BNP Paribas(US:BNPQY)2023-05-04 03:13Financial Data and Key Metrics Changes - BNP Paribas reported a distributable net income of €2.8 billion for Q1 2023, with earnings per share (EPS) of €2.19, representing a 43% increase year-on-year [7][10] - The underlying group's revenue growth was 5.3% year-on-year, with operating expenses increasing by only 3.8%, resulting in a positive jaws effect of 1.5 points [8][9] - The cost of risk was low at 28 basis points, significantly below the guidance of less than 40 basis points [9][27] Business Line Data and Key Metrics Changes - Corporate and Institutional Banking (CIB) revenues increased by 4%, driven by strong performance in Global Banking and Securities Services [22] - Commercial, Personal Banking and Services (CPBS) saw a revenue increase of 5.9%, supported by strong commercial and personal banking activities [22][43] - Investment and Protection Services (IPS) revenues rose by 0.6%, with strong growth in Insurance and Wealth Management offset by weaker performance in Asset Management [50][51] Market Data and Key Metrics Changes - The liquidity coverage ratio (LCR) improved to 139%, up 10 percentage points from December 2022, indicating strong liquidity management [9][30] - The common equity Tier 1 ratio stood at 13.6%, reflecting a solid financial structure post the sale of Bank of the West [9][28] Company Strategy and Development Direction - BNP Paribas aims to achieve its ambitious targets for 2023 and 2025, focusing on organic growth and avoiding acquisitions of other banks [5][58] - The company plans to redeploy proceeds from the sale of Bank of the West to enhance long-term growth, with a focus on maintaining a strong balance sheet [18][58] - The strategic plan emphasizes financing the energy transition and supporting clients in transitioning to a sustainable economy [34][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model, anticipating continued growth despite potential economic challenges [60] - The company does not foresee a recession in Europe, expecting only sluggish growth, supported by strong client activity and favorable commodity prices [60] - Management confirmed that the distributable income for 2023 is expected to exceed €11.2 billion, with confidence in maintaining performance levels throughout the year [64][67] Other Important Information - BNP Paribas launched the first tranche of a €2.5 billion share buyback program, with plans for a total of €5 billion in buybacks for the first half of the year [10][17] - The company is committed to a socially responsible strategy, focusing on diversity, inclusion, and employee development as part of its People Strategy 2025 [35] Q&A Session Summary Question: Update on Bank of the West capital deployment - Management confirmed that the redeployment will be organic, focusing on existing client relationships and avoiding acquisitions of other banks [58] Question: Impact of U.S. banking crisis on lending growth - Management indicated that the situation in the U.S. differs from Europe, with no anticipated systemic issues in the Eurozone banking environment [60] Question: Guidance on distributable income for 2023 - Management expressed confidence that the run-of-the-mill business will compensate for the impact of the Bank of the West sale, maintaining similar performance levels throughout the year [64][67] Question: Cost of risk sustainability - Management stated that while the current cost of risk is low, it is expected to remain below 40 basis points, with a focus on prudent provisioning [71] Question: Share buyback completion timeline - Management plans to complete the first tranche of the buyback by September, with ECB permission sought beforehand [70]