Natixis: Third Quarter 2019 Results

Published

Paris, November 7, 2019

3Q19 resultsDelivering growth across the board, robustness reinforcedReported net revenues up +6% YoY in 3Q19 and +7% underlying1Reported net income at €415m in 3Q19 vs. €358m in 3Q18, +16% YoYLow sensitivity to the rate environment with only 8% of revenues coming from Net Interest Income in 9M19

BUSINESSES WELL DIVERSIFIED AND ALL GROWING IN THE THIRD QUARTER3Q19 UNDERLYING NET REVENUES1 AT €2.2BN, UP +7% YOY

AWM: Strong growth in net revenues

Strength of our active asset management model focused on alpha generation with underlying net revenues1 up +12%YoY in 3Q19 (+7% in 9M19) in part driven by high levels of performance fees that reached €192m this quarter (€362m in 9M19). Revenue growth in line with cost growth at constant exchange rate in both 3Q19 and 9M19

Average fee rate in line with New Dimension target at ~30bps in 9M19 despite a negative mix effect in 3Q19

Strong AuM growth of +3% over the quarter to reach €921bn despite modest outflows on LT products (~€4bn), notably in North America, in part offset by positive net inflows in Europe and the success of affiliates such as Mirova on ESG

CIB: Strong positive jaws effect thanks to growing revenues and cost control

Underlying net revenues1 up +3% YoY in 3Q19 primarily driven by Global finance (+8% YoY). Growth of Global markets activities (+3% YoY) and of our Green & Sustainable Hub. Leading innovation in sustainable finance with the roll-out of Natixis’ Green Weighting Factor initiative

Costs under control, down at constant exchange rate by -2% YoY in 3Q19 and -3% in 9M19

Cost of risk increasing vs. 3Q18 (decreasing vs. 2Q19)

Insurance: Continued growth momentum

Underlying net revenues1 up +7% YoY with a positive jaws effect both in 3Q19 and 9M19

Underlying RoE1 ~30% in 9M19, largely in line with the target set for New Dimension by 2020

Payments: Continued growth with positive jaws

Underlying net revenues1 up +9% YoY in 9M19 with a positive jaws effect both in 3Q19 and 9M19

Increase in business volumes from Dalenys & PayPlug, up more than +20%

SUSTAINABLE VALUE CREATION AND FINANCIAL STRENGTH

Organic capital creation of ~30bps in 3Q19 and ~100bps in 9M19. Basel 3 FL CET1 ratio2 at 11.5% as at September 30, 2019, well above our 2020 target

Underlying net income1 at €400m in 3Q19 and €955m in 9M19

Underlying RoTE1 at 9.5% in 3Q19 and 10.2% in 9M19 considering a normalized cost of risk of ~30bps

REINFORCING ROBUSTNESS THROUGH SEVERAL MEASURES

Focus on the development and the reinforcement of existing expertise rather than on potential acquisitions while maintaining Natixis’ dividend policy. This translates into the reinforcement of the 2020 Basel 3 FL CET1 ratio target2 from 11% to 11.2% (see page 3)

Reinforcement of Natixis Investment Managers’ multi-boutique model with various initiatives aimed at strengthening governance and risk controls (see page 3)

Evolution to Natixis’ governing bodies (see ad hoc press release) and implementation of transversal organizational projects

Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See page 14 for the reconciliation of the restated figures with the accounting view [1] Excluding exceptional items. Excluding exceptional items and excluding IFRIC 21 for cost/income, RoE and RoTE (see note on methodology) 2 See note on methodology

In the third quarter of 2019 our revenues grew in line with or faster than our costs in each of our businesses demonstrating our agility and the flexibility of our cost base as well as the relevance of our business model. Natixis is only lightly exposed to the low interest rate environment - net interest income represented only 8% of our revenues in the first nine months of 2019 - result of our asset light strategy and a major advantage in the current context. Having profoundly transformed our businesses, and facing a fast evolution in the environment, we have chosen to further strengthen our robustness, having notably announced today a series of measures to support this objective. We meanwhile remain focused on implementing our strategic plan New Dimension, which is proving itself to be highly suited to the current environment”.François Riahi, Natixis Chief Executive Officer 3Q19 RESULTS

On November 7, 2019, the Board of Directors examined Natixis’ third quarter 2019 results.

€m   3Q19 reported 3Q18 restated   3Q19 o/w underlying 3Q18 o/w underlying   3Q19 vs. 3Q18 restated   3Q19 vs. 3Q18 underlying
Net revenues   2,280 2,156   2,234 2,083   6%   7%
o/w businesses   2,037 1,956   2,037 1,887   4%   8%
Expenses   (1,590) (1,499)   (1,568) (1,473)   6%   6%
Gross operating income   689 658   666 610   5%   9%
Provision for credit losses   (71) (93)   (71) (22)        
Net operating income   618 565   595 588   9%   1%
Associates and other items   12 6   12 6        
Pre-tax profit   630 570   607 594   10%   2%
Income tax   (126) (154)   (119) (162)        
Minority interests   (88) (59)   (89) (59)        
Net income - group share   415 358   400 373   16%   7%

Natixis’ underlying net revenues are up +8% YoY across the businesses with AWM up +12% YoY (mainly driven by performance fees), Payments up +8% YoY, Insurance up +7% YoY and CIB up +3% YoY.

Underlying expenses are up +6% YoY reflecting solid revenue growth across the businesses, mainly in Asset management due to the flexible structure of the cost base. Investments (e.g. strategic projects, support functions) keep on being made while maintaining a tight cost control (e.g. CIB expenses down YoY despite top-line growth). Positive or neutral jaw effect across all business lines at constant exchange rate and cost/income ratio improvement. The underlying cost/income ratio1 is at 72.6%, down -70bps vs. 3Q18.

The underlying loan loss provisioning decreased QoQ although up YoY on a very low basis, above its normalized level. Expressed in basis points of loans outstanding (excluding credit institutions), the businesses’ underlying cost of risk worked out to 41bps in 3Q19 (32bps on a 12-month rolling basis) vs. ~30bps normalized.

Net income (group share), adjusted for IFRIC 21 and excluding exceptional items reached €353m in 3Q19. Accounting for exceptional items (+€15m net of tax in 3Q19), and IFRIC 21 impact (+€47m in 3Q19) the reported net income (group share) in 3Q19 is at €415m.

Businesses’ underlying RoE1 reached 11.6% in 3Q19.

Natixis’ underlying RoTE1 reached 9.5% in 3Q19 excl. IFRIC 21.

