BPCE - 2019 Universal Registration Document

ACTIVITIES AND FINANCIAL INFORMATIONS 2019

GROUPE BPCE FINANCIAL DATA

Corporate and Investment Banking (CIB) 4.3.6

Corporate & Investment Banking

Chg. 2019/2018 pf

2019

2018 pf

€m

%

in millions of euros

Net banking income Operating expenses

3,337

3,266

71

2.2% 1.5% 3.6%

(2,235) 1,102 67.0%

(2,202) 1,064 67.4%

(33)

Gross operating income

38

Cost/income ratio

-

-0.4 pt 79.2% (10.3%)

Cost of risk

(312)

(174)

(138)

Share in income of equity-accounted associates

10

12

(1)

Gains or losses on other assets

(15) 786

3

(18)

ns

Income before tax

904

(118)

(13.1%)

In 2019, Corporate & Investment Banking’s net banking income remained stable in relation to 2018 at constant exchange rates. Excluding non-recurring items and one-off Autocalls in Asia (€259 million in the fourth quarter of 2018), net banking income decreased by 5.4% at constant exchange rates. Capital market revenues totaled €1,509 million in 2019, up 11.4% compared with 2018 at constant exchange rates. Revenues from fixed income, forex, credit, commodities and treasury activities stood at €1,118 million in 2019, down 4.9% on 2018 at constant exchange rates. The following changes were observed in each segment: fixed Income and Forex revenues were down 23.9%, with • Fixed Income falling 23.7%, attributable to less dynamic sales in France and Asia in long-term issues, and with forex activities falling 24.3% in a context of low currency volatility and a decrease in flow volumes; credit revenues were up 15.1% compared to 2018. The • business was impacted by continued growth in securitization activities, in both Europe and the US; revenues on the repo activities, now shared 50/50 between • Fixed Income and Equity, were down 7.5% on 2018, impacted by stricter regulatory constraints and in a competitive market that caused a tightening of margins. Revenues in the joint venture activities ( i.e. whose results are also shared between Global Markets and Investment Banking to ensure the alignment of teams) experienced a mixed performance in 2019. Strategic Financing and Acquisitions posted a limited 1.2% decline in revenue in a LBO market that showed signs of tension. Revenues from Syndication on the bond market rose 33.5% compared with 2018. The revenues generated on the primary bond issuance market increased 10.8%, while revenues on the secondary market improved sharply thanks to a favorable base effect. Negative impacts were recorded during the last quarter of 2018 on the management of debt positions in a very unfavorable market environment. Revenues from the equity activities totaled €417 million, up 135.0% at constant exchange rates in relation to 2018, and

slightly lower (-4.4%) excluding one-off Autocalls in Asia. Sales activity was redirected to new products during 2019. At €1,408 million, Financing revenues including TTS (Trade & Treasury Solutions) and the cinema financing activities (Coficiné) decreased by 4.8% at constant exchange rates in relation to 2018. Revenues from origination and syndication were down 18.1% versus 2018, impacted by the fall in securitization of real estate loans in the US in a less dynamic market, particularly in the CMBS segment. Revenues from the financing portfolio remained stable at constant exchange rates, amid ongoing pressure on margins. Revenues from the ENR (Energy & Natural Resources) Trade finance activity fell by 11.2% at constant exchange rates, hurt by a lower average oil price per barrel than in 2018. Revenues from Investment Banking, including M&A activities, were up 4.8% year-on-year at constant exchange rates to €395 million. In 2019, Corporate & Investment Banking’s expenses totaled €2,235 million, up 1.5% at current exchange rates and stable compared to 2018 at constant exchange rates. Excluding non-recurring items, its expenses came to €2,208 million in 2019, an increase of 0.9% at current exchange rates, and decrease of 0.8% at constant exchange rates, linked to the decline in variable expenses. Gross operating income totaled €1,102 million, up 3.6% compared with 2018 at current exchange rates and up 0.6% at constant exchange rates. Excluding non-recurring items, it amounted to €1,129 million, up 8.4% at constant exchange rates. The cost/income ratio came to 67.0% in 2019 (66.2% excluding non-recurring items), an improvement of 0.4 of a point versus 2018 (67.4%), including non-recurring items. At €312 million, the cost of risk rose by 79.2% versus 2018 (including non-recurring items). Income before tax totaled €786 million, down 13.1% compared with 2018 at current exchange rates, including a capital loss on the disposal of the subsidiary in Brazil for €14.5 million recognized in Q1 2019 under gains or losses on other assets. Excluding non-recurring items, it amounted to €827 million, down 12.9% at constant exchange rates.

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE