2020 Universal registration document and annual financial report - BNP PARIBAS 137
32020 review of oPerations
3
Core Business results
For the whole of 2020, CIB achieved excellent performances in the service of all its client segments.
Sales and marketing drive was strong in all its businesses. Financing was exceptional in syndicated loans early in the year, with momentum carrying over to bond and equity issuance beginning in the second quarter of 2020, thus accompanying the strengthening of corporates balance sheets. Market activities experienced a very good level of activity, driven by client needs. After the extreme shocks of the first half of 2020(1), activity normalised in equity derivatives in the second half of 2020. Lastly, Securities Services achieved a good level of activity, with very sustained transactions volumes throughout the year.
This period of intense activity was an opportunity to strengthen client positions in all regions, and to affirm European leadership in EMEA(2). The strengthened commercial set-ups and plans targeted by region and by country leveraged the Group s global footprint and the offering of other businesses. Cross-region deals developed in the Americas and the Asia-Pacific region.
The division s revenues, at 13,763 million euros, were up strongly (+13.9% compared to 2019). Revenues were up in all three businesses.
Corporate Banking revenues, at 4,727 million euros, rose by 9.6% compared to 2019. They rose in all regions and particularly in Europe. Cash management activities held up well, and trade finance recorded lower volumes due to the health crisis.
Corporate Banking ranked No. 1 in syndicated credits in EMEA(3) and for European corporate bond issues(4). It also ranked No. 4 and the 1st European player in Investment Banking in the EMEA(5) region and No. 1 in Corporate Banking, cash management and trade finance for large corporates in Europe(6), thanks to its constantly rising penetration of large corporates. Business growth was outstanding. Loans outstanding, at 161 billion euros(7), were up by 11.2%(8) compared to 2019 with a normalisation in the second half after a peak in the first half of the year. Deposits, at 178 billion euros(7), were up by 26.3%(8) compared to 2019. Volumes were up strongly (+69.9% compared to 2019) in ECM (Equity Capital Markets) activities, with the business achieving considerable market share gains in both volume and number of deals.
Global Markets revenues, at 6,819 million euros, were up sharply by 22.4% compared to 2019, driven by very sustained client activity. The year was marked by strong growth at FICC(9) in all businesses and regions to meet
customer needs. Equity and Prime Services suffered from the impact of exceptional shocks in the first quarter of 2020 with a return to normal in the second half. VaR (1 day, 99%), which measures the level of market risks, came to 45 million euros on average. It decreased in the second half after its late-March peak but remained above its 2019 low point.
Global Markets activity was very sustained. On the primary market, the business achieved a good level of bond issuance in 2020 (+23% compared to 2019) and ranked No. 1 for bonds in euros(10). The business continued to implement the agreement with Deutsche Bank in line with the established schedule.
At 5,652 million euros, FICC(9) revenues achieved exceptional growth compared to 2019 (+58.6%).
Equity and Prime Services revenues, at 1,166 million euros, were down by 41.9% compared to 2019, due to the exceptional shocks of the first quarter of 2020.
Securities Services revenues, at 2,217 million euros, were up by 0.9% at historical scope and exchange rates and by 2.3% at constant scope and exchange rates compared to 2019, with the growth in transactions fees and a rebound in assets under custody. The business drive was well oriented, with the finalisation in the fourth quarter 2020 of the partnership signed in 2019 with Allfunds to create a world leader in fund distribution services, as well as the launch of new and very significant partnerships. Custodial services for the private capital sector grew fast with a position as No. 1 in Luxembourg(11).
CIB s operating expenses, at 8,920 million euros, rose by 3.0% compared to 2019, due to the high level of activity, this increase being nonetheless contained by the continued effect of cost-saving measures. CIB thus generated a very positive jaws effect (12.5 points at constant scope and exchange rates).
CIB s gross operating income was thus up sharply by 41.7% to 4,843 million euros.
Corporate Banking s cost of risk came to 1,308 million euros, up by 1,085 million euros compared to 2019, due to the provisioning of performing loans (stages 1 and 2), as well as specific files (stage 3).
CIB thus generated 3,454 million euros in pre-tax income in 2020, up by 7.7% compared to 2019.
(1) In particular in 1Q20, with the - 184m impact of restrictions by European authorities on the payment of 2019 dividends.
(2) Source: Coalition Proprietary Analytics, ranking on the basis of revenues in the first nine months of 2020 EMEA: Europe, Middle East and Africa.
(3) EMEA: Europe, Middle East and Africa.
(4) Source: Dealogic as at 31 December 2020, bookrunner ranking in volume Global Corporate Investment Grade Bonds, European Corporate Investment Grade Bonds, EMEA Loans and EMEA Equity Capital Markets; EMEA: Europe, Middle East and Africa.
(5) Source: Dealogic as at 31 December 2020, rankings in terms of revenues.
(6) Source: Greenwich Share Leaders 2020 European Large Corporates Trade Finance.
(7) Average outstandings.
(8) Change at constant scope and exchange rates.
(9) Fixed Income, Currencies and Commodities.
(10) Source: Dealogic at 31 December 2020; bookrunner and volume ranking.
(11) Source: Monterey Insight Survey.