Reinforcement of the 2020 Basel 3 CET1 FL ratio target (see note on methodology) to 11.2% i.e. a +20bps increase vs. previous target of 11.0%:

  • decrease in Natixis’ 2018-2020 M&A budget from ~€1bn to ~€0.8bn (of which ~€0.5bn already invested) with a focus on existing perimeter in the current environment;
  • dividend policy unchanged with a minimum 60% pay-out ratio and distribution of excess capital;
  • increased robustness in the context of regulatory changes to materialize over the years to come, allowing Natixis to ensure sustainable value creation

                  Enhanced governance and control framework at Natixis Investment managers: In addition to previously announced appointment of newly-created position of COO, internal review leading to a number of initiatives including:

  • split of Natixis IM risk and compliance functions;
  • creation of NIM Head of Risk role separate from NIM Head of Compliance and with all affiliates to have a named CRO in addition to a named CCO;
  • risk monitoring framework to evolve for a more comprehensive view into current/evolving risks at the level of each affiliate

1 See note on methodology. Excluding exceptional items and excluding IFRIC 21 9M19 RESULTS1

€m   9M19 restated 9M18 restated   9M19 o/w underlying 9M18 o/w underlying   9M19 vs. 9M18 restated   9M19 vs. 9M18 underlying
Net revenues   6,693 6,709   6,644 6,608   (0)%   1%
o/w businesses   6,030 6,102   6,030 6,034   (1)%   (0)%
Expenses   (4,887) (4,701)   (4,837) (4,646)   4%   4%
Gross operating income   1,806 2,008   1,807 1,962   (10)%   (8)%
Provision for credit losses   (213) (170)   (213) (99)        
Net operating income   1,594 1,838   1,594 1,864   (13)%   (14)%
Associates and other items   704 25   22 25        
Pre-tax profit   2,298 1,863   1,616 1,889   23%   (14)%
Income tax   (505) (562)   (427) (571)        
Minority interests   (267) (176)   (234) (176)        
Net income - group share   1,526 1,125   955 1,141   36%   (16)%

Natixis’ underlying net revenues are higher vs. 9M18 for the vast majority of the businesses with Payments up +9% YoY, AWM up +7% YoY, Insurance up +7% YoY and IB/M&A up +2% YoY. 9M19 revenue evolution to be put in the context of a historically high 1H18, particularly 1Q18 for Global markets and 2Q18 for Global finance; these two activities featuring growth in 3Q19.

Underlying expenses are well under control and up +2% YoY at constant exchange rate reflecting solid revenue growth across most businesses, investments being made (e.g. strategic projects, support functions) and the increase in the SRF contribution. CIB costs down -3% YoY at constant exchange rate. The underlying cost/income ratio2 is at 72.0%, up +250bps vs. 9M18.

The underlying loan loss provisioning increased vs. a low 9M18 due to a large single file impact in 2Q19. Expressed in basis points of loans outstanding (excluding credit institutions), the businesses’ underlying cost of risk worked out to 43bps in 9M19.

Underlying tax rate at ~27% in 9M19. YoY increase in minority interests mainly due to a higher performance from some European AM affiliates.

Net income (group share), adjusted for IFRIC 21 and excluding exceptional items reached €1,002m in 9M19. Accounting for exceptional items (+€571m net of tax in 9M19) and IFRIC 21 impact (-€47m in 9M19), the reported net income (group share) in 9M19 is at €1,526m.

Businesses’ underlying RoE2 reached 12.2% in 9M19.

Natixis’ underlying RoTE2 reached 9.8% in 9M19 excl. IFRIC 21 and 10.2% with a normalized cost of risk3.

1 Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See page 14 for the reconciliation of the restated figures with the accounting view 2 See note on methodology. Excluding exceptional items and excluding IFRIC 21 3 Normalizing the 9M19 cost of risk at 30bps

3Q19 & 9M19 RESULTSExceptional items

€m   3Q19 3Q18   9M19 9M18
Exchange rate fluctuations on DSN in currencies (Net revenues) Corporate center 46 5   50 32
SWL provision reversal (Net revenues) CIB 0 68   (0) 68
Transformation & Business Efficiency Investment costs (Expenses) Business lines &Corporate center (22) (25)   (48) (55)
Fit to Win investments & restructuring expenses (Expenses) Corporate center (1) (1)   (2) 0
Legal provision (Provision for credit losses) CIB 0 (71)   0 (71)
Disposal of subsidiary in Brazil (Gain or loss on other assets) CIB 0 0   (15) 0
Capital gain - Disposal retail banking activities (Gain/loss on other assets) Corporate center 0 0   697 0
Total impact on income tax   (8) 8   (78) 9
Total impact on minority interests   0 0   (33) (0)
Total impact on net income (gs)   15 (15)   571 (17)

€586m positive net impact from the disposal of the retail banking activities in 1Q19: €697m capital gain minus €78m income tax minus €33m minority interests

TRANSFORMATION & BUSINESS EFFICIENCY

Investment costs by reporting line

€m 3Q19 3Q18   9M19 9M18
AWM (2) (11)   (7) (12)
CIB (9) (4)   (15) (9)
Insurance (2) 1   (4) (0)
Payments (2) 1   (2) (0)
Financial Investments 0 0   0 0
Corporate center (7) (11)   (20) (34)
Impact on expenses (22) (25)   (48) (55)

 

Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p5)

Asset & Wealth Management

€m   3Q19 3Q18 3Q19 vs. 3Q18   9M19 9M18 9M19 vs. 9M18 9M19 vs. 9M18 constant FX
Net revenues   945 841 12%   2,651 2,482 7% 3%
  o/w Asset Management1   908 805 13%   2,550 2,372 8% 4%
  o/w Wealth management   37 36 3%   100 110 (9)% (9)%
Expenses   (646) (573) 13%   (1,804) (1,688) 7% 3%
Gross operating income   299 268 12%   846 793 7% 3%
Provision for credit losses   (8) (1)     (10) (2)    
Associates and other items   8 (1)     4 (4)    
Pre-tax profit   298 266 12%   840 787 7%  
Cost/income ratio2   68.5% 68.3% +0.2pp   68.0% 68.0% -0.0pp  
RoE after tax2   13.4% 14.6% -1.2pp   13.5% 14.6% -1.1pp  

Underlying net revenues from Asset & Wealth Management (AWM) are up +12% YoY in 3Q19 (+10% at constant exchange rate), illustrating the resilience of our multi-boutique model focused on alpha generation. Asset management (excl. Employee savings plan) underlying net revenues, including performance fees, are up +9% YoY in North America (€450m) and up +26% in Europe (€303m) in 3Q19 (+1% at €1,222m and +20% at €837m in 9M19 for North America and Europe respectively). Wealth management net revenues are up +3% YoY in 3Q19.

The Asset management overall fee rate excluding performance fees is at ~30bps in 9M19, in line with 1H19 levels and with New Dimension target (slightly down QoQ due to mix effect). For European affiliates, it is at ~16bps in 9M19 and ~28bps excl. Life Insurance General Accounts. For North American affiliates, it is at ~38bps vs. ~40bps in 9M18 mainly due to a lower share of average AuM from Harris following the 4Q18 market effect. Performance fees reached €192m in 3Q19 and €362m in 9M19 (~15% of AM revenues vs. ~13% in FY18) mainly driven by H2O and AEW.

Asset management net flows on LT products reached ~ €(4)bn in 3Q19 more than offset by supportive market and FX impacts. The trend improved throughout the quarter: from >€(2)bn in July to ~€(0.5)bn in September. In Europe, ~€2bn net inflows on LT products in 3Q19 mainly driven by Real asset strategies and Mirova. In North America, a bit more than ~€(5)bn net outflows in 3Q19 primarily driven by Harris and Loomis Fixed income strategies. WCM equity strategies providing a growth relay to Harris in the 3Q19 environment.

Asset management AuM reached €921bn as at September 30, 2019 and are up +3% QoQ (+14% YTD), above their 4Q18 average level both for Europe and North America. On top of the net flows on LT products described above, 3Q19 was also marked by ~(1)bn net outflows on low-margin money-market products, a positive market effect of +€9bn and a positive FX/perimeter effect of +€20bn. H2O AuM stand at ~€28bn vs. ~€26bn at end-June driven by a strong market effect. Wealth management AuM reached €30.3bn as at September 30, 2019 with €0.9bn positive net inflows this quarter.

Underlying expenses growing in line with the revenues (+10% in 3Q19 and +3% in 9M19, both at constant exchange rate) reflecting in part the variable structure of the cost base in AM (higher performance fees) and investments being made in new initiatives and digitalization/IT as well as MIFID 2 impact.

The underlying cost of risk is attributable to a wealth management file.

The underlying RoE2 reached 13.4% in 3Q19 and 13.5% in 9M19.

1 Asset management including Private equity and Employee savings plan 2 See note on methodology. Excluding exceptional items and excluding IFRIC 21

 

Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p5)

Corporate & Investment Banking

€m   3Q19 3Q18 3Q19 vs. 3Q18   9M19 9M18 9M19 vs. 9M18 9M19 vs. 9M18 constant FX
Net revenues   784 759 3%   2,438 2,679 (9)% (11)%
Net revenues excl. CVA/DVA/Other   794 768 3%   2,437 2,640 (8)% (10)%
Expenses   (518) (521) (1)%   (1,618) (1,634) (1)% (3)%
Gross operating income   265 238 12%   820 1,045 (22)% (24)%
Provision for credit losses   (59) (27)     (193) (94)    
Associates and other items   2 3     8 12    
Pre-tax profit   209 214 (2)%   635 962 (34)%  
Cost/income ratio1   67.2% 69.6% -2.4pp   66.0% 60.7% +5.3pp  
RoE after tax1   8.6% 9.0% -0.4pp   9.2% 14.4% -5.2pp  

Underlying net revenues are up +3% YoY in 3Q19. Revenue evolution largely driven primarily by Global finance, up +8% YoY in 3Q19 and secondarily by Global markets, up +3% YoY. Investment banking/M&A has been impacted by some delay in fee recognition expected for 4Q19.

Global markets net revenues up +3% YoY in 3Q19. 9M19 revenue evolution balanced between FICT and Equity and reflecting a high base, especially in 1Q18. FICT net revenues up +2% YoY in 3Q19 despite tough market conditions and very volatile long-term interest rates. Continued good performance in Credit especially in the US. Less favorable environment for Rates given flat yield curve at unprecedented levels with less jumbo transactions although client activity remains stable. Good performance from FX with major currencies regaining volatility. Equity net revenues down a modest €3m YoY in 3Q19. Good performance from the US and continued diversification with solid commercial successes, especially in Convertibles and Green finance. Global finance net revenues up +8% YoY and +11% QoQ with all Real Assets business lines featuring YoY growth (Aviation, Real Estate and Infrastructure) and slightly lower revenues from Energy & Natural Resources. Focus on distribution after several quarters of very strong loan origination. Distribution rate on Real Assets at ~64% in 3Q19, up +1pp YoY and significantly up QoQ. Investment banking and M&A net revenues up +2% YoY in 9M19 and down YoY in 3Q19. Good contributions from our APAC M&A boutiques. Proportion of revenues generated from service fees at ~38% in 3Q19 and ~40% in 9M192.

Underlying expenses are well under control and down -2% YoY at constant exchange rate in 3Q19 (-3% YoY in 9M19). This reflects lower variable costs and ongoing initiatives to improve efficiency despite investments being made to develop our sectorial approach as well as control functions.

Underlying cost of risk is up vs. a very low 3Q18 and is above its normalized level.

Underlying RoE1 of 8.6% in 3Q19 and 9.2% in 9M19. Normalizing for the cost of risk3, the 9M19 RoE would have reached ~10%. RWA are up +2% YoY in 3Q19, in line with New Dimension guidance.

1 See note on methodology. Excluding exceptional items and excluding IFRIC 21 2 ENR, Real Assets, ASF 3 Normalizing the cost of risk at 30bps Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p5)

Insurance

€m   3Q19 3Q18 3Q19 vs. 3Q18   9M19 9M18 9M19 vs. 9M18
Net revenues   205 192 7%   630 589 7%
Expenses   (110) (104) 6%   (349) (329) 6%
Gross operating income   95 88 8%   281 259 8%
Provision for credit losses   0 0     0 0  
Associates and other items   1 3     6 6  
Pre-tax profit   96 91 6%   287 265 8%
Cost/income ratio1    55.9% 56.7% -0.8pp   54.7% 55.2% -0.5pp
RoE after tax1   26.9% 28.5% -1.6pp   29.2% 28.9% +0.3pp

Banking view

Underlying net revenues up +7% YoY both in 3Q19 and 9M19 with growth across the board.

Underlying expenses up +6% YoY both in 3Q19 and 9M19, translating into a positive jaw effect and a cost/income ratio improvement, broadly in line with the 2020 target of ~54%.

Underlying gross operating income up +8% YoY both in 3Q19 and 9M19.

Underlying RoE1 at 29.2% in 9M19 largely in line with the 30% target set for New Dimension by 2020.

Insurance view

Global turnover2 €2.9bn in 3Q19, up +5% YoY (+3% in 9M19 at €9.5bn).

Life and Personal protection: €2.5bn earned premiums2 in 3Q19, up +4% YoY (+2% in 9M19).

