020 target (~14%)
Insurance - Solid profitability improvement
Underlying net revenues2 up +8% YoY in 2018
Underlying RoE2 of 29.1% in 2018 in line with New Dimension 2020 target (~30%)
SFS - Strong growth dynamic in Payments
Underlying net revenues2 from SFS up +6% YoY in 2018, of which +16% in Payments (+18% in 4Q18)
Payments: Increase in business volumes from PayPlug and Dalenys, up +31% YoY in 2018. Historical processing
activity up +11% YoY
sustainable value creation and financial strength
Underlying net income2 at €1,607m in 2018 and at €261m in 4Q18
Underlying RoTE2 at 12.0% in 2018 and 13.9% adjusted3, in line with the New Dimension 2020 target (14-15.5%)
Basel 3 FL CET1 ratio[4] at 10.8% as at December 31, 2018 and 11.1% pro forma
Cash dividend of 0.78€ per share1: 0.30€ ordinary, 0.48€ special
2018: A Promising start to New Dimension
François Riahi, Natixis Chief Executive Officer, said: "Natixis has delivered strong results in 2018 and 4Q18 despite a challenging market environment. This performance illustrates how relevant our business model is - selective, asset light and diversified - with a complementary fit across our businesses that allows us to absorb shocks effectively. With a solvency level already at our 2020 target, we are in a position to distribute a €2.4bn total cash dividend to our shareholders. Our New Dimension strategic plan is well embarked and is already delivering satisfying results. We thus confirm all our strategic ambitions, continue to transform ourselves and as well as to provide our clients with differentiating solutions."
disposal of retail banking activities
On February 12th 2019, the Board of Directors of Natixis approved the terms and conditions of the transaction and the entering into agreements relating to the sale by Natixis to BPCE of its subsidiaries Natixis Financement, Natixis Factor, Natixis Lease and CEGC as well as the Eurotitres business as a going concern (« fonds de commerce »), it being specified that only the independent directors of Natixis took part in such vote.
Morgan Stanley, appointed by Natixis independent directors as financial advisor (attestateur d'équité) to assess the fairness of the financial terms of the transaction, delivered on February 12th 2019 a fairness opinion to the Board of Directors, the conclusion of which is as follows: "the consideration to be received by Natixis is fair from a financial point of view to Natixis".
Natixis reminds the decision process which led to the approval of the transaction by its Board of Directors:
- The independent directors of Natixis have been informed of the contemplated transaction in July 2018;
- On July 20th 2018, the independent directors of Natixis have appointed Morgan Stanley as financial advisor (attestateur d'équité) to assess the fairness of the financial terms of the transaction;
- The independent directors of Natixis reviewed the terms and conditions of the contemplated transaction in several meetings, accompanied by Morgan Stanley, and have resolved at the Natixis Board of directors' meeting of September 12th 2018 in favor of the contemplated transaction and approved the entering into by Natixis of a non-binding memorandum of understanding with BPCE;
- Since September 12th 2018, discussions between Natixis and BPCE have continued, and led to the finalization of the sale agreements, which have been submitted today to the approval of the Board of Directors. The independent directors had previously met on February 7th 2019 to review the definitive terms and conditions of the transaction, accompanied by Morgan Stanley;
- In parallel, the employee representative bodies of Natixis and its relevant subsidiaries have been consulted and delivered their opinion on the transaction on January 24th 2019.
4Q18 rEsults
On February 12, 2018, the Board of Directors examined Natixis' fourth quarter 2018 results and approved the accounts for the fiscal year 2018.
| €m | 4Q18 reported | 4Q17 reported | 4Q18 o/w underlying | 4Q18 o/w exceptionals | 4Q18 vs. 4Q17 reported | 4Q18 vs. 4Q17 reported constant FX | 4Q18 vs. 4Q17 underlying | 4Q18 vs. 4Q17 underlying constant FX | ||||
| Net revenues | 2,251 | 2,506 | 2,235 | 16 | (10)% | (11)% | (9)% | (10)% | ||||
| o/w businesses | 2,091 | 2,255 | 2,091 | (7)% | (8)% | (7)% | (8)% | |||||
| o/w businesses excl. (259)m non-recurring impact on Asian equity derivatives | 2,350 | 2,255 | 2,350 | 4% | 3% | 4% | 3% | |||||
| Expenses | (1,773) | (1,737) | (1,742) | (31) | 2% | 1% | 3% | 2% | ||||
| Gross operating income | 478 | 769 | 493 | (15) | (38)% | (39)% | (34)% | (35)% | ||||
| Provision for credit losses | (29) | (65) | (29) | |||||||||
| Net operating income | 449 | 704 | 464 | (15) | (36)% | (32)% | ||||||
| Associates and other items | 58 | 29 | 58 | |||||||||
| Pre-tax profit | 507 | 733 | 522 | (15) | (31)% | (25)% | ||||||
| Income tax | (128) | (139) | (133) | 5 | ||||||||
| Minority interests | (127) | (76) | (128) | 1 | ||||||||
| Net income - group share | 252 | 518 | 261 | (9) | (51)% | (44)% |
Natixis' underlying net revenues for the businesses are up +4% YoY excluding the -€259m non-recurring drag on Asian equity derivatives (December 18, 2018 press release), driven by a continued strong momentum in Asset and wealth management (+12% YoY), Insurance (+6% YoY) and Payments (+18% YoY). CIB revenues down YoY amidst challenging market conditions, especially in Asia[5].
Underlying expenses are well under control, up less than +1% YoY for the businesses and +3% YoY at Natixis level. The underlying adjusted1 businesses' gross operating income is up +11% YoY. The underlying cost/income ratio[6] is at 80.4%, up +920bps vs. 4Q17. Adjusted1 for the non-recurring revenue drag on Asian equity derivatives, it stands at 72.1%, up +90bps vs. 4Q17.
The underlying adjusted1 pre-tax profit is up +12% YoY including a significant reduction in loan loss provisioning as well as capital gains realized on the disposals of Selection 1818 and Axeltis in AWM (€42m). Expressed in basis points of loans outstanding (excluding credit institutions), the businesses' underlying cost of risk worked out to 8bps in 4Q18.
Minority interests are up YoY driven by a higher contribution from some European AM affiliates.
Net income (group share), adjusted for IFRIC 21 and excluding exceptional items came out at €211m in 4Q18. Accounting for exceptional items (-€9m net of tax in 4Q18) and IFRIC 21 impact (+€50m in 3Q18), the reported net income (group share) in 4Q18 is at €252m.
Natixis delivered a 5.9% underlying RoTE2 excluding IFRIC 21 impact (13.4% adjusted1) vs. 12.6% in 4Q17. The businesses' underlying RoE2 reached 9.0% (14.4% adjusted1) vs. 12.5% in 4Q17.
2018 rEsults
| €m | 2018 reported | 2017 reported | 2018 o/w underlying | 2018 o/w exceptionals | 2018 vs. 2017 reported | 2018 vs. 2017 reported constant FX | 2018 vs. 2017 underlying | 2018 vs. 2017 underlying constant FX | ||||
| Net revenues | 9,616 | 9,467 | 9,500 | 116 | 2% | 3% | 0% | 2% | ||||
| o/w businesses | 8,917 | 8,810 | 8,849 | 68 | 1% | 3% | 0% | 2% | ||||
| o/w businesses excl. (259)m non-recurring impact on Asian equity derivatives | 9,176 | 8,810 | 9,108 | 4% | 6% | 3% | 5% | |||||
| Expenses | (6,823) | (6,632) | (6,731) | (92) | 3% | 4% | 3% | 4% | ||||
| o/w expenses excluding SRF | (6,659) | (6,511) | (6,567) | 2% | 4% | 2% | 4% | |||||
| Gross operating income | 2,793 | 2,835 | 2,769 | 24 | (1)% | 1% | (6)% | (5)% | ||||
| Provision for credit losses | (215) | (258) | (143) | (71) | ||||||||
| Net operating income | 2,578 | 2,577 | 2,626 | (47) | 0% | (3)% | ||||||
| Associates and other items | 83 | 74 | 83 | |||||||||
| Pre-tax profit | 2,661 | 2,651 | 2,709 | (47) | 0% | (2)% | ||||||
| Income tax | (781) | (789) | (797) | 16 | ||||||||
| Minority interests | (304) | (192) | (305) | 1 | ||||||||
| Net income - group share | 1,577 | 1,669 | 1,607 | (30) | (6)% | (6)% |
Natixis' underlying net revenues are up +2% YoY at constant exchange rate. Excluding the 4Q18 non-recurring impact on Asian equity derivatives[7], they are up +5% YoY at constant exchange rate, essentially driven by strong dynamics across AWM (+13% YoY), Insurance (+8% YoY), Payments (+16% YoY) as well as for Coface (+9% YoY). CIB adjusted1 revenues down a modest -3% YoY at constant exchange rate on a high 2017.
