NATIXIS Paris, May 6, 2021
1Q21 results
Laying the foundations of the upcoming 2024 strategic plan
Reported net income at +€225m in 1Q21 (€(204)m in 1Q20) and underlying net income1 at +€239m (€(81)m in 1Q20)
Underlying RoTE1 at 10.4% in 1Q21
Basel 3 FL CET1 ratio2 at 11.6% +330bps above regulatory requirements
BUSINESS ACTIVITY
BUSINESSES' UNDERLYING NET REVENUES1 AT €2.1BN IN 1Q21, UP +21% YOY
AWM: Business growth and continued AuM increase
Underlying net revenues1 excl. H2O AM up +11% YoY (flat YoY including H2O AM) mainly driven by higher management fees and financial revenues
Natixis Investment Managers' AuM up +3% QoQ. AuM at €1,153bn3 as at end-March 2021
Positive asset management net inflows on long-term products of ~€6bn3 in 1Q21 mainly driven by North American affiliates with net inflows notably turning positive at Harris. More than €20bn3 positive net inflows on long-term products over the past 12 months
CIB: Continued development and cost of risk improvement
Underlying net revenues1 up +38% YoY (+9% excluding dividend mark-downs and XvA impacts in 1Q20). Net revenue growth mainly driven by Global markets and Global finance
Underlying cost income ratio1 improving to 58.6% in 1Q21 (78.0% in 1Q20) thanks to a positive jaw effect
Cost of risk benefiting from a favorable environment in 1Q21 although still at elevated levels at 52bps of outstandings
Underlying RoE1 at 12.3% in 1Q21
Insurance: Solid commercial activity and financials
Underlying net revenues1 up +5% YoY in 1Q21 with a positive jaw effect
Underlying RoE1 at ~30% in 1Q21
Life Insurance4: AuM growth of +4% QoQ to reach €75.7bn (of which 27% of unit-linked products)
Payments: Net revenue growth and investments
Underlying net revenues1 up +4% YoY in 1Q21 despite COVID-19 lockdown measures in France
Underlying RoE1 at 10.6% in 1Q21 while maintaining investment in order to ensure a sustainable development
FINANCIAL STRENGTH
Underlying net income1 at +€239m in 1Q21 (+€225m reported) vs. €(81)m in 1Q20 (€(204)m reported). Underlying RoTE1 at 10.4% in 1Q21
Basel 3 FL CET1 ratio2 at 11.6% as at March 31, 2021 (flat vs. 4Q20), +330bps above regulatory requirements
"Natixis' results for the first quarter of 2021 continue the positive momentum underway since the second half of 2020. Our business lines are on a sustainable growth path, underpinned by the transformation measures undertaken over recent months.
These results represent a solid base for the kick-off of the 2021-2024 strategic plan and for the ongoing growth of Natixis' four businesses under the simplification and development project presented by Groupe BPCE in February.
I would like to pay tribute to the exceptional commitment of our teams who have remained fully mobilized throughout this unprecedented crisis to support our clients and contribute to a sustainable economic recovery."