  • Total AuM2 at €66.5bn as at end-September 2019, up +2% QoQ and +11% YTD, driven by €1.2bn of net inflows2 in 3Q19 (€4.5bn YTD). 
  • Unit-linked AuM2 at €16.5bn as at end-September 2019, up +4% QoQ and +17% YTD, driven by €0.4bn of net inflows2 in 3Q19 (37% of total net inflows). UL products accounted for 28% of gross inflows in 3Q19, above the French market3. 
  • Personal protection: earned premiums up +8% YoY in 3Q19 at €0.2bn (+11% in 9M19).

P&C: €0.4bn earned premiums in 3Q19, up +9% YoY (+6% in 9M19). The combined ratio reaches 92.3% in 9M19 (+0.4pp YoY).

The non-life equipment rate at the end of September is at 26.8% (+0.3pp QoQ) for Banques Populaires and at 29.8% (+0.3pp QoQ) for Caisses d’Epargne.

1 See note on methodology. Excluding exceptional items and excluding IFRIC 21 2 Excluding reinsurance agreement with CNP 3 Source: FFA Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p5)

Payments

€m   3Q19 3Q18 3Q19 vs. 3Q18   9M19 9M18 9M19 vs. 9M18
Net revenues   103 96 8%   311 284 9%
Expenses   (91) (85) 7%   (272) (251) 8%
Gross operating income   13 11 14%   39 33 19%
Provision for credit losses   (1) 0     (2) (0)  
Associates and other items   0 0     0 1  
Pre-tax profit   12 11 3%   38 34 11%
Cost/income ratio1   87.9% 88.6% -0.7pp   87.3% 88.3% -1.0pp
RoE after tax1   8.0% 8.9% -0.9pp   9.2% 10.0% -0.8pp

Underlying net revenues up +9% YoY in 9M19 and +8% in 3Q19 (residual perimeter effects left). ~40% of 9M19 revenues realized with direct clients (+2pp vs. 9M18).

  • Payment Processing & Services: Steady +4% YoY revenue growth in Natixis Payments’ historical activities in 3Q19 (+5% in 9M19). Number of card transactions processed up +13% YoY in 3Q19 (+10% in 9M19). Pioneer in the implementation of SWIFT gpi for instant cross-border payments, a key solution for CIB Trade & Treasury Solutions clients. 
  • Merchant Solutions: Solid business volumes generated by Dalenys and PayPlug, up +20% YoY in 3Q19 (+23% in 9M19). Partnership between PayPlug and Shopify to foster business growth with French and Italian SMEs. 
  • Prepaid & Issuing Solutions: Robust growth in 3Q19 driven by meal vouchers (+8% YoY) and the contribution of our Benefits & Rewards activity (Titres Cadeaux and Comitéo). Number of mobile payments more than x2.6 vs. 3Q18.

1 See note on methodology. Excluding exceptional items and excluding IFRIC 21Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see detail p5)

Financial Investments

€m   3Q19 3Q18 3Q19 vs. 3Q18   9M19 9M18 9M19 vs. 9M18
Net revenues   195 197 (1)%   584 561 4%
Coface   178 180 (1)%   534 513 4%
Other   17 17 0%   50 48 4%
Expenses   (132) (130) 2%   (406) (387) 5%
Gross operating income   63 67 (6)%   178 174 3%
Provision for credit losses   (3) 1     (9) (4)  
Associates and other items   (0) 0     5 6  
Pre-tax profit   60 68 (12)%   175 176 (1)%

The net combined ratio of Coface1 reached 78.1% in 3Q19 vs. 82.8% in 3Q18 (76.8% 9M19 vs. 79.0% 9M18) with a cost ratio moving from 34.4% to 31.0% (from 34.0% 9M18 to 31.7% 9M19) and a loss ratio moving from 48.5% to 47.1% (from 45.0% 9M18 to 45.1% 9M19).

Corporate Center

€m   3Q19 3Q18 3Q19 vs. 3Q18   9M19 9M18 9M19 vs. 9M18
Net revenues   2 (2)     30 14  
Expenses   (70) (60) 17%   (388) (356) 9%
SRF   0 (0)     (170) (160) 6%
Other   (70) (60) 17%   (218) (196) 12%
Gross operating income   (68) (62) 10%   (358) (342) 5%
Provision for credit losses   0 4     1 1  
Associates and other items   1 2     (2) 5  
Pre-tax profit   (67) (56) 20%   (359) (336) 7%

Underlying net revenues from the Corporate Center of €2m in 3Q19.

Underlying expenses excluding SRF contribution up +€10m YoY in 3Q19 mainly due to various positive elements impacting 3Q18.

Underlying pre-tax profit contribution broadly unchanged YoY in 9M19 excl. SRF.

1 Reported ratios, net of reinsurance

 

FINANCIAL STRUCTURE

Basel 3 fully-loaded ratios1Natixis’ Basel 3 fully-loaded CET1 ratio worked out to 11.5% as at September 30, 2019.

  • Basel 3 fully-loaded CET1 capital amounted to €11.4bn
  • Basel 3 fully-loaded RWA amounted to €98.8bn

Based on a Basel 3 fully-loaded CET1 ratio of 11.5% as at June 30, 2019, the respective 3Q19 impacts were as follows:

  • 3Q19 results: +43bps
  • 3Q19 ordinary dividends: -22bps
  • 3Q19 RWA and other effects: -13bps

Basel 3 regulatory ratios1 As at September 30, 2019, Natixis’ Basel 3 regulatory capital ratios stood at 10.5% for the CET1, 12.7% for the Tier 1 and 15.0% for the total capital ratio.

  • Core Tier 1 capital stood at €10.4bn and Tier 1 capital at €12.5bn
  • Natixis’ RWA totaled €98.8bn, breakdown as follows:
    • Credit risk: €66.2bn
    • Counterparty risk: €7.0bn
    • CVA risk: €1.6bn
    • Market risk: €10.7bn
    • Operational risk: €13.3bn

Book value per shareEquity capital (group share) totaled €19.3bn as at September 30, 2019, 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 €5.44 as at September 30, 2019 based on 3,150,728,343 shares excluding treasury shares (the total number of shares being 3,153,078,482). The tangible book value per share (after deducting goodwill and intangible assets) is €4.14.

Leverage ratio1

The leverage ratio worked out to 4.2% as at September 30, 2019.

Overall capital adequacy ratioAs at September 30, 2019, the financial conglomerate’s excess capital was estimated at around €3.3bn (based on own funds including current financial year’s earnings).

     1 See note on methodology APPENDICES

Note on methodology:

The results at 30/09/2019 were examined by the board of directors at their meeting on 07/11/2019.Figures at 30/09/2019 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

Changes in Natixis’ account presentation following the disposal of the retail banking activities to BPCE S.A.