Underlying expenses are well under control despite a higher SRF contribution and 2018 being a period of investments. The underlying adjusted1 businesses gross operating income is up +7% YoY at constant exchange rate with a slight improvement of their underlying2 adjusted1 cost/income ratio vs. 2017. Natixis underlying cost/income ratio[8] at 70.9% is up +200bps vs. 2017. Adjusted1 for the non-recurring revenue impact on Asian equity derivatives, it ends up at 69.0%, up +10bps vs. 2017.
The underlying pre-tax profit is down a modest -2% YoY despite challenging market conditions. Excluding the €259m revenue drag from Asian EQD in 4Q181, it is up +8% YoY, including a significant reduction in the cost of risk (~40%) vs. 2017. Expressed in basis points of loans outstanding (excluding credit institutions), the businesses' underlying cost of risk worked out to 16bps in 2018 vs. 23bps in 2017.
The tax rate stood at ~30% in 2018, in line with full-year guidance. Minority interests are up YoY due to a higher contribution from Coface and some European AM affiliates.
Net income (group share) excluding exceptional items came out at €1,607m in 2018. Including the exceptional items (-€30m net of tax in 2018), the reported net income (group share) in 2018 comes out at €1,577m, equivalent to ~142bps of annual capital generation.
Natixis delivered a 12.0% underlying2 RoTE (13.9% adjusted1) vs. 12.3% in 2017. The businesses' underlying2 RoE reached 13.7% (15.1% adjusted1) vs. 13.8% in 2017.
Natixis will submit the payment of an ordinary dividend of 0.30€ per share for the year 2018 to the next Annual General Meeting on May 28, 2019 (64% pay-out ratio). Besides, a special dividend of 0.48€ (€1.5bn) per share will be paid subject to the closing of the disposal of retail banking activities announced on September 12, 2018 and regulatory approvals. Natixis confirms its dividend policy, i.e. a minimum pay-out ratio of 60% for each single year of the New Dimension plan (2018-2020) and a strict discipline when it comes to excess capital with an 11% fully-loaded CET1 ratio target for 2020.
4q18 & 2018 rEsults
Exceptional items
| €m | 4Q18 | 4Q17 | 2018 | 2017 | ||
| Exchange rate fluctuations on DSN in currencies (Net revenues) | Corporate center | 16 | (18) | 48 | (104) | |
| SWL reversal provision (Net revenues) | CIB | 68 | ||||
| Capital gain on the sale of 15% stake in CACEIS (Net revenues) | CIB | 74 | 74 | |||
| Transformation & Business Efficiency Investment costs (Expenses) | Business lines & Corporate center | (28) | (39) | (89) | (74) | |
| Fit to Win investments & restructuring expenses (Expenses) | Corporate center | (3) | (3) | |||
| Non-recurring additional Corporate Social Solidarity Contribution resulting from agreement with CNP (Expenses) | Insurance | (19) | ||||
| Legal provision (Provision for credit losses) | CIB | (71) | ||||
| Capital gain on the liquidation of a holding structure (Gain or loss on other assets) | CIB | 18 | 18 | |||
| Total impact on income tax | 5 | 14 | 16 | 59 | ||
| Total Impact on minority interests | 1 | 1 | ||||
| Total impact in net income (gs) | (9) | 48 | (30) | (46) |
transformation & business efficiency
Investment costs by reporting line
| €m | 4Q18 | 4Q17 | 2018 | 2017 | |
| AWM | (8) | (2) | (20) | (2) | |
| CIB | (6) | 0 | (14) | (3) | |
| Insurance | (2) | 1 | (2) | (4) | |
| SFS | (1) | (7) | (8) | (8) | |
| Corporate center | (11) | (32) | (45) | (57) | |
| Impact on expenses | (28) | (39) | (89) | (74) |
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p5)
Asset & Wealth Management
| €m | 4Q18 | 4Q17 | 4Q18 vs. 4Q17 | 2018 | 2017 | 2018 vs. 2017 | 2018 vs. 2017 constant FX | ||
| Net revenues | 1,005 | 899 | 12% | 3,419 | 3,113 | 10% | 13% | ||
| o/w Asset management | 971 | 857 | 13% | 3,274 | 2,972 | 10% | 13% | ||
| o/w Wealth management | 34 | 42 | (19)% | 144 | 142 | 2% | 2% | ||
| Expenses | (614) | (609) | 1% | (2,244) | (2,175) | 3% | 6% | ||
| Gross operating income | 392 | 290 | 35% | 1,174 | 938 | 25% | 28% | ||
| Provision for credit losses | 0 | 0 | (1) | 0 | |||||
| Associates and other items | 43 | 3 | 39 | 11 | |||||
| Pre-tax profit | 435 | 293 | 48% | 1,212 | 949 | 28% | |||
| Cost/income ratio[9] | 61.2% | 67.8% | (6.6)pp | 65.7% | 69.9% | (4.2)pp | |||
| RoE after tax1 | 20.0% | 14.0% | +6.0pp | 16.0% | 12.8% | +3.2pp |
Underlying net revenues from Asset & Wealth Management (AWM) are up +13% YoY in 2018 at constant exchange rate (+9% excluding AM performance fees) and +12% YoY in 4Q18, above New Dimension growth target of ~6%. Asset management underlying revenues increased by +6% YoY at constant exchange rate in North America (€1,612m) and +27% in Europe (€1,205m) over 2018. Wealth management underlying revenues are up +2% YoY in 2018.
The Asset management fee rate excluding performance fees (€249m in 4Q18 and €426m in 2018; ~13% of 2018 AM revenues) stood at 31bps in 2018 and remained flat QoQ in 4Q18. In 2018, it rose both in Europe to 16bps (+1.3bps vs. 2017 and +0.6bps excl. Life insurance) and in North America to 40bps (+0.9bps YoY) including a slight uptick QoQ in 4Q18. 2018 is the 9th consecutive year of fee rate increase in AM.
Asset management net inflows nil in 2018 due to 4Q18 net outflows offsetting the good performance of the first three quarters amidst very challenging market conditions, especially in North America that experienced net outflows of -€10bn in 2018 (-€16bn in 4Q18) of which -$3bn at Harris and -$8bn at Loomis. In Europe, net inflows reached +€11bn in 2018 (of which +€2bn on LT products in 4Q18) and is positive across a vast majority of our European affiliates in 4Q18 (e.g. H2O, AEW, Mirova, Seeyond, OSSIAM). ~€7bn of net outflows on money-market products in November/December.
Asset management AuM reached €808bn as at December 31, 2018 (including Vega IM) and are decreasing by -€23bn over the year due to a negative market effect of -€44bn and a positive FX/scope effect of +€22bn. Over 2018, average AuM increased by +9% in Europe (excl. Life insurance) and by +5% in North America at constant exchange rate. Wealth management AuM reached €26.1bn[10].
The underlying RoE1 improved materially at 16.0% in 2018 (+320bps YoY) in line with New Dimension 2020 target (20.0% in 4Q18, up +600bps YoY) with a significant positive jaws effect of 7pp in 2018 (11pp in 4Q18) and an underlying cost/income ratio1 improvement of 420bps YoY to 65.7% (660bps YoY improvement in 4Q18).The underlying gross operating income is up +28% YoY in 2018 at constant exchange rate in 2018.