Nicolas Namias, Natixis Chief Executive Officer
2020 figures restated for the evolution of the standards applied as well as the evolution of the Asset and wealth management organization as of January 1st, 2021 (see note on methodology) 1 Excluding exceptional items. Excluding exceptional items and excluding IFRIC 21 in 4Q for cost/income, RoE and RoTE 2 See note on methodology 3 Excluding H2O AM (~€18bn AuM as at March 31, 2021) 4 Excluding reinsurance agreement with CNP
Natixis - 30, avenue Pierre Mendès France - 75013 Paris - Address: BP 4 - 75060 Paris Cedex 02 - France - Tel: +33 1 58 32 30 00 - www.natixis.com
Limited liability company with a Board of Directors, with a share capital of 5,052,644,851.20 euros - Trade register No. 542 044 524 - VAT: FR 73 542 044 524
1Q21 RESULTS
On May 06th, 2021, the Board of Directors examined Natixis' first quarter 2021 results
1Q21 | 1Q20 | 1Q21 vs. | 1Q21 | 1Q20 | 1Q21 vs. | 1Q21 | 1Q20 | 1Q21 vs. | |||||||||
1Q20 | |||||||||||||||||
€m | 1Q20 | o/w | o/w | 1Q20 | underlying | underlying | |||||||||||
restated | restated | underlying | |||||||||||||||
restated | underlying | underlying | underlying | incl. H2O | incl. H2O | ||||||||||||
incl. H2O | |||||||||||||||||
Net revenues | 2,073 | 1,655 | 25% | 2,049 | 1,638 | 25% | 2,068 | 1,733 | 19% | ||||||||
o/w businesses | 2,037 | 1,693 | 20% | 2,052 | 1,700 | 21% | 2,071 | 1,795 | 15% | ||||||||
Expenses | (1,659) | (1,560) | 6% | (1,614) | (1,557) | 4% | (1,628) | (1,579) | 3% | ||||||||
Gross operating income | 414 | 95 | x4.4 | 435 | 81 | x5.4 | 440 | 153 | x2.9 | ||||||||
Provision for credit losses | (92) | (193) | (92) | (193) | (92) | (193) | |||||||||||
Net operating income | 323 | (98) | NR | 344 | (113) | NR | 349 | (40) | NR | ||||||||
Associates and other items | 6 | (8) | 6 | 6 | 4 | 6 | |||||||||||
Pre-tax profit | 328 | (107) | NR | 349 | (107) | NR | 353 | (34) | NR | ||||||||
Income tax | (95) | 1 | (100) | 5 | (102) | (9) | |||||||||||
Minority interests | (10) | (10) | (11) | (10) | (12) | (39) | |||||||||||
Net income - group share excl. Coface & H2O AM | 224 | (116) | NR | 239 | (111) | NR | |||||||||||
Coface net contribution | 7 | (118) | 0 | 1 | 0 | 1 | |||||||||||
H2O AM net contribution | (6) | 29 | 0 | 29 | 0 | 0 | |||||||||||
Net income - group share incl. Coface & H2O AM | 225 | (204) | NR | 239 | (81) | NR | 239 | (81) | NR |
Underlying net revenues are up +25% YoY (+19% including H2O AM) off a low base due to several items, all directly or indirectly linked to the COVID-19 context having impacted 1Q20 (seed money portfolio mark-downs, dividend mark-downs on equity products, XvA - see page 12). All businesses are featuring YoY revenue growth with CIB up +38% YoY, AWM up +11% YoY, Insurance up +5% YoY and Payments up +4% YoY.
Underlying expenses are up +4% YoY reflecting top line growth and related impacts on variable costs. The underlying cost/income ratio1 stands at 72.3% in 1Q21 (85.2% in 1Q20).
The underlying cost of risk has improved both QoQ and YoY although remaining above its through-the-cycle level (see below for exposures to "sensitive" sectors). Expressed in basis points of loans outstanding (excluding credit institutions), the businesses' underlying cost of risk worked out to 52bps in 1Q21.
Net income (group share), adjusted for IFRIC 21 and excluding exceptional items reached €353m in 1Q21. Accounting for exceptional items (€(14)m net of tax in 1Q21) and IFRIC 21 impact (€114m in 1Q21) the reported net income (group share) in 1Q21 at €225m.
The Natixis' underlying RoTE1 reached 10.4% in 1Q21 excl. IFRIC 21 (vs. 0.8% in 1Q20).
Natixis' exposure to the Oil & Gas sector stood at ~€10.2bn of net EAD2 (Exposure at Default) as at 31/03/2021 (~60% Investment Grade) of which ~€0.7bn across US independent producers and service companies which have a more limited absorption capacity of lower oil price. As at 31/13/2021, the exposure to Aviation stood at ~€3.8bn of net EAD2, was well diversified across more than 30 countries (none of which exceeding 25% of the exposure), secured for >90% and majority Investment Grade. The exposure to Tourism & Leisure stood at ~€2.1bn of net EAD as at 31/03/2021, mainly in the EMEA region and geared towards industry leaders.