  • Employee savings plan is reallocated to Asset & Wealth Management
  • Film industry financing is reallocated to Corporate & Investment Banking
  • Insurance is not impacted
  • Payments becomes a standalone business line
  • Financial Investments are isolated and include Coface, Natixis Algeria and the private equity runoff activities. The Corporate Center is refocused on Natixis’ holding and ALM functions and carries the Single Resolution Fund contribution within its expenses

                         

Additional impacts on the quarterly series from the disposal of the retail banking activities to BPCE S.A.

  • New support function services provided by Natixis to the activities sold (TSA / SLA), as well as the cancellation of services or analytical items that have been made obsolete following such a disposal are factored in
  • The reclassification as Net revenues of the residual IT and logistic services that continue to be provided to the activities sold. Such services now being provided to entities that do not fall under Natixis’ scope of consolidation anymore, they have been reclassified as Net revenues instead of expense deductions
  • The implementation of introductory fees between the Natixis CIB Coverage and the entities sold

In order to ensure comparability between the 2018 and 2019 quarterly series, these impacts have been simulated retroactively as of January 1st, 2018, even though they only impact the published financial statements as of their implementation date in 2019. These items essentially impact the Corporate Center and more marginally the CIB. The others business lines are unimpacted

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 (the associated tax benefit being already accounted for in the net income following the adoption of IAS 12 amendment). 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 (the associated tax benefit being already accounted for in the net income following the adoption of IAS 12 amendment). 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%.

Note on Natixis’ RoE and RoTE calculation: Calculations based on quarter-end balance sheet in 1Q19 to reflect the disposal of the retail banking activities. The €586m net capital gain is not annualized. Adoption of IAS 12 amendment effective as of 3Q19 (see below for additional comments), with no impact on the RoE/RoTE

Net book value: calculated by taking shareholders’ equity group share (minus distribution of dividends proposed by the Board of Directors and submitted to the approval of the General Shareholders' Meeting on May 28, 2019), 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 30/09/2019
Goodwill 3,932
Restatement for Coface minority interests (162)
Restatement for AWM deferred tax liability & others (351)
Restated goodwill 3,420

 

€m 30/09/2019
Intangible assets 711
Restatement for Coface minority interest & others (49)
Restated intangible assets 663

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.

Regulatory (phased-in) capital and ratios: based on CRR-CRD4 rules as reported on June 26, 2013, including the Danish compromise - phased in. Presentation excluding current financial year’s earnings and accrued dividend (based on a 60% pay-out1)

Fully-loaded capital and ratios: based on CRR-CRD4 rules as reported on June 26, 2013, including the Danish compromise - without phase-in. Presentation including current financial year’s earnings and accrued dividend (based on a 60% pay-out1)

Leverage ratio: based on delegated act rules, without phase-in (presentation including 9M19 earnings and accrued dividend1) 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 9M19 takes into account ¾ of the annual duties and levies concerned by this accounting rule. The impact for the quarter is calculated by difference with the former quarter

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

IAS 12: As of 3Q19, according to the adoption of IAS 12 (income taxes) amendment, the tax benefit on DSN interest expenses previously recorded in the consolidated reserves is now being accounted for in the income statement (income tax line). Previous periods have not been restated with a positive impact of €35.9m in 3Q19, of which €23.8m related to 1H19

1 Pay-out ratio based on reported net income group share minus DSN interest expenses (the associated tax benefit being already accounted for in the net income following the adoption of IAS 12 amendment) and excluding the €586m net capital gain from the disposal of the retail banking activities Natixis - Consolidated P&L (restated)

€m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19   3Q19 vs. 3Q18   9M18 9M19   9M19 vs. 9M18
Net revenues 2,193 2,360 2,156 2,040 2,132 2,282 2,280   6%   6,709 6,693   (0)%
Expenses (1,675) (1,528) (1,499) (1,656) (1,720) (1,577) (1,590)   6%   (4,701) (4,887)   4%
Gross operating income 518 832 658 383 412 705 689   5%   2,008 1,806   (10)%
Provision for credit losses (36) (41) (93) (23) (31) (110) (71)       (170) (213)    
Associates 7 3 6 13 3 8 3       16 15    
Gain or loss on other assets 6 4 (0) 44 682 (2) 9       10 689    
Change in value of goodwill 0 0 0 0 0 0 0       0 0    
Pre-tax profit 495 798 570 418 1,066 602 630   10%   1,863 2,298   23%
Tax (175) (234) (154) (110) (215) (164) (126)       (562) (505)    
Minority interests (60) (57) (59) (127) (86) (92) (88)       (176) (267)    
Net income (group share) 260 507 358 181 764 346 415   16%   1,125 1,526   36%

Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See below for the reconciliation of the restated figures with the accounting view

Natixis - Reconciliation between management and accounting figures

9M18

€m 9M18 underlying   Exceptional items   9M18 restated Contribution from perimeter sold   9M18 reported
Net revenues 6,608   100   6,709 656   7,365
Expenses (4,646)   (55)   (4,701) (349)   (5,050)
Gross operating income 1,962   46   2,008 307   2,315
Provision for credit losses (99)   (71)   (170) (15)   (185)
Associates 16   0   16 0   16
Gain or loss on other assets 10   0   10 (0)   9
Pre-tax profit 1,889   (26)   1,863 291   2,154
Tax (571)   9   (562) (91)   (653)
Minority interests (176)   (0)   (176) (1)   (177)
Net income (group share) 1,141   (17)   1,125 200   1,324

9M19

€m 9M19 underlying   Exceptional items   9M19 restated Residual contribution from perimeter sold   9M19 reported
Net revenues 6,644   50   6,693 22   6,716
Expenses (4,837)   (50)   (4,887) (22)   (4,909)
Gross operating income 1,807   (1)   1,806 (0)   1,806
Provision for credit losses (213)   0   (213) 0   (213)
Associates 15   0   15 0   15
Gain or loss on other assets 7   682   689 (0)   689
Pre-tax profit 1,616   682   2,298 (0)   2,298
Tax (427)   (78)   (505) 0   (505)
Minority interests (234)   (33)   (267) 0   (267)
Net income (group share) 955   571   1,526 (0)   1,526

Natixis - IFRS 9 Balance sheet

Assets (€bn) 30/09/2019 30/06/2019
Cash and balances with central banks 21.4 17.8
Financial assets at fair value through profit and loss1 243.9 218.1
Financial assets at fair value through Equity 11.4 11.5
Loans and receivables1 127.5 124.9
Debt instruments at amortized cost 1.6 1.8
Insurance assets 108.9 106.9
Non-current assets held for sale 0.0 0.0
Accruals and other assets 16.8 16.4
Investments in associates 0.7 0.7
Tangible and intangible assets 2.2 2.2
Goodwill 3.9 3.9
Total 538.3 504.3
Liabilities and equity (€bn) 30/09/2019 30/06/2019
Due to central banks 0.0 0.0
Financial liabilities at fair value through profit and loss1 243.4 217.8
Customer deposits and deposits from financial institutions1 101.1 97.5
Debt securities 49.1 48.5
Liabilities associated with non-current assets held for sale 0.0 0.0
Accruals and other liabilities 19.5 18.5
Insurance liabilities 98.8 96.5
Contingency reserves 1.8 1.7
Subordinated debt 4.0 4.0
Equity attributable to equity holders of the parent 19.3 18.6
Minority interests 1.3 1.2
Total 538.3 504.3