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p5)
Corporate & Investment Banking
| €m | 4Q18 | 4Q17 | 4Q18 vs. 4Q17 | 2018 | 2017 | 2018 vs. 2017 | 2018 vs. 2017 constant FX | ||
| Net revenues | 512 | 817 | (37)% | 3,169 | 3,581 | (12)% | (10)% | ||
| Net revenues excl. CVA/DVA | 510 | 840 | (39)% | 3,167 | 3,576 | (11)% | (10)% | ||
| Net revenues excl. (259)m non-recurring impact on Asian equity derivatives | 771 | 817 | (6)% | 3,428 | 3,581 | (4)% | (3)% | ||
| Expenses | (552) | (567) | (3)% | (2,178) | (2,191) | (1)% | 0% | ||
| Gross operating income | (40) | 249 | 990 | 1,390 | (29)% | (27)% | |||
| Provision for credit losses | (11) | (21) | (104) | (115) | |||||
| Associates and other items | 3 | 2 | 14 | 10 | |||||
| Pre-tax profit | (49) | 231 | 901 | 1,285 | (30)% | ||||
| Cost/income ratio[11] | 109.3% | 70.6% | +38.7pp | 68.7% | 61.2% | +7.5pp | |||
| RoE after tax1 | - | 10.3% | - | 10.1% | 13.2% | (3.1)pp | |||
| Adjusted[12] Cost/income ratio1 | 72.6% | 70.6% | +2.0pp | 63.6% | 61.2% | +2.4pp | |||
| Adjusted2 RoE after tax1 | 9.0% | 10.3% | (1.3)pp | 13.0% | 13.2% | (0.2)pp |
Underlying net revenues are down a modest -3% YoY in 2018 at constant exchange rate excluding the €259m non-recurring drag on Asian equity derivatives in 4Q18. Diversification is a key asset both in terms of activities (Global finance and Investment banking/M&A notably offsetting a more challenging 4Q18 for Global markets) and geographies (Europe and the US, both broadly flat YoY at constant exchange rate, offsetting the decrease in Asia). These evolutions are to be put in the context of a high 2017.
Global markets revenues are down -15% YoY in 2018 at constant exchange rate excluding the €259m non-recurring drag on Asian equity derivatives in 4Q182 and the cash equity contribution. FICT net revenues are down -12% YoY in 2018 (-11% at constant exchange rate) on the back of challenging market conditions in Rates and FX (-15% YoY including a -34% YoY decline in 4Q18). Equity adjusted2 net revenues are down -26% YoY in 2018 at constant scope (excl. cash equity). The 4Q18 adjusted2 top-line is not representative of Natixis' revenue run-rate in Equity since the quarter was marked by much tighter financial hurdles to new business pending the internal review of our books that followed the identification of a deficient hedging strategy in Asia (December 18th announcement) as well as the teams' full engagement to handle the matter. Global finance net revenues are up +9% YoY at constant FX in 2018 and slightly up YoY in 4Q18 on a high 4Q17. Strong performance across Real Assets (+23% YoY) and Energy & Natural Resources (+4% YoY). Dynamic new loan production, up +20% YoY in 2018 (o/w RA +22% YoY and ENR +14% YoY). The distribution rate on Real Assets is close to 70% in 2018 (~60% in 2017). Investment banking and M&A net revenue are up +4% YoY at constant exchange rate in 2018 including a 4Q18 YoY growth by 2/3 vs. 4Q17. M&A revenues are close to €200m in 2018 (including a ~€15m contribution from Fenchurch and Vermillion, boutiques consolidated in 2Q18), and up +36% YoY vs. 2017. The proportion of revenues generated from service fees[13] is slightly up at 43% in 2018 vs. 39% in 2017and 37% in 2016.
The underlying expenses are well under control , down -1% YoY in 2018 and -3% YoY in 4Q18, despite important regulatory projects.
The underlying adjusted2 gross operating income is down mid-single digit YoY in 2018 at constant exchange rate.
The underlying cost of risk is improving markedly through focus on O2D and a favourable environment.
The underlying RoE1 of CIB reached 10.1% in 2018, despite 4Q18 headwinds and 13.0% on an adjusted basis2 vs. an already very good 2017 (13.2%). RWA are flat YoY at constant exchange rate (up +2% YoY at current exchange rate).
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p5)
Insurance
| €m | 4Q18 | 4Q17 | 4Q18 vs. 4Q17 | 2018 | 2017 | 2018 vs. 2017 | ||
| Net revenues | 201 | 190 | 6% | 790 | 734 | 8% | ||
| Expenses | (116) | (110) | 6% | (446) | (416) | 7% | ||
| Gross operating income | 85 | 80 | 6% | 344 | 318 | 8% | ||
| Provision for credit losses | 0 | 0 | 0 | 0 | ||||
| Associates and other items | 9 | 4 | 15 | 13 | ||||
| Pre-tax profit | 93 | 84 | 12% | 358 | 331 | 8% | ||
| Cost/income ratio[14] | 60.3% | 60.0% | +0.3pp | 56.5% | 56.6% | (0.1)pp | ||
| RoE after tax1 | 29.8% | 25.3% | +4.5pp | 29.1% | 23.9% | +5.2pp |
Underlying net revenues are up +8% YoY in 2018 above New Dimension growth target of ~7% driven by both Life and P&C.
Underlying expenses are up +7% YoY in 2018, translating into a positive jaws effect and a slight improvement in the cost/income ratio1 despite an increase in the Corporate Social Solidarity Contribution (C3S) in 1Q18.
Gross operating income up +8% YoY in 2018.
The RoE1 improved of +520bps YoY in 2018 to 29.1% in line with New Dimension 2020 target, in part driven by the buy-back of BPCE Assurances minorities (29.8% in 4Q18, up +450bps YoY).
Global turnover[15] reached €12.0bn in 2018, up +2% YoY. Net inflows2 in Life insurance reached €5.8bn in 2018 of which 44% in the form of unit-linked products (33% of gross inflows vs. 28% for the French market as at end-December[16]).
Assets under management in Life insurance reached €60.1bn as at December 31, 2018 of which 23% in the form of unit-linked products.
The P&C combined ratio worked out to 88.9% in 4Q18 and 91.2% in 2018, down respectively -2.6pp YoY and -0.9pp YoY.
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p5)
Specialized Financial Services
| €m | 4Q18 | 4Q17 | 4Q18 vs. 4Q17 | 2018 | 2017 | 2018 vs. 2017 | ||
| Net revenues | 373 | 350 | 7% | 1,472 | 1,382 | 6% | ||
| Specialized financing | 217 | 210 | 3% | 894 | 862 | 4% | ||
| Payments | 105 | 89 | 18% | 389 | 336 | 16% | ||
| Financial services | 51 | 51 | 1% | 188 | 184 | 2% | ||
| Expenses | (259) | (242) | 7% | (995) | (930) | 7% | ||
| Gross operating income | 114 | 108 | 6% | 476 | 451 | 6% | ||
| Provision for credit losses | (6) | (24) | (23) | (73) | ||||
| Associates and other items | 0 | 0 | 1 | 0 | ||||
| Pre-tax profit | 109 | 83 | 30% | 454 | 379 | 20% | ||
| Cost/income ratio[17] | 70.0% | 69.9% | +0.1pp | 67.6% | 67.3% | +0.3pp | ||
| RoE after tax1 | 13.8% | 11.2% | +2.6pp | 14.3% | 13.3% | +1.0pp |
Underlying net revenues from Specialized Financial Services are up +6% YoY in 2018 and +7% YoY in 4Q18. Specialized financing revenues increased by +4% YoY in 2018, driven by Leasing and Sureties & financial guarantees. Payments revenues are up +16% YoY in 2018 (~50% driven by the acquisitions made since 2017, ~50% by Natixis' historical payment activities), consistent with New Dimension target and including an +18% increase in 4Q18. Financial services revenues are up +2% YoY in 2018 driven by Employee savings plans.
Within Payments, business volumes generated by Natixis' recent acquisitions (Dalenys and PayPlug) in Merchant Solutions increased by +31% YoY in 2018. In the meantime, Prepaid & Managed/Consumer Solutions revenues are up +45% YoY in 2018 (+29% excluding perimeter effect from Comitéo) and +54% in 4Q18 (+31% excl. Comitéo). The number of mobile payments has been multiplied by more than x2 YoY in 2018. The number of card transactions processed in the Services & Processing activity is up +11% YoY in 2018. Overall, 41% of 4Q18 Payments revenues have been realized outside Groupe BPCE networks.
Underlying expenses from SFS are up +7% YoY in 2018 and +3% at constant scope. The underlying cost/income ratio1 excluding Payments acquisitions stands at 68.1% in 4Q18 and 66.0% in 2018.
The underlying cost of risk remains well under control, down YoY both in 4Q18 and 2018.
The underlying RoE1 of SFS improved +100bps YoY to 14.3% in 2018.