1See note on methodology. Excluding exceptional items and excluding IFRIC 21 2Energy & Natural Resources + Real Assets perimeters
2
1Q21 RESULTS Exceptional items
€m | 1Q21 | 1Q20 | ||||||||||
Exchange rate fluctuations on DSN in currencies (Net revenues) | Corporate center | 39 | 24 | |||||||||
Provision for litigation (Net revenues) | CIB | (15) | (0) | |||||||||
Contribution to the Insurance solidarity fund (Net revenues) | Insurance | 0 | (7) | |||||||||
Transformation & Business Efficiency Investment costs (Expenses) | Business lines & Corporate center | (28) | 0 | |||||||||
Real estate management strategy and other (Expenses) | Business lines & Corporate center | (17) | (3) | |||||||||
Impact of Liban default on ADIR Insurance (Associates) | Insurance | 0 | (14) | |||||||||
Coface residual stake valuation (Coface net contribution) | Coface | 7 | (7) | |||||||||
Coface capital loss (Coface net contribution) | Coface | 0 | (112) | |||||||||
H2O AM exchange rate fluctuations (H2O AM net contribution) | H2O AM | (6) | 0 | |||||||||
Total impact on income tax | 5 | (4) | ||||||||||
Total impact on minority interests | 1 | 0 | ||||||||||
Total impact on net income (gs) | (14) | (123) | ||||||||||
Breakdown of Transformation & Business Efficiency Investment costs by businesses | ||||||||||||
€m | 1Q21 | 1Q20 | ||||||||||
AWM | (6) | 0 | ||||||||||
CIB | (7) | 0 | ||||||||||
Insurance | (0) | 0 | ||||||||||
Payments | (1) | 0 | ||||||||||
Corporate center | (14) | (0) | ||||||||||
Impact on expenses | (28) | 0 | ||||||||||
Real estate management strategy and other - €(14)m in the Corporate center and €(3)m in Payments in 1Q21. Mainly Corporate center in 1Q20
3
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see details page 3)
Asset & Wealth Management
€m | 1Q21 | 1Q20 | 1Q21 | 1Q21 | ||
vs. 1Q20 | ||||||
vs. 1Q20 | ||||||
constant FX | ||||||
Net revenues | 755 | 680 | 11% | 17% | ||
o/w Asset Management1 | ||||||
689 | 615 | 12% | 19% | |||
o/w Employee savings plan | 25 | 24 | 4% | 4% | ||
o/w Wealth management | 41 | 41 | 1% | 1% | ||
Expenses | (581) | (559) | 4% | 9% | ||
Gross operating income | 174 | 121 | 44% | 58% | ||
Provision for credit losses | (2) | 1 | ||||
Associates and other items | (0) | (2) | ||||
Pre-tax profit | 172 | 119 | 44% | |||
Cost/income ratio2 | 76.4% | 81.7% | (5.3)pp | |||
RoE after tax2 | 10.4% | 9.1% | 1.3pp |
AWM including H2O AM
€m | 1Q21 | 1Q20 | 1Q21 | |
vs. 1Q20 | ||||
Net revenues | 773 | 774 | 0% | |
o/w Asset Management1 | 707 | 710 | 0% | |
o/w Employee savings plan | 25 | 24 | 4% | |
o/w Wealth management | 41 | 41 | 1% | |
Expenses | (594) | (581) | 2% | |
Gross operating income | 179 | 193 | (7)% | |
Provision for credit losses | (2) | 1 | ||
Associates and other items | (2) | (2) | ||
Pre-tax profit | 175 | 192 | (9)% | |
The AWM underlying gross operating income is up +44% YoY in 1Q21. AM net revenues excluding performance fees are up +10% YoY in 1Q21, mainly driven by higher management fees and financial revenues. AM perf. fees reached €18m in 1Q21 vs. €3m in 1Q20 (excl. H2O AM) and are mainly coming from Loomis. The net revenue contribution is up YoY across affiliates in both North America and Europe. AWM underlying expenses are up +4% in 1Q21 including a -4% YoY reduction in AM non-comp expenses at constant exchange rate, translating into positive jaws.
