BNP Paribas(US:BNPQY)2020-07-31 18:49Financial Data and Key Indicators Changes - Group revenues increased by 4% year-on-year, reaching €11.7 billion [9] - Net income for the second quarter was €2.3 billion, down 6.8% year-on-year [11] - Common equity Tier 1 ratio stood at 12.4%, confirming the strength of the balance sheet [11][23] - Cost of risk rose to 65 basis points, with €329 million in ex-ante provisioning for expected losses [10][17] Business Line Data and Key Indicators Changes - Domestic markets saw a revenue decline of 5.2% year-on-year, impacted by lockdown measures [30] - Corporate and institutional banking revenues surged by 33%, driven by high activity levels [15][68] - International Financial Services revenues decreased by 5.5% year-on-year, with a notable drop in personal finance [47][49] - Specialized businesses showed strong recovery, with Arval's financed fleet up 7.2% year-on-year [40] Market Data and Key Indicators Changes - BNP Paribas participated in 70% of syndicated loans and 53% of bond issues in Europe, Middle East, and Africa [8] - The group granted close to 90,000 state-guaranteed loans by June 30 [8] - Outstanding loans in international retail networks increased year-on-year, with a rebound in new loan production in May and June [44] Company Strategy and Development Direction - The company aims to enhance its digital platforms and reduce reliance on physical branches, accelerating cost reductions [88] - BNP Paribas is committed to withdrawing from thermal coal financing by 2030 in the EU and OECD, and by 2040 elsewhere [26][27] - The diversified and integrated banking model has proven effective in supporting clients during the health crisis [5][77] Management's Comments on Operating Environment and Future Outlook - Management noted a rebound in economic activity in June, returning to pre-crisis levels in many areas [4][12] - The outlook for 2020 remains unchanged, with net income expected to be 15% to 20% lower compared to the previous year [79] - Management expressed confidence in the recovery of domestic markets and the impact of new lending activities [95] Other Important Information - The group raised over €250 billion in financing during the first half of 2020, with significant contributions to government support measures [7] - The net book value per share increased to €81, reflecting continued value creation [24] Q&A Session Summary Question: Cost base and future expectations - Management acknowledged the acceleration of cost reductions across various divisions, emphasizing a shift towards digital interactions [88][90] Question: Net interest margins in domestic markets - Management indicated that the drop in net interest income is temporary, with expectations for recovery as activities return to normal [93][95] Question: Dividend policy for 2021 - Management confirmed compliance with ECB recommendations on dividends, anticipating a return to a 50% payout ratio once restrictions are lifted [96][98] Question: CET1 ratio and moratoria volumes - Management clarified that the CET1 ratio includes a small impact from transitional arrangements and confirmed moratoria volumes at €54 billion [105][106] Question: Provisions and cost of risk guidance - Management expects the cost of risk in the second half to be lower than the first half, barring any significant changes in the economic environment [121][124] Question: Fixed income revenue expectations - Management anticipates a tapering off of fixed income revenues in the second half, but remains optimistic about maintaining market share [122][123]