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p5)
Corporate Center
| €m | 4Q18 | 4Q17 | 4Q18 vs. 4Q17 | 2018 | 2017 | 2018 vs. 2017 | ||
| Net revenues | 144 | 195 | (26)% | 651 | 687 | (5)% | ||
| Coface | 165 | 167 | (1)% | 678 | 624 | 9% | ||
| Others | (21) | 28 | (27) | 63 | ||||
| Expenses | (202) | (169) | 19% | (867) | (827) | 5% | ||
| Coface | (125) | (114) | 9% | (485) | (484) | 0% | ||
| SRF | 0 | 1 | (164) | (121) | ||||
| Others | (77) | (56) | 37% | (218) | (222) | (2)% | ||
| Gross operating income | (57) | 26 | (216) | (140) | ||||
| Provision for credit losses | (12) | (20) | (15) | (71) | ||||
| Associates and other items | 3 | 2 | 14 | 22 | ||||
| Pre-tax profit | (66) | 8 | (216) | (189) |
Underlying net revenues from the Corporate Center are down YoY in 4Q18 due to FVA (Funding Value Adjustment) and negative mark-to-market effect on listed financial participations.
Underlying expenses, excluding Coface and the SRF contribution are largely stable YoY in 2018 and up in 4Q18 due to digital and IT investments as well as costs related to strategic projects.
The P&L drag at the pre-tax profit level has been reduced by €16m in 2018 excl. SRF.
COFACE
The turnover reached €1.4bn in 2018, up +5% YoY[18], driven by record client activity (volume effect) and retention.
The cost ratio at 34.5% in 2018 is down -0.7pp YoY, reflecting tight cost control while sustaining investments.
The loss ratio at 45.1% in 2018 is down -6.3pp YoY, thanks to good claims performance in a riskier economic environment through strong underwriting.
The net combined ratio[19] at 79.6% in 2018 is down -7pp YoY. The 4Q18 combined ratio is below the "through the cycle target" (~83%).
Natixis has mandated today an investment service provider (Oddo BHF SCA) to proceed to the sale of 700,000 shares of Coface representing 0.45% of the capital and voting rights of the company. It is a purely technical sale with the sole objective to limit Natixis' accretion in Coface's capital following the cancellation of Coface's own shares. This sale comes after the cancellation of 3,348,971 treasury shares (acquired by Coface between February 2018 and October 2018) and in the context of an additional 1,867,312 treasury shares to be cancelled (acquired by Coface between October 2018 and February 2019). The mandate will be executed over the coming weeks. After such a sale, Natixis will remain Coface's reference shareholder with 41.69% of the capital.
Financial structure
Basel 3 fully-loaded[20]
Natixis' Basel 3 fully-loaded CET1 ratio worked out to 10.8% as at December 31, 2018.
- Basel 3 fully-loaded CET1 capital amounted to €11.8bn
- Basel 3 fully-loaded RWA amounted to €109.2bn
Based on a Basel 3 fully-loaded CET1 ratio of 10.6% as at December 31, 2017, the respective 2018 impacts were as follows:
- Effect of allocating net income (group share) to retained earnings in 2018: +142bps
- Accrued dividend for 2018: -85bps
- Impacts of disposals and acquisitions: -19bps
- IFRS9 impacts: -9bps
- RWA and other effects: -12bps
Pro-forma for the announced disposal of retail banking activities to BPCE SA (+236bps), the payment of a €1.5bn special dividend (-158bps), the acquisitions as announced in AWM (-29bps) as well as the irrevocable payment commitment deduction from capital (IPC) and the impact of IFRS16 implementation on RWAs (-16bps of aggregated impact), Natixis' Basel 3 fully-loaded CET1 ratio stands at 11.1% as at December 31, 2018.
Basel 3 phased-in, regulatory ratios1
As at December 31, 2018, Natixis' Basel 3 regulatory (phased-in) capital ratios stood at 10.4% for the CET1, 12.3% for the Tier 1 and 14.5% for the total solvency ratio.
- Core Tier 1 capital stood at €11.3bn and Tier 1 capital at €13.4bn
- Natixis' RWA totaled €109.2bn, breakdown as follows:
- Credit risk: €76.7bn
- Counterparty risk: €5.9bn
- CVA risk: €1.7bn
- Market risk: €9.6bn
- Operational risk: €15.3bn
Book value per share
Equity capital (group share) totaled €19.9bn as at December 31, 2018, of which €2.0bn in the form of hybrid securities (DSNs) recognized in equity capital at fair value (excluding capital gain following reclassification of hybrids).
Natixis' book value per share stood at €5.35 as at December 31, 2018 based on 3,146,571,614 shares excluding treasury shares (the total number of shares being 3,150,288,592). The tangible book value per share (after deducting goodwill and intangible assets) was €4.05.
Leverage ratio1
The leverage ratio worked out to 4.2% as at December 31, 2018.
Overall capital adequacy ratio
As at December 31, 2018, the financial conglomerate's excess capital was estimated at around €3.2bn. Before consideration of current financial year's earnings and dividend declared for 2018, the excess capital was estimated at around €2.6bn.
Appendices
Note on methodology:
The results at 31/12/2018 were examined by the board of directors at their meeting on 12/02/2019.
Figures at 31/12/2018 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.
In view of the new strategic plan New dimension, the 2017 quarterly series have been restated for the following changes in business lines organization and in standards for implementation in 4Q17 as if these changes had occurred on 1st January 2017.
The new businesses organization mainly considers:
- The split of Investment Solutions into two new divisions: Insurance and Asset & Wealth Management[21]
- Within CIB:
- Global finance and Investment banking[22] are now two separate business lines
- Creation of Global Securities & Financing (GSF), a joint-venture between FIC and Equity derivatives. The joint-venture includes Securities Financing Group (SFG, previously in FIC) and Equity Finance (previously in Equity). Revenues of GSF are equally split between Equity & FIC
- 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
- Within SFS, the Payments division is split out of Financial services and reported separately within the SFS business line
- The removal of the Financial investments division and its inclusion within the Corporate center
The following changes in standards have been included:
- Increase in capital allocation to our business lines from 10% to 10.5% of the average Basel 3 risk weighted assets
- Reduction in normative capital remuneration rate to 2% (compared to 3% previously)
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 based on 10.5% 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 2%.