The Asset management overall fee rate excluding performance fees and excluding H2O AMis at ~23bps in 1Q21 and ~37bps excl. Ostrum AM (-0.7bpsQoQ). Fee rate at ~34bps for North American affiliates and at ~39bps for European affiliates excl. Ostrum AM, which fee rate stands at ~3bps.
Asset management AuM3 are up +3% QoQ at €1,153bn with positive net inflows, a positive market effect (+€9bn) and FX/other impact (+€22bn). An improvement in funds' performance and percentile rankings can be noticed in 1Q21 with ~75% of funds in the first two quartiles on a 3-year view and ~85% on a 5-year view (o/w ~30% in the first decile). AM net inflows3 on LT products reached ~€6bn in 1Q21 driven by North American affiliates across fixed income and equity strategies. Positive net inflows at Harris Associates (AuM now >$115bn) driven by institutional accounts. Flat flows into European affiliates with a continued strong momentum for ESG strategies and private assets offsetting outflows on life insurance products. The US and International distribution platforms are supportive of the flow dynamics with >€20bn of net inflows on LT products over the last 12 months.
1Asset management including Private equity 2 See note on methodology. Excluding exceptional items and excluding IFRIC 21 3 Europe including Dynamic Solutions and Vega IM AuM, excluding H2O AM (€18bn AuM as at 31/03/2021). US including WCM IM
4
Unless specified otherwise, the following comments and data refer to underlying results, i.e. excluding exceptional items (see details page 3)
Corporate & Investment Banking
€m | 1Q21 | 1Q20 | 1Q21 | 1Q21 | |||||
vs. 1Q20 | |||||||||
vs. 1Q20 | |||||||||
constant FX | |||||||||
Net revenues | 940 | 680 | 38% | 43% | |||||
Net revenues excl. CVA/DVA/Other | 929 | 733 | 27% | 31% | |||||
Expenses | (576) | (559) | 3% | 6% | |||||
Gross operating income | 364 | 121 | x3.0 | x3.3 | |||||
Provision for credit losses | (81) | (194) | |||||||
Associates and other items | 3 | 2 | |||||||
Pre-tax profit | 286 | (70) | NR | ||||||
Cost/income ratio1 | 58.6% | 78.0% | (19.4)pp | ||||||
RoE after tax1 | 12.3% | (1.9)% | 14.2pp |
Underlying net revenues are up +38% YoY in 1Q21 off a low base due to 1Q20 notably being impacted by dividend cancellations and xVA effects. Excluding such items, net revenues would be up +9% YoY.
Global markets: FICT revenues are up QoQ at €330m in 1Q21, although down YoY due to a lower contribution from Treasury and FX that benefited from the high market volatility of end-1Q20. Solid growth in Credit. Equity revenues are at €167m in 1Q21 on the back of favorable market conditions and a strong commercial activity, notably with Groupe BPCE retail networks.
Global finance: Net revenues are at €336m in 1Q21, up +13% YoY, driven by higher portfolio revenues generated with corporates as well as on Real estate and Infrastructure notably.
Investment banking/M&A: Investment banking revenues are benefiting from strong activity levels in DCM in 1Q21. M&A revenues are down YoY on a good 1Q20.
The underlying cost/income ratio1 is at 58.6% in 1Q21 (78.0% in 1Q20) with a positive jaw effect despite higher variable costs reflecting the top-line performance of the quarter.
The underlying cost of risk is improving and benefiting from the 1Q21 environment although still at elevated levels with impairments notably coming from Tourism and Aviation.
The underlying RoE1 is at 12.3% in 1Q21.
1 See note on methodology. Excluding exceptional items and excluding IFRIC 21
5
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
Natixis SA published this content on 06 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 May 2021 15:55:07 UTC.
