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Natexis Banques Populaires 2002 Results

Natexis Banques Populaires 2002 Results. C ontents. Banque Populaire Group Significant events of 2002 4-6 Consolidated income statement and business review 7-9

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Natexis Banques Populaires 2002 Results

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  1. Natexis Banques Populaires 2002 Results

  2. Contents Banque Populaire Group Significant events of 2002 4-6 Consolidated income statement and business review 7-9 Loan loss provisions and financial position 10-12 Number of branches 13 Natexis Banques Populaires Income statement excl. Coface 15-16 Review of operations by business line 17 -20 Loan loss provisions 21 Coface income statement (based on insurance GAAP and bank GAAP) 23-24 Income statement including six-month Coface contribution 25 Regulatory capital and ownership structure 29-30 Priority action points for 2003 31 Appendices Results by business line 33-38 Industry and country risks 39-40

  3. Banque Populaire Group

  4. Significant events of 2002 (Banque Populaire Group) (1/3) Solid performance despite a challenging economic backdrop • Robust operating performances across the Group • Very strong increase in net banking income and results in Local Retail Banking • Resilient performance by the Financing and Service businesses… • … but an extremely difficult year for Investment Banking • Modest increase in loan loss provisions • Moderate contraction in gross operating income

  5. Significant events of 2002 (Banque Populaire Group) (2/3) Further improvement in the Group's fundamentals • Sharp increase in regulatory capital • Tier One up 53% over three years • Proven success of the member-stakeholder system • 180,000 additional member-stakeholders • €355 million increase in equity capital of the Banques Populaires banks • Increase in Tier One ratio to 8.2% • Steady rise in the Tier One Ratio despite a 5% increase in risk-weighted assets, testifying to the validity of the Group's sustained growth strategy

  6. Significant events of 2002 (Banque Populaire Group) (3/3) A year of investment, with • steady increase in additional branches • accelerated investment in information systems • the size of the Banques Populaires regional banks adapted to new challenges and of growth, marked by • Crédit Coopératif becoming a new Banque Populaire bank and Crédit Maritime joining the network as of January 2003 • the Coface acquisition • expansion in the United States (acquisition of A & S. Bleichroeder)

  7. Consolidated income statement Banque Populaire Group € millions Change Change * 2001 2002 • Contribution of core 5,835 5,595 +4% +1% businesses to net banking income • Total net banking income5,748 5,652+2%-2% • Gross operating income 1,611 1,945 -17%-17% • Operating income 1,098 1,508-27%-27% • Net income 532 777 -31%-31% * based on a comparable structure

  8. Contribution to net banking income by core business Banque Populaire Group € millions Local retail banking:4,052 (up 7%) Financing: 881( up 1%) Investment Banking: 194 (down 48%) Services: 569 (up 1%) Credit Insurance and Credit Management: 191(1) 2002/2001 change Including intra-group (1) Coface: 2nd half 2002 contribution

  9. General operating expenses Banque Populaire Group  2002 general operating expenses excl. Coface up 6% to €3,950 million • NBP expenses excl. Coface up by a restrained 3% versus 17% in 2001 • Major capital spending drive in local retail banking • Sales force • Increase in sales staff • 95 additional branches opened (73 net of closures) • Information systems • Migration to a shared platform • Integration of new CRM processes, electronic payment systems and distribution channels  Non-recurring high-tech outlay: €93 million against €35 million in 2001  2002 general operating expenses incl. Coface up 12% to €4,137 million

  10. Natexis Local Retail Banking Banque Populaire Group total Group as % of risk-weighted assets Loan loss provisions Banque Populaire Group 1000 0.5 900 0.43 % 0.40 % 800 0.36 % 0.4 700 0.33 % € millions 600 % of risk-weighted assets 514 0.3 457 500 437 379 400 320 312 0.2 253 300 232 193 184 145 146 200 0.1 100 0 0 1999 2000 2001 2002

  11. Financial position (1/2) Banque Populaire Group 3-year change € billions 10.42 Regulatory capital * up 53%over 3 years 9.59 1.89 + 56% 8.35 1.77 1.55 6.82 + 43% 4.43 • Fund for General Banking Risks • Reserves and other • Minority interests • Common stock 1.21 4.19 3.64 3.10 + 132% 1.67 1.55 1.34 0.72 2.43 + 36% 2.08 1.82 1.79 Dec. 31 1999 Dec. 31 2000 Dec. 31 2001 Dec. 31 2002 * Tier One