Net book value: calculated by taking shareholders' equity group share (minus dividend declared but not paid yet), 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:
| €m | 31/12/2018 |
| Goodwill | 3,796 |
| Restatement for Coface minority interests | (160) |
| Restatement for AWM deferred tax liability & others | (305) |
| Restated goodwill | 3,331 |
| €m | 31/12/2018 |
| Intangible assets | 678 |
| Restatement for Coface minority interest & others | 101 |
| Restated intangible assets | 779 |
Own senior debt fair-value adjustment: calculated using a discounted cash-flow model, contract by contract, including parameters such as swap curves 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
Regulatory (phased-in) CET1 capital and ratio: based on CRR-CRD4 rules as reported on June 26, 2013, including the Danish compromise - phased in. Presentation excluding 2018 financial year's earnings and dividend declared (excluding 60% pay-out ratio accrual in 2Q18 and 3Q18)
Fully-loaded CET1 capital and ratio: based on CRR-CRD4 rules as reported on June 26, 2013, including the Danish compromise - without phase-in. Presentation including 2018 financial year's earnings and dividend declared
Leverage ratio: based on delegated act rules, without phase-in (presentation including 2018 financial year's earnings and dividend declared) 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 5. Figures and comments that are referred to as 'underlying' exclude such exceptional items. 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, the RoE and the RoTE excluding IFRIC 21 impact calculation in 4Q18 take into account a quarter of the annual duties and levies concerned by this 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
Natixis - Consolidated P&L
| €m | 1Q17 | 2Q17 | 3Q17 | 4Q17 | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 4Q18 vs. 4Q17 | 2017 | 2018 | 2018 vs. 2017 | ||||
| Net revenues | 2,347 | 2,410 | 2,205 | 2,506 | 2,412 | 2,577 | 2,376 | 2,251 | (10)% | 9,467 | 9,616 | 2% | ||||
| Expenses | (1,771) | (1,594) | (1,530) | (1,737) | (1,795) | (1,640) | (1,615) | (1,773) | 2% | (6,632) | (6,823) | 3% | ||||
| Gross operating income | 576 | 815 | 674 | 769 | 618 | 936 | 761 | 478 | (38)% | 2,835 | 2,793 | (1)% | ||||
| Provision for credit losses | (70) | (67) | (55) | (65) | (43) | (40) | (102) | (29) | (258) | (215) | ||||||
| Associates | 7 | 6 | 5 | 8 | 7 | 3 | 6 | 13 | 26 | 29 | ||||||
| Gain or loss on other assets | 9 | 18 | (1) | 22 | 6 | 4 | (1) | 45 | 48 | 54 | ||||||
| Change in value of goodwill | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
| Pre-tax profit | 523 | 772 | 623 | 733 | 587 | 903 | 665 | 507 | (31)% | 2,651 | 2,661 | 0% | ||||
| Tax | (214) | (255) | (181) | (139) | (204) | (266) | (184) | (128) | (789) | (781) | ||||||
| Minority interests | (28) | (29) | (59) | (76) | (60) | (57) | (59) | (127) | (192) | (304) | ||||||
| Net income (group share) | 280 | 487 | 383 | 518 | 323 | 580 | 422 | 252 | (51)% | 1,669 | 1,577 | (6)% |
Natixis - IFRS 9 Balance sheet
| Assets (in €bn) | 31/12/2018 | 01/01/2018 |
| Cash and balances with central banks | 24.3 | 36.9 |
| Financial assets at fair value through profit and loss[23] | 214.1 | 225.7 |
| Financial assets at fair value through Equity | 10.8 | 10.0 |
| Loans and receivables1 | 96.6 | 125.1 |
| Debt instruments at amortized cost | 1.2 | 1.0 |
| Insurance assets | 100.5 | 96.2 |
| Non-current assets held for sale | 25.6 | 0.7 |
| Accruals and other assets | 16.8 | 18.5 |
| Investments in associates | 0.7 | 0.7 |
| Tangible and intangible assets | 1.1 | 1.6 |
| Goodwill | 3.8 | 3.6 |
| Total | 495.5 | 520.0 |
| Liabilities and equity (in €bn) | 31/12/2018 | 01/01/2018 |
| Due to central banks | 0.0 | 0.0 |
| Financial liabilities at fair value through profit and loss1 | 208.2 | 221.3 |
| Customer deposits and deposits from financial institutions1 | 109.2 | 135.3 |
| Debt securities | 35.0 | 32.6 |
| Liabilities associated with non current assets held for sale | 9.7 | 0.0 |
| Accruals and other liabilities | 17.0 | 17.8 |
| Insurance liabilities | 89.5 | 86.5 |
| Contingency reserves | 1.7 | 1.9 |
| Subordinated debt | 4.0 | 3.7 |
| Equity attributable to equity holders of the parent | 19.9 | 19.7 |
| Minority interests | 1.3 | 1.2 |
| Total | 495.5 | 520.0 |
Natixis - 4Q18 P&L by business line
| €m | AWM | CIB | Insurance | SFS | Corporate | 4Q18 | |
| Center | reported | ||||||
| Net revenues | 1,005 | 512 | 201 | 373 | 160 | 2,251 | |
| Expenses | (622) | (558) | (118) | (260) | (216) | (1,773) | |
| Gross operating income | 384 | (46) | 83 | 113 | (56) | 478 | |
| Provision for credit losses | 0 | (11) | 0 | (6) | (12) | (29) | |
| Net operating income | 384 | (57) | 83 | 107 | (68) | 449 | |
| Associates and other items | 43 | 3 | 9 | 0 | 3 | 58 | |
| Pre-tax profit | 427 | (54) | 91 | 107 | (65) | 507 | |
| Tax | (128) | ||||||
| Minority interests | (127) | ||||||
| Net income (gs) | 252 | ||||||
Asset & Wealth Management
| €m | 1Q17 | 2Q17 | 3Q17 | 4Q17 | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 4Q18 vs. 4Q17 | 2017 | 2018 | 2018 vs. 2017 | |||
| Net revenues | 704 | 743 | 766 | 899 | 777 | 819 | 818 | 1,005 | 12% | 3,113 | 3,419 | 10% | |||
| Asset Management[24] | 671 | 713 | 730 | 857 | 739 | 782 | 782 | 971 | 13% | 2,972 | 3,274 | 10% | |||
| Wealth management | 33 | 30 | 36 | 42 | 37 | 37 | 36 | 34 | (19)% | 142 | 144 | 2% | |||
| Expenses | (519) | (521) | (528) | (610) | (529) | (549) | (564) | (622) | 2% | (2,178) | (2,264) | 4% | |||
| Gross operating income | 186 | 222 | 239 | 289 | 248 | 269 | 253 | 384 | 33% | 936 | 1,154 | 23% | |||
| Provision for credit losses | 0 | 0 | 0 | 0 | 0 | (1) | (1) | 0 | 0 | (1) | |||||
| Net operating income | 186 | 223 | 239 | 289 | 248 | 268 | 253 | 384 | 33% | 936 | 1,153 | 23% | |||
| Associates | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 2 | 1 | 3 | |||||
| Other items | 9 | 0 | (1) | 2 | 0 | (3) | (2) | 41 | 10 | 37 | |||||
| Pre-tax profit | 195 | 222 | 238 | 291 | 248 | 266 | 251 | 427 | 47% | 947 | 1,192 | 26% | |||
| Cost/Income ratio | 73.6% | 70.1% | 68.8% | 67.9% | 68.1% | 67.1% | 69.0% | 61.8% | 69.9% | 66.2% | |||||
| Cost/Income ratio excluding IFRIC 21 effect | 73.2% | 70.2% | 69.0% | 68.0% | 67.5% | 67.3% | 69.2% | 62.0% | 69.9% | 66.2% | |||||
| RWA (Basel 3 - in €bn) | 10.6 | 10.2 | 10.2 | 11.7 | 11.5 | 11.6 | 12.3 | 12.0 | 3% | 11.7 | 12.0 | 3% | |||
| Normative capital allocation (Basel 3) | 3,874 | 3,828 | 3,715 | 3,676 | 4,077 | 3,997 | 4,087 | 4,302 | 17% | 3,773 | 4,116 | 9% | |||
| RoE after tax (Basel 3)[25] | 11.3% | 12.5% | 13.5% | 14.0% | 13.7% | 15.2% | 13.9% | 19.5% | 12.8% | 15.6% | |||||
| RoE after tax (Basel 3) excluding IFRIC 21 effect2 | 11.5% | 12.4% | 13.4% | 13.9% | 14.0% | 15.1% | 13.8% | 19.4% | 12.8% | 15.6% |
Corporate & Investment Banking
| €m | 1Q17 | 2Q17 | 3Q17 | 4Q17 | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 4Q18 vs. 4Q17 | 2017 | 2018 | 2018 vs. 217 | |||