1 Including deposit and margin call

Natixis - 3Q19 P&L by business line

€m AWM CIB Insurance Payments Financial investments Corporate Center   3Q19 reported
Net revenues 945 784 205 103 195 47   2,280
Expenses (648) (527) (112) (93) (133) (77)   (1,590)
Gross operating income 297 256 93 10 62 (29)   689
Provision for credit losses (8) (59) 0 (1) (3) 0   (71)
Net operating income 289 197 93 9 59 (29)   618
Associates and other items 8 2 1 0 (0) 1   12
Pre-tax profit 297 200 94 9 59 (28)   630
            Tax   (126)
            Minority interests   (88)
            Net income (gs)   415

Asset & Wealth Management

€m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19   3Q19 vs. 3Q18   9M18 9M19   9M19 vs. 9M18
Net revenues 799 842 841 1,032 773 932 945   12%   2,482 2,651   7%
Asset Management1 762 805 805 998 742 900 908   13%   2,372 2,550   8%
Wealth management 37 37 36 34 31 32 37   3%   110 100   (9)%
Expenses (548) (569) (584) (642) (558) (605) (648)   11%   (1,701) (1,811)   6%
Gross operating income 251 273 257 389 216 327 297   16%   781 840   8%
Provision for credit losses (0) (1) (1) 0 1 (2) (8)       (2) (10)    
Net operating income 251 272 256 390 216 325 289   13%   779 830   7%
Associates 0 0 0 2 0 0 0       1 0    
Other items (0) (3) (2) 41 (2) (2) 8       (5) 3    
Pre-tax profit 251 269 255 433 214 323 297   16%   775 834   8%
Cost/Income ratio 68.6% 67.6% 69.4% 62.3% 72.1% 64.9% 68.5%       68.5% 68.3%    
Cost/Income ratio excl. IFRIC 21 68.1% 67.7% 69.6% 62.4% 71.6% 65.1% 68.7%       68.5% 68.3%    
RWA (Basel 3 - in €bn) 11.7 11.8 12.5 12.3 12.5 13.7 13.4   8%   12.5 13.4   8%
Normative capital allocation (Basel 3) 4,143 4,065 4,150 4,363 4,364 4,407 4,555   10%   4,119 4,442   8%
RoE after tax (Basel 3)2 13.7% 15.2% 13.9% 19.6% 11.5% 15.1% 13.3%       14.3% 13.3%    
RoE after tax (Basel 3) excl. IFRIC 212 14.0% 15.1% 13.8% 19.5% 11.8% 15.0% 13.3%       14.3% 13.3%    

[1] Asset management including Private equity and Employee savings plan2 Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles Corporate & Investment Banking

€m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19   3Q19 vs. 3Q18   9M18 9M19   9M19 vs. 9M18
Net revenues 944 976 828 518 807 847 784   (5)%   2,748 2,438   (11)%
Global markets 527 457 334 14 366 419 344   3%   1,318 1,129   (14)%
  FIC-T 378 299 252 231 251 304 258   2%   929 812   (13)%
  Equity 148 145 97 (219) 125 117 94   (3)%   390 336   (14)%
Equity excl. cash 143 140 97 (219) 125 117 94   (3)%   381 336   (12)%
Cash equity 5 4 (0) (0) 0 0 0       9 0    
  CVA/DVA desk 1 13 (15) 2 (9) (3) (8)       (0) (19)    
Global finance1 341 394 341 362 337 333 369   8%   1,076 1,039   (3)%
Investment banking2 82 85 78 126 87 90 73   (6)%   246 250   2%
Other (7) 41 74 16 16 6 (2)       108 20    
Expenses (566) (551) (525) (559) (582) (523) (527)   0%   (1,643) (1,633)   (1)%
Gross operating income 378 425 302 (41) 225 324 256   (15)%   1,105 805   (27)%
Provision for credit losses (31) (37) (98) (9) (30) (104) (59)       (165) (193)    
Net operating income 347 388 204 (50) 195 219 197   (3)%   940 612   (35)%
Associates 4 3 3 3 2 3 2       9 8    
Other items 3 0 (0) 0 (15) 0 (0)       3 (15)    
Pre-tax profit 353 391 207 (47) 183 222 200   (4)%   951 605   (36)%
Cost/Income ratio 60.0% 56.4% 63.5% 107.9% 72.2% 61.8% 67.3%       59.8% 67.0%    
Cost/Income ratio excl. IFRIC 21 57.7% 57.2% 64.4% 109.4% 69.1% 62.7% 68.3%       59.5% 66.7%    
RWA (Basel 3 - in €bn) 59.7 61.7 61.2 61.1 62.0 61.1 62.3   2%   61.2 62.3   2%
Normative capital allocation (Basel 3) 6,435 6,416 6,676 6,631 6,634 6,740 6,734   1%   6,509 6,703   3%
RoE after tax (Basel 3)3 16.0% 17.6% 9.0% NR 7.6% 9.6% 8.5%       14.1% 8.6%    
RoE after tax (Basel 3) excl. IFRIC 213 17.0% 17.2% 8.7% NR 8.6% 9.2% 8.2%       14.2% 8.7%    

[1] Including Film industry financing 2 Including M&A 3 Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles Insurance

€m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19   3Q19 vs. 3Q18   9M18 9M19   9M19 vs. 9M18
Net revenues 204 193 192 201 218 207 205   7%   589 630   7%
Expenses (118) (108) (103) (118) (125) (116) (112)   9%   (330) (353)   7%
Gross operating income 86 85 89 83 93 92 93   5%   259 277   7%
Provision for credit losses 0 0 0 0 0 0 0       0 0    
Net operating income 86 85 89 83 93 92 93   5%   259 277   7%
Associates 3 0 3 9 0 5 1       6 6    
Other items 0 0 (0) 0 0 (0) 0       0 (0)    
Pre-tax profit 89 85 92 91 93 96 94   3%   265 284   7%
Cost/Income ratio 58.0% 56.1% 53.8% 58.9% 57.5% 55.8% 54.6%       56.0% 56.0%    
Cost/Income ratio excl. IFRIC 21 51.1% 58.5% 56.2% 61.2% 51.7% 57.8% 56.6%       55.2% 55.3%    
RWA (Basel 3 - in €bn) 7.3 7.0 7.1 7.3 8.0 7.9 8.4   18%   7.1 8.4   18%
Normative capital allocation (Basel 3) 853 868 828 841 858 942 926   12%   850 909   7%
RoE after tax (Basel 3)1 28.6% 26.4% 30.3% 30.7% 29.4% 28.4% 27.7%       28.4% 28.4%    
RoE after tax (Basel 3) excl. IFRIC 211 33.0% 24.9% 28.8% 29.2% 33.3% 27.2% 26.4%       28.9% 28.9%    

