On 30 July 2010, the Board of Directors of BNP Paribas, in a meeting chaired by Michel Pébereau, examined the Group’s second quarter results 2010 as well as the financial statements for the first half of the year.
QUARTERLY NET PROFITS OF 2.1 BILLION EUROS
In the second quarter of this year, in a less unfavourable economic environment and despite a very challenging market environment, BNP Paribas Group confirmed the effectiveness of its diversified and integrated business model applied to its new size including BNP Paribas Fortis’ businesses. It achieved a very solid performance again, further accentuated by the decline in the cost of risk. Net profit (attributable to equity holders) was 2,105 million euros, up 31.2% compared to the second quarter 2009 and down only 7.8% compared to the very high level in the first quarter 2010.
The Group posted 11,174 million euros in revenues, up 11.8%, stable at constant scope and exchange rates compared to the second quarter 2009. The huge revenue growth in retail banking and the Investment Solutions’ business units offset CIB’s fall in revenues. The revaluation of the Group’s own debt resulted in revenues of 235 million euros compared to a 237 million euros charge in the second quarter 2009. Operating expenses, which totalled 6,414 million euros, were up 10.2% (-1.2%( )) and gross operating income rose 14.0% (+1.7%(1)) compared to the second quarter 2009.
The cost of risk, which was 1,081 million euros, continued the downward trend reported in previous quarters. It was cut more than half from the second quarter 2009, which led to a doubling of operating income. At 3,676 million euros, pre-tax income soared 69.4% compared to the second quarter 2009.
The average corporate income tax rate this quarter was unusually high (34.2%) due to 160 million euros in one-off charges associated with the legal integration of the Fortis Group’s businesses in Italy and the U.S..
For the first half of the year as a whole, the Group’s revenues were 22,704 million euros, up 16.6% compared to the first half 2009. At constant scope and exchange rates revenues were flat (+0.2%) during the same period. Good control of operating expenses (-1.4%(1)) pushed gross operating income up 2.3%(1) to 9,694 million euros, illustrating the Group’s powerful cash flow generating capacity. Thanks to a significant shrinking of the cost of risk, which was cut by nearly half compared to the first half 2009, net income attributable to equity holders was 4,388 million euros, up 38.8% compared to the first half 2009.
So, half yearly net earnings per ordinary share were 3.6 euros (+25% compared to the first half 2009). Annualised return on equity came to 13.7% compared to 11.8% in the first half 2009.
The far-reaching plan to tie-up the entities of BNP Paribas Fortis and BGL BNP Paribas with those of the Group is being done quickly thanks to the dedication and support of staff across all business units, functions and territories. In the first half of the year, 123 million euros in synergies were booked and are added to the 120 million euros already included in the 2009 financial statements. In addition to the 243 million already recorded, the full year effect of synergies already implemented, and which will be reflected in accounting terms in the coming quarters, is 159 million euros. Thus, the total amount of synergies already achieved, i.e. 402 million euros, is ahead of the plan announced.
A POSITIVE CONTRIBUTION OF ALL THE BUSINESS UNITS
This quarter, all the Group’s operating divisions continued to pursue their business development and made a positive contribution to the Group’s income. BNP Paribas thereby demonstrated the robustness of its diversified, integrated and customer-driven banking model.
(1) At constant scope and exchange rates.