| Net revenues | 971 | 1,019 | 775 | 817 | 938 | 965 | 822 | 512 | (37)% | 3,581 | 3,237 | (10)% | |||
| Global markets | 603 | 547 | 363 | 408 | 528 | 457 | 335 | 11 | (97)% | 1,921 | 1,331 | (31)% | |||
| FIC-T | 388 | 389 | 253 | 288 | 378 | 299 | 252 | 229 | (20)% | 1,317 | 1,158 | (12)% | |||
| Equity | 179 | 172 | 103 | 144 | 148 | 145 | 97 | (220) | 599 | 170 | |||||
| o/w Equity excl. cash | 170 | 165 | 95 | 137 | 143 | 140 | 97 | (219) | 566 | 161 | |||||
| o/w Cash equity | 10 | 7 | 9 | 7 | 5 | 4 | 0 | 0 | 32 | 9 | |||||
| CVA/DVA desk | 35 | (13) | 7 | (24) | 1 | 13 | (15) | 2 | 5 | 2 | |||||
| Global finance | 312 | 343 | 315 | 358 | 334 | 382 | 335 | 360 | 0% | 1,328 | 1,411 | 6% | |||
| Investment banking[26] | 81 | 122 | 85 | 75 | 83 | 85 | 79 | 125 | 68% | 362 | 372 | 3% | |||
| Other | (25) | 7 | 12 | (24) | (7) | 41 | 74 | 16 | (30) | 123 | |||||
| Expenses | (566) | (555) | (506) | (567) | (563) | (549) | (523) | (558) | (2)% | (2,194) | (2,193) | 0% | |||
| Gross operating income | 404 | 464 | 269 | 249 | 375 | 417 | 299 | (46) | 1,387 | 1,045 | (25)% | ||||
| Provision for credit losses | (29) | (48) | (16) | (21) | (29) | (39) | (96) | (11) | (115) | (175) | |||||
| Net operating income | 375 | 416 | 253 | 228 | 346 | 378 | 203 | (57) | 1,272 | 870 | (32)% | ||||
| Associates | 3 | 3 | 3 | 3 | 4 | 3 | 3 | 3 | 10 | 12 | |||||
| Other items | 0 | 0 | 0 | 18 | 3 | 0 | 0 | 0 | 18 | 3 | |||||
| Pre-tax profit | 378 | 418 | 255 | 249 | 352 | 380 | 206 | (54) | 1,300 | 884 | (32)% | ||||
| Cost/Income ratio | 58.3% | 54.4% | 65.3% | 69.5% | 60.1% | 56.8% | 63.6% | 108.9% | 61.3% | 67.7% | |||||
| Cost/Income ratio excluding IFRIC 21 effect | 55.5% | 55.4% | 66.5% | 70.6% | 57.7% | 57.6% | 64.5% | 110.4% | 61.3% | 67.7% | |||||
| RWA (Basel 3 - in €bn) | 64.4 | 61.3 | 60.4 | 59.0 | 58.9 | 60.8 | 60.4 | 60.3 | 2% | 59.0 | 60.3 | 2% | |||
| Normative capital allocation (Basel 3) | 7,136 | 6,963 | 6,623 | 6,519 | 6,365 | 6,346 | 6,601 | 6,552 | 1% | 6,810 | 6,466 | (5)% | |||
| RoE after tax (Basel 3)[27] | 14.7% | 16.5% | 10.5% | 11.8% | 16.1% | 17.3% | 9.1% | NR | 13.5% | 9.9% | |||||
| RoE after tax (Basel 3) excluding IFRIC 21 effect2 | 15.7% | 16.1% | 10.2% | 11.4% | 17.2% | 17.0% | 8.8% | NR | 13.5% | 9.9% |
Insurance
| €m | 1Q17 | 2Q17 | 3Q17 | 4Q17 | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 4Q18 vs. 4Q17 | 2017 | 2018 | 2018 vs. 9M17 | |||
| Net revenues | 189 | 179 | 176 | 190 | 204 | 193 | 192 | 201 | 6% | 734 | 790 | 8% | |||
| Expenses | (129) | (102) | (99) | (109) | (118) | (108) | (103) | (118) | 8% | (439) | (448) | 2% | |||
| Gross operating income | 60 | 77 | 77 | 80 | 86 | 85 | 89 | 83 | 3% | 295 | 342 | 16% | |||
| Provision for credit losses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Net operating income | 60 | 77 | 77 | 80 | 86 | 85 | 89 | 83 | 3% | 295 | 342 | 16% | |||
| Associates | 4 | 3 | 2 | 4 | 3 | 0 | 3 | 9 | 13 | 15 | |||||
| Other items | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Pre-tax profit | 65 | 80 | 79 | 85 | 89 | 85 | 92 | 91 | 8% | 308 | 356 | 16% | |||
| Cost/Income ratio | 68.1% | 56.9% | 56.2% | 57.5% | 58.0% | 56.1% | 53.8% | 58.9% | 59.8% | 56.7% | |||||
| Cost/Income ratio excluding IFRIC 21 effect | 54.9% | 61.5% | 60.9% | 61.9% | 51.1% | 58.5% | 56.2% | 61.2% | 59.8% | 56.7% | |||||
| RWA (Basel 3 - in €bn) | 7.4 | 7.2 | 7.4 | 7.2 | 7.3 | 7.0 | 7.1 | 7.3 | 1% | 7.2 | 7.3 | 1% | |||
| Normative capital allocation (Basel 3) | 857 | 871 | 849 | 875 | 853 | 868 | 828 | 841 | (4)% | 863 | 848 | (2)% | |||
| RoE after tax (Basel 3)[28] | 17.7% | 21.6% | 22.3% | 26.7% | 28.6% | 26.4% | 30.3% | 30.7% | 22.1% | 29.0% | |||||
| RoE after tax (Basel 3) excluding IFRIC 21 effect1 | 25.6% | 19.0% | 19.6% | 24.2% | 33.0% | 24.9% | 28.8% | 29.2% | 22.1% | 29.0% |
Specialized Financial Services
| €m | 1Q17 | 2Q17 | 3Q17 | 4Q17 | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 4Q18 vs. 4Q17 | 2017 | 2018 | 2018 vs. 2017 | |||
| Net revenues | 344 | 347 | 341 | 350 | 362 | 371 | 366 | 373 | 7% | 1,382 | 1,472 | 6% | |||
| Specialized Financing | 219 | 218 | 215 | 210 | 223 | 230 | 225 | 217 | 3% | 862 | 894 | 4% | |||
| Factoring | 39 | 39 | 38 | 42 | 40 | 40 | 39 | 41 | (2)% | 158 | 160 | 1% | |||
| Sureties & Financial Guarantees | 55 | 46 | 52 | 47 | 54 | 50 | 51 | 50 | 8% | 200 | 205 | 3% | |||
| Leasing | 54 | 61 | 52 | 49 | 57 | 61 | 63 | 56 | 15% | 216 | 237 | 10% | |||
| Consumer Financing | 66 | 65 | 67 | 67 | 67 | 67 | 67 | 65 | (4)% | 265 | 265 | 0% | |||
| Film Industry Financing | 5 | 6 | 5 | 6 | 6 | 11 | 6 | 5 | (15)% | 23 | 27 | 19% | |||
| Payments | 81 | 83 | 83 | 89 | 93 | 95 | 96 | 105 | 18% | 336 | 389 | 16% | |||
| Financial Services | 44 | 46 | 43 | 51 | 46 | 46 | 45 | 51 | 1% | 184 | 188 | 2% | |||
| Employee savings plans | 21 | 22 | 21 | 26 | 23 | 23 | 23 | 26 | 0% | 91 | 95 | 4% | |||
| Securities Services | 23 | 23 | 22 | 25 | 23 | 23 | 22 | 25 | 2% | 93 | 93 | 1% | |||
| Expenses | (233) | (228) | (229) | (249) | (245) | (250) | (248) | (260) | 4% | (939) | (1,004) | 7% | |||
| Gross operating income | 112 | 118 | 112 | 101 | 117 | 121 | 117 | 113 | 12% | 443 | 468 | 6% | |||
| Provision for credit losses | (21) | (14) | (13) | (24) | (9) | 3 | (11) | (6) | (75)% | (73) | (23) | (68)% | |||
| Net operating income | 90 | 104 | 99 | 77 | 108 | 123 | 107 | 107 | 39% | 371 | 445 | 20% | |||
| Associates | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||
| Other items | 0 | 0 | 0 | 0 | 0 | 1 | 0 | 0 | (0) | 1 | |||||
| Pre-tax profit | 90 | 104 | 99 | 77 | 108 | 124 | 106 | 107 | 40% | 371 | 445 | 20% | |||
| Cost/Income ratio | 67.6% | 65.8% | 67.1% | 71.2% | 67.7% | 67.4% | 67.9% | 69.7% | 67.9% | 68.2% | |||||
| Cost/Income ratio excluding IFRIC 21 effect | 65.6% | 66.5% | 67.7% | 71.8% | 65.9% | 68.0% | 68.5% | 70.3% | 67.9% | 68.2% | |||||
| RWA (Basel 3 - in €bn) | 15.2 | 16.0 | 15.7 | 16.7 | 17.5 | 15.8 | 15.7 | 16.2 | (3)% | 16.7 | 16.2 | (3)% | |||
| Normative capital allocation (Basel 3) | 1,961 | 1,889 | 1,907 | 1,958 | 2,145 | 2,232 | 2,084 | 2,072 | 6% | 1,929 | 2,133 | 11% | |||
| RoE after tax (Basel 3)[29] | 12.6% | 15.1% | 14.0% | 10.7% | 13.5% | 14.9% | 13.7% | 14.0% | 13.0% | 14.0% | |||||
| RoE after tax (Basel 3) excluding IFRIC 21 effect1 | 13.6% | 14.7% | 13.6% | 10.3% | 14.4% | 14.6% | 13.4% | 13.6% | 13.0% | 14.0% |
Corporate Center
| €m | 1Q17 | 2Q17 | 3Q17 | 4Q17 | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 4Q18 vs. 4Q17 | 2017 | 2018 | 2018 vs. 2017 | |||
| Net revenues | 138 | 122 | 146 | 251 | 131 | 229 | 179 | 160 | (36)% | 657 | 699 | 6% | |||
| Coface | 137 | 152 | 167 | 167 | 177 | 156 | 180 | 165 | (1)% | 624 | 678 | 9% | |||
| Others | 1 | (30) | (21) | 84 | (45) | 73 | (1) | (5) | 33 | 21 | |||||
| Expenses | (324) | (189) | (169) | (201) | (339) | (184) | (176) | (216) | 7% | (883) | (915) | 4% | |||
