On 5 May 2009, the Board of Directors of BNP Paribas, in a meeting chaired by Michel Pébereau, examined the Group’s first quarter results.
A NET PROFIT (GROUP SHARE) OF 1.56 BILLION EUROS
In the first quarter 2009, the environment remained challenging with a continued deterioration of the economy and strong persisting turbulence in financial markets. Against this backdrop, BNP Paribas posted a very solid performance enabling it to generate a net profit of 1,558 million euros. These results were obtained thanks to its diversified and integrated business model, its geographic mix concentrated in Western Europe, its cost discipline and its risks control.
The Group’s revenues totalled 9,477 million euros, up 28.2% compared to the first quarter 2008. This performance is due to the businesses’ good sales and marketing drive as well as the Group’s greater attractiveness in the current banking landscape. The direct effects of the financial crisis on revenues however are -555 million euros, in line with the -549 million euros posted in the first quarter 2008. These fair value adjustments broke down as -401 million euros for the CIB division, -69 million euros for the Investment Solutions division and -85 million euros for the Corporate Centre. The latter also posted a positive fair value adjustment of 57 million euros related to the debt issued by the Group (compared to +183 million euros in the first quarter 2008).
The Group’s operating expenses, which totalled 5,348 million euros, were up 16.1% compared to the first quarter 2008. Thanks to the cost-cutting measures implemented across all the businesses, they were down 2.4% at constant scope and exchange rates and excluding variable compensation, in accordance with the target to stabilise costs in 2009. The operating divisions’ cost/income ratio, at 56.1%, improved by 7.9 points.
The gross operating income, which was 4,129 million euros, was up 1,339 million (+48%) compared to the first quarter 2008, reflecting the Group’s good operating performance this quarter and allowing it to absorb the additional cost of risk.
The cost of risk totalled 1,826 million euros, or 128bp of risk-weighted assets1 compared to 546 million euros in the first quarter 2008 and 2,552 million euros in the fourth quarter 2008. In the Group’s two domestic markets (France and Italy), the cost of risk remained moderate at respectively 35bp1 and 74bp1. However, the downturn in the economy affected the other loan portfolios, in particular at BancWest, Personal Finance, in Ukraine and, from now on, also in CIB’s financing businesses. Lastly, the direct effects of the financial crisis still weighed to the tune of 356 million euros on the cost of risk this quarter (compared to 186 million euros in the first quarter 2008), primarily due to the counterparty risk in the CIB division.
The rise in the cost of risk still being below the rise in the gross operating income pushed the operating income up 2.6% to 2,303 million euros. The lesser income from associated companies, the lesser non operating capital gains and a higher tax charge result, however, in net income group share of 1,558 million euros, down 21.4% compared to the first quarter 2008. The annualised return on equity was 12.3%.
A POSITIVE CONTRIBUTION OF ALL THE DIVISIONS
All the Group’s divisions continued their business development and made a positive contribution to the Group’s results. This performance again puts BNP Paribas amongst the leading global banks that are weathering the best the financial crisis and the downturn in the economy.