  12. Financial position (2/2) Banque Populaire Group Dec. 31, 2001 Dec. 31, 2002 • Total regulatory capital* (€ millions) 13,62412,501 Tier One 10,419 9,590 o/w Fund for General Banking Risks 1,891 1,774 Tier Two and Tier Three 3,205 2,911 • Risk-weighted assets (€ billions) 126.5120.8 • Provisions** / risk-weighted assets5.0% 5.1% • Tier One ratio8.2%7.9% • ROE 7.5% *** 13.2% * Capital used to calculate international capital adequacy ratio ** Specific and general provisions + Fund for General Banking Risks *** 9.3% excluding allocation to FGBR

  13. A fast-growing network Banque Populaire Group • 282 additional branches opened over three years • 3,380 new ATMs (up 5%) • Integration of Crédit Coopératif and Crédit Maritime: 237 additional branches as of January 2003 2,274 - 22 + 95 2,201 - 10 + 65 - 33 2,146 +122 2,057 Dec. 31 2000 Dec. 31 2002 Dec. 31 1999 Dec. 31 2001 Number of branches branches opened branches closed

  14. Natexis Banques Populaires

  15. Income statement excluding Coface (1/2) € millions 2002 Change 2001 2002/2001 Contribution of core businesses to net banking income 1,6441,806-9% Contribution of other businesses to net banking income (33)34 (o/wwritedown of the Bank's proprietary equity portfolio)(58) (9) • Total net banking income 1,611 1,840-12% • General operating expenses 1,259 1,227 +3% • Gross operating income 352 613-43% • Provisions for loan losses, country risks and industry risks (193) (184) +5% • Operating income159 429-63%

  16. Income statement excluding Coface (2/2) € millions 2002 Change 2001 2002/2001 • Operating income 159429-63% • Income from companies at equity 3 13 • Net gain (loss) on disposals of fixed assets 53 3 • Income before exceptional items and tax 215445-52% • Exceptional items (16) 3 • Corporate income tax (18) (79) • Goodwill amortization (35) (20) • Reversal from fund for general banking risks(1) 21 0 • Minority interests (54) (58) • Net income 113291-61% (1) In first-half 2002

  17. € millions Net banking income by business line +2% 701 689 568 +6% -1% -48% -3% 311 298 294 282 261 258 267 -50% 230 215 180 185 162 139 109 55 2000 2001 2000 2001 2001 2002 2002 2002 2002 2002 2000 2000 2000 2001 2001 2000 2002 2001 Corporate and International Banking Specialized Financing Private Equity BFTS* Asset Management & Insurance Capital Markets *Banking, Financial and Technology Services

  18. Average outstanding loans and commitments • € billions(on and off-balance sheet) +3% 69.9 67.9 Specialized Financing +4% Corporate loans Corporate and International Banking +1% Other financing * Dec 31 2001 Dec. 31 2002 * Asset and acquisition financing, trade finance, commodities financing

  19. Assets under management • € billions Employee savings plans 14% Managed funds 56% - 4 +6.6 72.5 Private asset management 3% 69.9 Long-term 20% Valuation Net new money International estate planning 2% Money Market 36% Real estate management 1% Insurance 24% 12/31/01 12/31/02 €72.5 billionat Dec. 31, 2002

  20. General operating expenses excluding Coface Change € millions 02/01 2002 2001 1,227 • General operating expenses1,259 • Payroll costs 669 • Other and depreciation/amortization 590 • Cost/income ratio 78% +3% +3% 649 578 +2% 67% • Number of employees at December 31, 2002 (1) : 7,838 (1) FTE (long-term + short-term contracts)

  21. Loan loss provisions 0.4 0.34 600 0.35 0.32 500 0.3 0.27 0.27 416 407 0.25 400 358 * 345 € millions % of risk-weighted assets 0.2 300 263 263 242 0.15 193 184 187 200 146 138 0.1 100 0.05 0 0 1999 2000 2001 2002 Industry and country risk provisions Loan loss provisions as % of risk-weighted assets FGBR Loan loss provisions * Decrease related to currency effects and lower outstanding basis

  22. Income before exceptionals by core business • € millions 284 282 300 250 200 150 99 97 71 100 50 -80 0 2001 2002 2001 2002 -50 -100 Financing Investment Banking Services (excluding income from investment of equity capital)

  23. € millions % change 2002 2001 926 4 (519) (58) (383) (31) 7 68 44 57 (8) 93 973 (7) (501) (61) (393) 10 4 21 35 5 (2) 38 +5% NM -4% +6% +3% NM -46% -69% -20% -91% -68% -60% Coface income statement based on insurance GAAP • Revenues • Change in unearned premiums provision • Claims expenses • External business acquisition costs: commissions • Other administrative expenses • Gross operating margin • Reinsurance result • Change in claims equalization provision • Operating margin • Net investment income • Employee profit-sharing • Income before exceptional items and tax (= gross operating income under bank GAAP)