| Coface | (122) | (128) | (119) | (114) | (122) | (116) | (122) | (128) | 12% | (484) | (488) | 1% | |||
| SRF | (128) | 6 | 0 | 1 | (162) | (1) | 0 | 0 | (121) | (164) | 35% | ||||
| Others | (74) | (66) | (50) | (88) | (54) | (67) | (53) | (88) | 0% | (278) | (263) | (6)% | |||
| Gross operating income | (186) | (67) | (23) | 50 | (208) | 45 | 3 | (56) | (226) | (215) | (5)% | ||||
| Provision for credit losses | (20) | (5) | (26) | (20) | (5) | (3) | 5 | (12) | (71) | (15) | |||||
| Net operating income | (206) | (72) | (49) | 30 | (213) | 42 | 8 | (68) | (297) | (231) | (22)% | ||||
| Associates | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1 | 0 | |||||
| Other items | 1 | 18 | 0 | 2 | 3 | 6 | 2 | 3 | 20 | 14 | |||||
| Pre-tax profit | (205) | (54) | (49) | 32 | (209) | 48 | 10 | (65) | (275) | (216) | (21)% |
4Q18 results: from data excluding non-operating items to reported data
| €m | 4Q18 Underlying | Exchange rate fluctuations on DSN in currencies | Transformation & Business Efficiency investment costs | Fit to Win investments & restructuring expenses | 4Q18 Reported | ||||
| Net revenues | 2,235 | 16 | 2,251 | ||||||
| Expenses | (1,742) | (28) | (3) | (1,773) | |||||
| Gross operating income | 493 | 16 | (28) | (3) | 478 | ||||
| Provision for credit losses | (29) | (29) | |||||||
| Associates | 13 | 13 | |||||||
| Gain or loss on other assets | 45 | 45 | |||||||
| Pre-tax profit | 522 | 16 | (28) | (3) | 507 | ||||
| Tax | (133) | (3) | 7 | 1 | (128) | ||||
| Minority interests | (128) | 1 | (127) | ||||||
| Net income (group share) | 261 | 13 | (21) | (1) | 252 | ||||
2018 results: from data excluding non-operating items to reported data
| €m | 2018 Underlying | Exchange rate fluctuations on DSN in currencies | Transformation & Business Efficiency investment costs | Fit to Win investments & restructuring expenses | SWL provision reversal | Legal provision | 2018 Reported | ||||
| Net revenues | 9,500 | 48 | 68 | 9,616 | |||||||
| Expenses | (6,731) | (89) | (3) | (6,823) | |||||||
| Gross operating income | 2,769 | 48 | (89) | (3) | 68 | 2,793 | |||||
| Provision for credit losses | (143) | (71) | (215) | ||||||||
| Associates | 29 | 29 | |||||||||
| Gain or loss on other assets | 54 | 54 | |||||||||
| Pre-tax profit | 2,709 | 48 | (89) | (3) | 68 | (71) | 2,661 | ||||
| Tax | (797) | (14) | 28 | 1 | (19) | 20 | (781) | ||||
| Minority interests | (305) | 1 | (304) | ||||||||
| Net income (group share) | 1,607 | 34 | (61) | (1) | 50 | (52) | 1,577 | ||||
Regulatory capital in 4Q18 & financial structure - Basel 3 phased-in[30], €bn
As of 2Q18, regulatory reporting excluding current financial year's earnings and accrued/declared dividend - See note on methodology
| Shareholder's equity group share | 19.9 |
| Current financial year's earnings | (1.6) |
| Goodwill & intangibles | (3.9) |
| Other deductions | (1.0) |
| Hybrids restatement in Tier 1[31] | (2.1) |
| CET1 Capital | 11.3 |
| Additional T1 | 2.1 |
| Tier 1 Capital | 13.4 |
| Tier 2 Capital | 2.4 |
| Total prudential capital | 15.8 |
| 1Q17 | 2Q17 | 3Q17 | 4Q17 | 1Q18 | 1Q18 Pro forma | 2Q18 | 3Q18 | 4Q18 | |
| CET1 ratio | 10.9% | 11.2% | 11.4% | 10.8% | 10.8% | 10.7% | 10.6% | 10.4% | 10.4% |
| Tier 1 ratio | 12.8% | 13.1% | 13.1% | 12.9% | 12.7% | 12.5% | 12.5% | 12.4% | 12.3% |
| Solvency ratio | 15.1% | 15.4% | 15.3% | 14.9% | 14.8% | 14.6% | 14.5% | 14.3% | 14.5% |
| Tier 1 capital | 14.6 | 14.7 | 14.6 | 14.3 | 13.9 | 13.7 | 13.7 | 13.6 | 13.4 |
| RWA EoP | 114.1 | 112.6 | 111.7 | 110.7 | 109.5 | 109.5 | 110.1 | 109.6 | 109.2 |
IFRIC 21 effects by business line
| €m | 1Q17 | 2Q17 | 3Q17 | 4Q17 | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 2017 | 2018 | ||||||||||||
| AWM | (3) | 1 | 1 | 1 | (4) | 1 | 1 | 1 | 0 | 0 | ||||||||||||
| CIB | (28) | 9 | 9 | 9 | (22) | 7 | 7 | 7 | 0 | 0 | ||||||||||||
| Insurance | (25)[32] | 8[33] | 84 | 84 | (14) | 5 | 5 | 5 | 0 | 0 | ||||||||||||
| SFS | (6) | 2 | 2 | 2 | (6) | 2 | 2 | 2 | 0 | 0 | ||||||||||||
| Corporate center | (94) | 34 | 30 | 30 | (119) | 40 | 40 | 40 | 0 | 0 | ||||||||||||
| Total Natixis | (156) | 55 | 50 | 50 | (166) | 55 | 55 | 55 | 0 | 0 | ||||||||||||
| | ||||||||||||||||||||||
| €m | 1Q17 | 2Q17 | 3Q17 | 4Q17 | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 2017 | 2018 | ||||||||||||
| SFS (Leasing) | (1) | 0 | 0 | 0 | (1) | 0 | 0 | 0 | 0 | 0 | ||||||||||||
| Total Natixis | (1) | 0 | 0 | 0 | (1) | 0 | 0 | 0 | 0 | 0 | ||||||||||||
Normative capital allocation and RWA breakdown - 31/12/2018
| €bn | RWA EoP | % of total | Goodwill & intangibles 2018 | Capital allocation 2018 | RoE after tax 2018 |
| AWM | 12.0 | 13% | 2.9 | 4.1 | 15.6% |
| CIB | 60.3 | 63% | 0.2 | 6.5 | 9.9% |
| Insurance | 7.3 | 8% | 0.1 | 0.8 | 29.0% |
| SFS | 16.2 | 17% | 0.4 | 2.1 | 14.0% |
| Total (excl. Corporate center) | 95.8 | 100% | 3.6 | 13.6 |
| RWA breakdown (€bn) | 31/12/2018 |
| Credit risk | 76.7 |
| Internal approach | 55.7 |
| Standard approach | 21.0 |
| Counterparty risk | 5.9 |
| Internal approach | 5.0 |
| Standard approach | 0.9 |
| Market risk | 9.6 |
| Internal approach | 4.4 |
| Standard approach | 5.2 |
| CVA | 1.7 |
| Operational risk - Standard approach | 15.3 |
| Total RWA | 109.2 |
Fully-loaded leverage ratio[34]
According to the rules of the Delegated Act published by the European Commission on October 10, 2014, including the effect of intragroup cancelation - pending ECB authorization
| €bn | 31/12/2018 |
| Tier 1 capital1 | 13.9 |
| Total prudential balance sheet | 394.6 |
| Adjustment on derivatives | (40.0) |
| Adjustment on repos[35] | (31.5) |
| Other exposures to affiliates | (22.1) |
| Off balance sheet commitments | 38.1 |
| Regulatory adjustments | (5.1) |
| Total leverage exposures | 334.0 |
| Leverage ratio | 4.2% |
Net book value as at December 31, 2018
| €bn | 31/12/2018 |
| Shareholders' equity (group share) | 19.9 |
| Deduction of hybrid capital instruments | (2.0) |
| Deduction of gain on hybrid instruments | (0.1) |
| Distribution | (0.9) |
| Net book value | 16.8 |
| Restated intangible assets[36] | 0.8 |
| Restated goodwill1 | 3.3 |
| Net tangible book value[37] | 12.7 |
| € | |
| Net book value per share | 5.35 |
| Net tangible book value per share | 4.05 |
2018 Earnings per share
| €m | 31/12/2018 |
| Net income (gs) | 1,577 |
| DSN interest expenses on preferred shares after tax | (97) |
| Net income attributable to shareholders | 1,480 |
| Earnings per share (€) | 0.47 |
Number of shares as at December 31, 2018
| 31/12/2018 | |
| Average number of shares over the period, excluding treasury shares | 3,141,934,648 |
| Number of shares, excluding treasury shares, EoP | 3,146,571,614 |
| Number of treasury shares, EoP | 3,716,978 |
| Net income attributable to shareholders | |||||
| €m | 4Q18 | 2018 | |||
| Net income (gs) | 252 | 1,577 | |||
| DSN interest expenses on preferred shares after tax | (24) | (97) | |||
| RoE & RoTE numerator | 228 | 1,480 | |||
| Natixis RoTE[38] | ||
| €m | 31/12/2018 | |
