BNP Paribas(US:BNPQY)2023-02-07 23:02Financial Data and Key Indicator Changes - BNP Paribas reported a net income growth of 7.5% year-on-year, reaching €10.2 billion, with a 19% increase when excluding exceptional items [5][6] - The Group achieved a revenue growth of 9% year-on-year, with Corporate and Institutional Banking (CIB) up 15.7%, Commercial and Personal Banking Services (CPBS) up 9.3%, and Investment and Protection Services (IPS) up 3% [5][26] - The cost of risk remained low at 31 basis points of loans outstanding, and the Group's core Tier 1 ratio increased by 20 basis points to 12.3% as of December 2022 [7][33] Business Line Data and Key Indicator Changes - CIB revenues grew by 15.7%, driven by strong client activity and market share gains, particularly in global markets and security services [26][56] - CPBS revenues increased by 9.3%, supported by a favorable interest rate environment and strong performance in commercial and personal banking [63][68] - IPS revenues rose by 3%, with strong inflows in wealth management despite a challenging market environment [78][84] Market Data and Key Indicator Changes - The Group anticipates a positive impact of higher interest rates, expecting an additional €2 billion in net interest income by 2025, primarily benefiting CPBS [15][16] - The sale of Bank of the West is expected to enhance the Group's capital position, contributing approximately 170 basis points to the core Tier 1 ratio [12][36] Company Strategy and Development Direction - BNP Paribas aims to boost organic growth and make targeted investments in technology and sustainable business models, with a focus on maintaining a disciplined approach to growth [14][87] - The strategic plan "Growth, Technology & Sustainability 2025" has been revised upwards, with a new target for compound annual growth in net income of more than 9% [16][87] - The Group plans to execute a €5 billion share buyback program in 2023 to enhance shareholder returns [9][87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Group's ability to deliver strong growth in net income and EPS, driven by disciplined cost management and a favorable interest rate environment [20][87] - The Group anticipates that 2023 will be a pivotal year, with adjusted distributable income expected to increase by €1 billion [18][20] Other Important Information - The sale of Bank of the West was completed for a total consideration of $16.3 billion, resulting in a net capital gain of around €3 billion [12][11] - BNP Paribas is committed to financing the energy transition, with specific targets for sustainable loans and investments by 2025 [46][48] Q&A Session Summary Question: Can you explain the organic growth expectations for 2023? - Management indicated that organic growth will be driven by a combination of net interest income and cost management, with a target of exceeding €11 billion in distributable income for 2023 [90][94] Question: What are the capital impacts from regulatory changes? - Management confirmed that the only expected impact is from IFRS 17, which will reduce the common equity Tier 1 ratio by 10 basis points [97][98] Question: How much of the €7.6 billion from the Bank of the West sale has been redeployed? - Management stated that the focus will be on growing activities that generate fees and commissions, with no plans to acquire another bank [100][101]