1 Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles Payments

€m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19   3Q19 vs. 3Q18   9M18 9M19   9M19 vs. 9M18
Net revenues 93 95 96 105 103 105 103   8%   284 311   9%
Expenses (79) (88) (84) (90) (88) (94) (93)   11%   (251) (274)   9%
Gross operating income 14 7 12 15 16 11 10   (13)%   33 37   11%
Provision for credit losses (0) (0) 0 (2) (0) (1) (1)       (0) (2)    
Net operating income 14 7 12 13 16 10 9   (24)%   33 35   6%
Associates 0 0 0 0 0 0 0       0 0    
Other items 0 1 0 0 0 0 0       1 0    
Pre-tax profit 14 8 12 13 16 10 9   (24)%   34 35   4%
Cost/Income ratio 85.2% 92.2% 87.6% 85.7% 84.8% 89.6% 90.1%       88.3% 88.1%    
Cost/Income ratio excl. IFRIC21 84.5% 92.4% 87.9% 85.9% 84.1% 89.8% 90.3%       88.3% 88.1%    
RWA (Basel 3 - in €bn) 1.0 1.2 1.0 1.1 1.1 1.2 1.1   12%   1.0 1.1   12%
Normative capital allocation (Basel 3) 295 300 352 332 356 373 385   9%   316 372   18%
RoE after tax (Basel 3)1 12.8% 7.4% 9.6% 10.1% 12.0% 7.3% 6.5%       9.9% 8.5%    
RoE after tax (Basel 3) excl. IFRIC 211 13.4% 7.2% 9.4% 9.9% 12.5% 7.1% 6.3%       9.9% 8.6%    

Standalone EBITDA calculationFigures excluding exceptional items2

€m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19   9M18 9M19
Net revenues 93 95 96 105 103 105 103   284 311
Expenses (79) (87) (85) (90) (88) (94) (91)   (251) (272)
Gross operating income - Natixis reportedexcl. exceptional items 14 8 11 15 16 11 13   33 39
Analytical adjustments to net revenues (1) (1) (2) (1) (1) (1) (1)   (5) (4)
Structure charge adjustments to expenses 5 5 5 5 6 5 5   15 16
Gross operating income - standalone view 18 12 14 19 20 15 17   44 52
Depreciation, amortization and impairment on property, plant and equipment and intangible assets 3 4 4 5 4 4 3   11 12
EBITDA - standalone view 21 16 18 24 24 19 20   55 63

EBITDA = Net revenues (-) Operating expenses. Standalone view excluding analytical items and structure charges

[1] Normative capital allocation methodology based on 10.5% of the average RWA-including goodwill and intangibles 2 See page 5 Financial investments

€m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19   3Q19 vs. 3Q18   9M18 9M19   9M19 vs. 9M18
Net revenues  190  174  197  181  193  196  195   (1)%    561  584   4%
Coface  177  156  180  165  175  181  178   (1)%    513  534   4%
Other  13  18  17  16  18  15  17   0%    48  50   4%
Expenses (130) (125) (131) (140) (133) (141) (133)   2%   (387) (408)   5%
Gross operating income  59  49  66  41  60  55  62   (6)%    174  176   1%
Provision for credit losses (6) 1 1 3 (2) (4) (3)       (4) (9)    
Net operating income  54  50  67  44  58  51  59   (12)%    171  167   (2)%
Associates  0  0  0  0  0  0  0        0  0    
Other items  2  3  0  0  0  5  0        5  5    
Pre-tax profit 56 53 67 44 58 56 59   (12)%   176 173   (2)%
RWA (Basel 3 - in €bn) 5.3 5.6 5.5 5.6 5.7 5.7 5.6   1%   5.5 5.6   1%

Corporate Center

€m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19   3Q19 vs. 3Q18   9M18 9M19   9M19 vs. 9M18
Net revenues (37) 79 3 3 37 (5) 47       45 79    
Expenses (232) (87) (71) (107) (234) (98) (77)   8%   (390) (408)   5%
SRF (160) (0) (0) 0 (170) 0 0       (160) (170)   6%
Other (73) (86) (71) (107) (64) (98) (77)   8%   (230) (238)   4%
Gross operating income (269) (7) (68) (104) (196) (103) (29)       (344) (329)    
Provision for credit losses 1 (4) 4 (15) 0 1 0       1 1    
Net operating income (269) (11) (63) (118) (196) (102) (29)       (343) (328)    
Associates 0 0 0 0 0 0 (0)       0 0    
Other items 1 2 2 3 699 (5) 1       5 695    
Pre-tax profit (268) (9) (62) (115) 503 (107) (28)       (338) 368    
RWA (Basel 3 - in €bn) 9.0 9.4 8.7 7.8 7.0 7.3 8.0   (7)%   8.7 8.0   (7)%

€697m capital gain coming from the disposal of the retail banking activities in 1Q19

3Q19 results: from data excluding non-operating items to reported data

€m 3Q19 underlying   Exchange rate fluctuations on DSN in currencies Transformation & Business Efficiency investment costs Fit to Win investments & restructuring expenses   3Q19 reported
Net revenues 2,234   46       2,280
Expenses (1,568)     (22) (1)   (1,590)
Gross operating income 666   46 (22) (1)   689
Provision for credit losses (71)           (71)
Associates 3           3
Gain or loss on other assets 9           9
Pre-tax profit 607   46 (22) (1)   630
Tax (119)   (15) 7 0   (126)
Minority interests (89)       0   (88)
Net income (group share) 400   31 (15) (0)   415

9M19 results: from data excluding non-operating items to restated data

€m 9M19 underlying   Exchange rate fluctuations on DSN in currencies Transformation & Business Efficiency investment costs Fit to Win investments & restructuring expenses Disposal of subsidiary in Brazil Capital gain - Disposal of retail banking activities   9M19 restated
Net revenues 6,644   50           6,693
Expenses (4,837)     (48) (2)       (4,887)
Gross operating income 1,807   50 (48) (2) 0 0   1,806
Provision for credit losses (213)               (213)
Associates 15               15
Gain or loss on other assets 7         (15) 697   689
Pre-tax profit 1,616   50 (48) (2) (15) 697   2,298
Tax (427)   (16) 15 1   (78)   (505)
Minority interests (234)       1   (33)   (267)
Net income (group share) 955   34 (33) (1) (15) 586   1,526