  24. Coface income statement based on bank GAAP € millions 2002 2001 % change • Cont. to net banking income from insurance operations • Revenues • Claims expenses (risk-related expenses) • Brokerage and acquisition commissions • Net investment income • Other • Cont. to net banking income from service operations • Insurance-related services • Management of public procedures • Credit and marketing information and receivables mangt. services • Net banking income • Expenses Cost/income ratio • Gross operating income (= income before exceptional items and tax under insurance GAAP) • Income from companies at equity • Income before exceptional items and tax • Exceptional items • Corporate income tax • Goodwill amortization • Minority interests • Net income 159 707 (501) (61) 5 9 251 88 61 102 410 (372) 91% 38 4 41 (3) (10) (4) (5) 19 219 667 (519) (58) 57 72 243 81 67 95 462 (369) 80% 93 3 96 (3) (33) (4) (7) 48 -28% +3% -11% +1% -60% -57% -61%

  25. Contribution of core businesses to net banking income 1,836 Contribution of other businesses to net banking income(43) • Total net banking income1,793 • General operating expenses 1,446 • Gross operating income347 • Provisions for loan losses, country risks and industry risks (193) • Operating income154 • Income from companies at equity 3 • Net gain (loss) on disposals of fixed assets 53 • Income before exceptional items and tax 210 • Corporate income tax (13) • Other (33) • Minority interests(55) • Net income 108 Income statement including 6-month Coface contribution 2002 € millions

  26. EPS and profitability • Earnings per share (1) €2.4 • NAV per share (2) €75.7 (excluding goodwill) NAV per share (2) €82.8 • ROE 3.1% (1) Based on average number of shares outstanding during the year (44.7 million in 2002) (2) Based on number of shares outstanding at year-end (47.4 million at December 31, 2002)

  27. Credit risk: Coverage of non-performing loans Dec 31 2002 Dec 31 2001 € billions • Total loans 54.1 53.4 • Non-performing loans 1.72 1.63 • Non-performing loans as % of total 3.2% 3.1% • Specific provisions 1.04 1.00 • Provision rate 60.5% 61.3%

  28. Risk-weighted assets € billions Dec. 31 2002 Dec 31 2001 • Credit risks 52.7 51.5 • Corporate and International Banking 37.2 38.6 • Specialized Financing 4.5 4.8 • Other 11.0 8.6 • Market risks 4.5 5.6 • Total risk-weighted assets 57.2 57.1

  29. Regulatory capital € millions Dec. 31 2002 Dec. 31 2001 • Total regulatory capital (1) 5,817 5,602 • Tier One 4,093 4,135 • o/w Fund for general banking risks 242 263 • o/w preferred stock 602 512 • Tier Two and Tier Three 1,724 1,467 • Risk-weighted assets 57,183 57,102 • Tier One Ratio 7.2% 7.2% (1) International solvency ratio definition

  30. 110.00 100,00 NBP 90.00 75 80.00 70.00 62 60.00 CAC 40 50.00 40.00 02/01/02 16/01/02 30/01/02 13/02/02 27/02/02 13/03/02 27/03/02 10/04/02 24/04/02 08/05/02 22/05/02 05/06/02 19/06/02 03/07/02 17/07/02 31/07/02 14/08/02 28/08/02 11/09/02 25/09/02 09/10/02 23/10/02 06/11/02 20/11/02 04/12/02 18/12/02 01/01/03 15/01/03 29/01/03 12/02/03 Ownership structure/ share performance • Banque Fédérale des Banques Populaires: 72.85% • Public and other shareholders: 27.15%o/w employees 4.30%A & S.B Holdings (USA) 2.91% DZ BANK (Germany) 1.95% 100 Source: Datastream

  31. Priority action points for 2003 • Continue to expand businesses with a strong market position backed by recognized expertise • Leverage the potential offered by recent Coface and Natexis Bleichroeder acquisitions • Revamp Capital Markets and BFTS portfolios: • New management team • Review strategies for businesses that are not generating satisfactory profits • Boost sales performance and security levels • Continue the cost-containment drive • Maintain tight control over risks given the unsettled economic backdrop

