2020 Universal registration document and annual financial report - BNP PARIBAS 123
32020 review of oPerations
3
BNP Paribas consolidated results
Thanks to the successful digital and industrial transformation, the Group s operating expenses, at 30,194 million euros, were down by 3.6% compared to 2019, in line with the objectives of the 2020 plan. The Group s operating expenses included the following exceptional items for a total of 521 million euros (compared with 1,217 million euros in 2019): 211 million euros in restructuring(1) and adaptation(2) costs (compared with 473 million euros in 2019), 178 million euros in IT reinforcement costs, and 132 million euros in donations and staff safety measures relating to the health crisis. As announced, exceptional transformation costs were nil; they amounted to 744 million euros in 2019.
The operating expenses of the operating divisions were down by 1.0% compared to 2019. They decreased by 1.6% at Domestic Markets(3), with a more pronounced decrease in the networks(4) (-2.7%), while the division s specialised businesses were up but achieved a positive jaws effect of 4.3 points. Operating expenses were down by 3.7%(5) at International Financial Services, thanks to cost-saving measures that were accentuated with the health crisis. CIB s operating expenses were up by 3.0%, due to business growth, but were contained by cost-saving measures. CIB achieved a very positive jaws effect of 10.9 points.
The proven effectiveness of the digital and industrial transformation and good cost containment thus allowed the Group to generate a positive 2.9-point jaws effect (1.2 points in the operating divisions).
The Group s gross operating income thus came to 14,081 million euros, up by 6.2%.
Cost of risk, at 5,717 million euros, rose by 2,514 million euros compared to 2019. It stood at 66 basis points of outstanding customer loans, including 16 basis points (1.4 billion euros) related to the provisioning of performing loans (stages 1 and 2).
The Group s operating income, at 8,364 million euros, was thus down by 16.8%.
Non-operating items totalled 1,458 million euros, up from 2019 (1,337 million euros). They included +699 million euros in capital gains from the sale of buildings, a +371 million euro capital gain related to the strategic agreement with Allfunds, as well as a -130 million euro impairment of an investment accounted for under equity method. In 2019, they had reflected the exceptional impact of the 16.8% capital gain from the sale of SBI Life in India, followed by the deconsolidation of the residual stake(6) (+1,450 million euros), the +101 million euro capital gain from the sale of a building, as well as goodwill impairments (-818 million euros).
Pre-tax income, at 9,822 million euros (11,394 million euros in 2019), was down by 13.8%.
Total corporate income taxes stood at 2,407 million euros. The average corporate tax rate was 25.6%, compared to 24.2% in 2019. At 1,323 million euros, taxes subject to IFRIC 21 increased by 158 million euros compared to 2019.
The Group s net income attributable to equity holders thus came to 7,067 million euros, down by 13.5% compared to 2019. Excluding exceptional items, it came to 6,803 million euros, down by 19.2%.
The return on tangible equity not revaluated(7) was 7.6% and reflected the good resilience of the results, thanks to the strength of the Group s diversified and integrated model in a context strongly marked by the health crisis.
As at 31 December 2020, the common equity Tier 1 ratio stood at 12.8%, up by 70 basis points compared to 31 December 2019. The Group s immediately available liquidity reserve totalled 432 billion euros, equivalent to more than one year of room to manoeuvre in terms of wholesale funding. The leverage ratio(8) stood at 4.9% taking into account the temporary exemptions related to deposits with Eurosystem central banks (4.4% excluding this effect).
Tangible net book value per share(9) reached 73.2 euros, equivalent to a compound annual growth rate of 7.2% since 31 December 2008, illustrating the continuous value creation throughout the cycle.
The Board of directors will propose to the shareholders Annual General Meeting to pay out a dividend of 1.11 euro per share in May 2021 in cash(10), equivalent to 21% of 2020 net income, maximum amount based on the European Central Bank recommendation of 15 December 2020(11). The additional restitution of 29% of 2020 net income is intended after the end of September 2021 in the form of share buybacks(12) or distribution of reserves(13) as soon as the ECB repeals its recommendation, which it is expected to do by the end of September 2021 in the absence of materially adverse developments .
The Group pursues its ambitious policy of engagement in society through transformation projects that will continue into 2021 with, in particular, the strengthening of the ESG(14) set-up, the implementation of steering tools to align the loan portfolio emissions with the Paris Agreement trajectory, and the mobilisation in favour of thematics having a strong contribution to meet the United Nations Sustainable Development Goals. The Group s action in this area has been recognised by ShareAction ( European leader in managing climate risks ), Euromoney magazine ( World Best Bank for Financial Inclusion , thanks to the support for microfinance and inclusive products and services).
The Group continued to reinforce its internal control set-up.
(1) Related in particular to the restructuring of certain businesses (amongst others CIB).
(2) Adaptation measures related in particular to BancWest and CIB.
(3) Including 100% of Private Banks in the domestic networks (excluding PEL/CEL effects).
(4) FRB, BNL bc and BRB.
(5) -1.6% at constant scope and exchange rates.
(6) 5.2% residual stake in SBI Life.
(7) With 2019 earnings placed into reserves.
(8) Calculated in accordance with Regulation (EU) No. 2020/873, Article 500b.
(9) Revaluated with 2019 earnings placed into reserves.
(10) Subject to the approval of the Annual General Meeting of 18 May 2021: detached on 24 May 2021 and paid out on 26 May 2021.
(11) [ ] until 30 September 2021 [ ] the ECB expects dividends and share buy-backs to remain below 15% of the cumulated profit for 2019-20 and not higher than 20 basis points of the CET1 ratio.
(12) Subject to European Central Bank approval.
(13) Subject to European Central Bank and Annual General Meeting approval.
(14) Environmental, Social, Governance risks.