Figures restated as communicated on April 11, 2019 following the disposal of the retail banking activities. See page 14 for the reconciliation of the restated figures with the accounting view

 

Natixis - 3Q19 capital & Basel 3 financial structureSee note on methodology - Irrevocable Payment Commitment (IPC) deduction disclosed as part of the ratio as of 2Q19

Fully-loaded          

€bn 30/09/2019
Shareholder’s Equity 19.3
Hybrid securities (incl. capital gain following reclassification of hybrids) (2.2)
Goodwill & intangibles (3.9)
Deferred tax assets (0.7)
Dividend provision (0.5)
Other deductions (0.6)
CET1 capital 11.4
CET1 ratio 11.5%
Additional Tier 1 capital 1.8
Tier 1 capital 13.2
Tier 1 ratio 13.3%
Tier 2 capital 2.3
Total capital 15.4
Total capital ratio 15.6%
Risk-weighted assets 98.8

Regulatory

 

€bn 30/09/2019
Fully-loaded CET1 capital 11.4
Current financial year’s earnings (1.5)
Current financial year’s accrued dividend 0.5
CET1 capital 10.4
CET1 ratio 10.5%
Additional Tier 1 capital 2.2
Tier 1 capital 12.5
Tier 1 ratio 12.7%
Tier 2 capital 2.3
Total capital 14.8
Total capital ratio 15.0%
Risk-weighted assets 98.8

 

IFRIC 21 effects by business line

Effect in Expenses

€m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19   9M18 9M19
AWM (4) 1 1 1 (4) 1 1   (1) (1)
CIB (22) 7 7 7 (24) 8 8   (7) (8)
Insurance (14) 5 5 5 (13) 4 4   (5) (4)
Payments (1) 0 0 0 (1) 0 0   (0) (0)
Financial investments 0 0 0 0 (0) 0 0   0 (0)
Corporate center (119) 40 40 40 (119) 40 40   (40) (40)
Total Natixis (160) 53 53 53 (161) 54 54   (53) (54)

Historical figures restated for the disposal of the retail banking activities

Normative capital allocation and RWA breakdown - 30/09/2019

€bn RWA EoP % of total Goodwill & intangibles 9M19 Capital allocation 9M19 RoE after tax 9M19
AWM 13.4 16% 3.1 4.4 13.3%
CIB 62.3 73% 0.2 6.7 8.6%
Insurance 8.4 10% 0.1 0.9 28.4%
Payments 1.1 1% 0.3 0.4 8.5%
Total (excl. Corp. center and Financial invmts) 85.2 100% 3.7 12.4  

 

RWA breakdown (€bn) 30/09/2019
Credit risk 66.2
Internal approach 54.8
Standard approach 11.4
Counterparty risk 7.0
Internal approach 5.9
Standard approach 1.1
Market risk 10.7
Internal approach 4.9
Standard approach 5.8
CVA 1.6
Operational risk - Standard approach 13.3
Total RWA 98.8

 

Fully-loaded leverage ratio1 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 30/09/2019
Tier 1 capital1 13.6
Total prudential balance sheet 431.1
Adjustment on derivatives (59.4)
Adjustment on repos2 (30.0)
Other exposures to affiliates (49.2)
Off balance sheet commitments 37.9
Regulatory adjustments (5.3)
Total leverage exposure 325.1
Leverage ratio 4.2%

[1] See note on methodology. Without phase-in - supposing replacement of existing subordinated issuances when they become ineligible 2 Repos with clearing houses cleared according to IAS32 standard, without maturity or currency criteria Net book value as at September 30, 2019

€bn 30/09/2019
Shareholders’ equity (group share) 19.3
Deduction of hybrid capital instruments (2.0)
Deduction of gain on hybrid instruments (0.1)
Distribution  
Net book value 17.1
Restated intangible assets1 (0.7)
Restated goodwill1 (3.4)
Net tangible book value2 13.1
 
Net book value per share 5.44
Net tangible book value per share 4.14

9M19 Earnings per share

€m 30/09/2019
Net income (gs) 1,526
DSN interest expenses on preferred shares adjustment (104)
Net income attributable to shareholders 1,421
Earnings per share (€) 0.45

Number of shares as at September 30, 2019

  30/09/2019
Average number of shares over the period, excluding treasury shares 3,149,951,603
Number of shares, excluding treasury shares, EoP 3,150,728,343
Number of treasury shares, EoP 2,350,139

Net income attributable to shareholders

€m 3Q19 9M19
 Net income (gs) 415 1,526
 DSN interest expenses on preferred shares adjustment (59) (104)
 RoE & RoTE numerator 356 1,421

[1] See note on methodology 2 Net tangible book value = Book value – goodwill - intangible asset

RoTE1

€m 30/09/2019
Shareholders’ equity (group share) 19,260
DSN deduction (2,122)
Dividend provision (501)
Intangible assets (663)
Goodwill (3,420)
RoTE Equity end of period 12,554
Average RoTE equity (3Q19) 12,374
3Q19 RoTE annualized with no IFRIC 21 adjustment 11.5%
IFRIC 21 impact (47)
3Q19 RoTE annualized excl. IFRIC 21 10.0%
Average RoTE equity (9M19) 12,261
9M19 RoTE annualized excl. IFRIC 21 14.2%

RoE1

€m 30/09/2019
Shareholders’ equity (group share) 19,260
DSN deduction (2,122)
Dividend provision (501)
Unrealized/deferred gains and losses in equity (OCI) (563)
   
RoE Equity end of period 16,073
Average RoE equity (3Q19) 15,885
3Q19 RoE annualized with no IFRIC 21 adjustment 9.0%
IFRIC 21 impact (47)
3Q19 RoE annualized excl. IFRIC 21 7.8%
Average RoE equity (9M19) 15,785
9M19 RoE annualized excl. IFRIC 21 11.1%

Doubtful loans2

€bn 30/06/2019UnderIFRS 9 30/09/2019Under IFRS 9
Provisionable commitments3 1.7 1.9
Provisionable commitments / Gross debt 1.4% 1.5%
Stock of provisions4 1.3 1.4
Stock of provisions / Provisionable commitments 75% 72%

[1]See note on methodology. Returns based on quarter-end balance sheet to reflect the disposal of the retail banking activities. The €586m net capital gain is not annualized 2 On-balance sheet, excluding repos, net of collateral 3 Net commitments 4 Specific and portfolio-based provisions 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 third quarter 2019 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 November 8, 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
Noemie Louvel T + 33 1 78 40 37 87   Vanessa Stephan T + 33 1 58 19 34 16
Souad Ed Diaz T + 33 1 58 32 68 11      

www.natixis.com

 

  

 

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