| Shareholders' equity (group share) | 19,916 | |
| DSN deduction | (2,122) | |
| Dividend provision | (944) | |
| Intangible assets | (779) | |
| Goodwill | (3,331) | |
| RoTE Equity end of period | 12,740 | |
| Average RoTE equity (4Q18) | 12,701 | |
| 4Q18 RoTE annualized | 7.2% | |
| Average RoTE equity (2018) | 12,565 | |
| 2018 RoTE annualized | 11.8% | |
| Natixis RoE1 | ||
| €m | 31/12/2018 | |
| Shareholders' equity (group share) | 19,916 | |
| DSN deduction | (2,122) | |
| Dividend provision | (944) | |
| Exclusion of unrealized or deferred gains and losses recognized in equity (OCI) | (240) | |
| RoE Equity end of period | 16,610 | |
| Average RoE equity (4Q18) | 16,503 | |
| 4Q18 RoE annualized | 5.5% | |
| Average RoE equity (2018) | 16,145 | |
| 2018 RoE annualized | 9.2% | |
Doubtful loans[39]
| €bn | 31/12/2017 Pro forma IFRS9 | 31/12/2018 Under IFRS9 |
| Provisionable commitments[40] | 2.7 | 2.3 |
| Provisionable commitments / Gross debt | 2.2% | 2.0% |
| Stock of provisions[41] | 2.0 | 1.8 |
| Stock of provisions / Provisionable commitments | 73% | 78% |
Disclaimer
This media release may contain objectives and comments relating to the objectives and strategy of Natixis. Any such objectives inherently depend on assumptions, project considerations, objectives and expectations linked to future and uncertain events, transactions, products and services as well as suppositions regarding future performances and synergies.
No Insurance can be given that such objectives will be realized. They are subject to inherent risks and uncertainties, and are based on assumptions relating to Natixis, its subsidiaries and associates, and the business development thereof; trends in the sector; future acquisitions and investments; macroeconomic conditions and conditions in Natixis' principal local markets; competition and regulation. Occurrence of such events is not certain, and outcomes may prove different from current expectations, significantly affecting expected results. Actual results may differ significantly from those implied by such objectives.
Information in this media release relating to parties other than Natixis or taken from external sources has not been subject to independent verification, and Natixis makes no warranty as to the accuracy, fairness, precision or completeness of the information or opinions herein. Neither Natixis nor its representatives shall be liable for any errors or omissions, or for any prejudice resulting from the use of this media release, its contents or any document or information referred to herein.
Included data in this press release have not been audited.
NATIXIS financial disclosures for the fourth quarter 2018 are contained in this press release and in the presentation attached herewith, available online at www.natixis.com in the "Investors & shareholders" section.
The conference call to discuss the results, scheduled for February 13th, 2019 at 9:00 a.m. CET, will be webcast live on www.natixis.com (on the "Investors & shareholders" page).
Contacts:
| Investor Relations: | investorelations@natixis.com | Press Relations: | relationspresse@natixis.com | ||
| Damien Souchet | T + 33 1 58 55 41 10 | Daniel Wilson | T + 33 1 58 19 10 40 | ||
| Souad Ed Diaz Noemie Louvel | T + 33 1 58 32 68 11 T + 33 1 78 40 37 87 | Sonia Dilouya Vanessa Stephan | T + 33 1 58 32 01 03 T + 33 1 58 19 34 16 | ||
[1] Proposal of a 0.30€ ordinary dividend per share submitted to the approval of the Annual General Meeting on May 28, 2019. Special dividend of €1.5bn or 0.48€ per share subject to the closing of the disposal of retail banking activities to BPCE SA and regulatory approvals
[2] Excluding exceptional items
3 Cf. December 18, 2018 press release: €(259)m non-recurring impact on Asian equity derivatives (net of tax for adjusted RoE and RoTE)
4 See note on methodology
[5] Cf. December 18, 2018 press release: €(259)m non-recurring impact on Asian equity derivatives (net of tax for adjusted RoE and RoTE)
[6] See note on methodology and excluding IFRIC 21 impact for the calculation of the cost/income ratio and the RoE
[7] Cf. December 18,2018 press release: €(259)m non-recurring impact on Asian equity derivatives (net of tax for adjusted RoE and RoTE)
[8] See note on methodology
[9] See note on methodology and excluding IFRIC 21 impact for the calculation of the cost/income ratio and the RoE at 4Q
[10] Including a scope effect of €(5.7)bn due to the closing of the disposal of Selection 1818 in 4Q18
[11] See note on methodology and excluding IFRIC 21 impact for the calculation of the cost/income ratio and the RoE in 4Q
[12] Cf. December 18,2018 press release: €(259)m non-recurring impact on Asian equity derivatives (net of tax for adjusted RoE and RoTE)
[13] ENR, Real Assets, ASF
[14] See note on methodology and excluding IFRIC 21 impact for the calculation of the cost/income ratio and the RoE in 4Q
[15] Excluding reinsurance agreement with CNP
[16] Source: FFA
[17] See note on methodology and excluding IFRIC 21 impact for the calculation of the cost/income ratio and the RoE in 4Q
[18] At constant scope and exchange rate
[19] Reported ratios, net of reinsurance
[20] See note on methodology
[21] Asset management includes Private equity
[22] including M&A business
[23] Including deposit and margin call
[24] Asset management including Private equity
[25] Normative capital allocation methodology based on 10.5% of the average RWA - including goodwill and intangibles
[26] Including M&A
[27] Normative capital allocation methodology based on 10.5% of the average RWA - including goodwill and intangibles
[28] Normative capital allocation methodology based on 10.5% of the average RWA - including goodwill and intangibles
[29] Normative capital allocation methodology based on 10.5% of the average RWA - including goodwill and intangibles
[30] See note on methodology
[31] Including capital gain following reclassification of hybrids as equity instruments
[32] €(10.9)m in underlying expenses and -€14.1m in exceptional expenses linked to the additional Corporate Social Solidarity Contribution resulting from agreement with CNP
[33] €3.6m in underlying expenses and €4.7m in exceptional expenses linked to the additional Corporate Social Solidarity Contribution resulting from agreement with CNP
[34] See note on methodology. Without phase-in - supposing replacement of existing subordinated issuances when they become ineligible
[35] Repos with clearing houses cleared according to IAS32 standard, without maturity or currency criteria
[36] See note on methodology
[37] Net tangible book value = Book value - goodwill - intangible assets
[38] See note on methodology
[39] On-balance sheet, excluding repos, net of collateral
[40] Net commitments include properties that are underlying leasing contracts and for which Natixis is the owner as well as factored loans for which the chargeable counterparties are not in default
[41] Specific and portfolio-based provisions
Attachment