  32. Appendices

  33. Corporate and International Banking Core business: Financing 2002 Net Banking Income = €701m (up 2%) • Rise in net banking income • Strong growth in corporate financing (up 16%), boosted by a sharp increase in margins without any attendant escalation of risk • Commodity Financing up by a strong 14% but contraction in Structured Finance (LBOs, real estate, financial engineering) • Slight decline in payment media and other banking service revenues (impact of lower interest rates on float contribution) • Controlled growth in risk-bearing assets • Average loans: €63bn (up 3%) • Risk-weighted assets: €37.2bn at Dec. 31, 2002 (down 4%) • Further improvement in cost/income ratio 44% versus 45% in 2001

  34. Specialized Financing Core business: Financing 2002 Net Banking Income = €180m (down 3%) • Factoring • Stable market share for Natexis Factorem despite slowdown in the factoring industry • Contribution to net banking income down 8% to €91m due to lower factoring fees and interest income • Average outstanding financing down 1% to €1.7bn • Real estate and equipment leasing • Modest 1% increase in average financing to €5.2bn • Contribution to net banking income up 3% to €89m • 10% increase in recurring net banking income (mainly powered by equipment leasing) and rise in non-recurring net banking income, driven by disposal gains, especially in real-estate leasing. Default rates rose, however. • Cost/income ratio:46%

  35. Capital Markets Core business: Investment Banking 2002 Net Banking Income = €139m • Equities • AQ Euro 100 ranking: No. 1 European financial analysis team in terms of forecasts • Primary and secondary markets activities affected by dismal stock market conditions • Acquisition of New York-based broker A & S. Bleichroeder completed on December 6, 2002 • Fixed Income, Foreign Exchange and Derivatives • Strong negative impact of equity derivatives business • Substantial rise in net banking income from Forex operations (up 34%) and securities (up 11%). Net banking income from Treasury operations held firm. • Solid performance by bond origination, especially on an international scale • Own account trading • Slight contraction in total net banking income • Natexis ABM's contribution to net banking income negatively impacted by lower interest rates in the US, but sharp rise in contribution from Natexis Metals.

  36. Private Equity Core business: Investment Banking 2002 Net Banking Income = €55m • Proprietary portfolio • New investments 126 119 • Disposals (sale price) 168 193 • Managed net assets, net of provisions(1) (a)805 780 • Unrealized capital gains at Dec. 31 148 187 • Managed private equity funds • New investments 109 166 • Disposals (sale price) 55 100 • External capital under management (2) (b) 738 720 • Total managed assets (a + b) 1,543 € millions 2002 2001 1,500 (1)Including unrealized gains (2) excluding Euromezzanine

  37. Banking, Financial andTechnology Services Core business: Services 2002 Net Banking Income = €258m (down 1%) • Banking services • Net banking income up 11% to €67m • Rapid expansion of mass processing transactions and electronic payments • Financial services • Sharp drop in trade execution volume • Custody services up by a strong 5% to €322bn • 2.6 million portfolios • LineBourse: 30,500 accounts • Net banking income down 7% to €172m

  38. Asset Management and Insurance Core busines: Services 2002 Net Banking Income = €311m (up 6%) • Assets under management up 4% to €72.5bn Fund management • Money market funds: 28% growth in assets under management • Long-term funds: assets under management down 17% • Employee savings plans: Natexis Interépargne has consolidated its leadership in France • 21% market share • 2.1 million accounts managed, up 13% • 15,200 clients, up 54% • Insurance • 4% growth in assets under management, driven by rebound in new money • 3.4 million life policies

  39. Credit risk by client industry Corporate & International Banking loan book (1) Services 10.7% Energy 8.1% Holding companies and conglomerates 8.0% Aerospace, defense, electronics 7.2% Mechanical and electrical engineering 6.8% Financial services, insurance 6.6% Food 6.0% Retailing 5.7% Real estate 5.5% Audiovisual, publishing, cinema, advertising 5.1% Construction and civil engineering 4.8% Manufacturing 4.7% Government 3.5% Consumer goods 3.5% International trade, commodities 3.4% (2) Telecoms 3.1% Pharmaceuticals, healthcare 2.6% Local government services 2.4% Tourism, hotels, leisure 1.8% Other 0.5% (1) €55.3bn (on- and off-balance sheet)(2) Telecoms industry = 0.9%, Telecoms services = 2.2% 0 2 4 6 8 10

  40. Asia and Oceania 2.8% Africa/Middle East 1.4% France 71.1% Latin America 2.0% North America 9.4% Rest of Europe 2.9% Other European Economic Area countries 10.4% Credit risk by geographic area Corporate loans (1) (1) €62.2bn (on- and off-balance sheet) including specialized financing

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