Major Global Banks announced their results for 3Q 2015
HSBC, Credit Suisse, Commerzbank, BNP Paribas and Barclays have issued statements to inform public and investors for their results regarding the 3rd Quarter of 2015.
HSBC Holdings plc
3Q 2015 Earnings Release
Highlights
- Reported PBT up 32% in 3Q15 at $6,097m compared with $4,609m in 3Q14. This reflected the impact of a net favourable movement in significant items.
- Adjusted PBT down 14% in 3Q15 at $5,512m compared with $6,424m in 3Q14.
- Adjusted revenue down 4% in 3Q15 at $14,044m mainly in RBWM (insurance manufacturing) and GB&M (Credit, Rates and Foreign Exchange).
- Adjusted operating expenses up 2% in 3Q15 at $8,583m in part reflecting investment in regulatory programmes and compliance.
- Adjusted operating expenses down 4% from 2Q15, in part reflecting the initial impact of our cost savings initiatives.
9M15 results (vs 9M14)
- Reported PBT up 16% for 9M15 at $19,725m compared with $16,949m for 9M14.
- Adjusted PBT down 3% for 9M15 at $18,514m compared with $19,119m for 9M14.
- Adjusted revenue up 2% for 9M15 at $44,816m compared with $44,141m for 9M14, driven by revenue growth in client-facing GB&M, principally in Equities and Foreign Exchange. Revenue also increased in CMB and Principal RBWM.
- Adjusted operating expenses up 6% at $26,225m compared with $24,830m for 9M14, reflecting investment in growth, and regulatory programmes and compliance costs.
Dividends and capital
- Earnings per ordinary share and dividends per ordinary share (in respect of the period) for 9M15 were $0.73 and $0.30, respectively, compared with $0.67 and $0.30 for 9M14. The third interim dividend was $0.10 per ordinary share.
- Strong capital base with a CRD IV end point CET1 capital ratio of 11.8%, up from 11.6% at 30 June 2015. This was a result of continued capital generation together with reduced RWAs from the implementation of a broad range of RWA initiatives.
- Leverage ratio remained strong at 5.0%.
Group Chief Executive, Stuart Gulliver, commented:
Business performance
Our third quarter performance was resilient against a tough market backdrop.
Revenue was down compared to the third quarter of 2014. In particular, the stock market correction in Asia affected Principal Retail Banking & Wealth Management, and revenue was also lower in Global Banking & Markets.
Despite slowing growth in the mainland Chinese economy and market volatility in Asia, there has been no visible impact on our Asian credit quality in 3Q15.
Our operating expenses were higher than the same period last year, as expected, although our cost programmes have started to gain traction. Our third quarter costs were lower than our second quarter costs.
Strategy execution
We have continued to implement the strategic actions we announced at our Investor Update in June.
Our targeted initiatives reduced risk-weighted assets by an additional $32bn, bringing the total reduction to $82bn since the start of the year. This means we are already nearly 30% of the way towards our targeted reduction of $290bn by the end of 2017. We remain focused on reducing our risk-weighted assets quickly and efficiently.
Our cost-reduction measures are beginning to have an impact on our cost base. There is more to achieve on costs and we expect the measures we have already taken to have a further impact in the fourth quarter. We also started a number of additional initiatives in the third quarter that will deliver savings before the end of the year.
Achieving our strategic targets remains our primary focus. We will provide a further update on our progress at our full-year results in February.
Credit Suisse Group
Following the publication of its 3Q15 Earnings Release on October 21, 2015, Credit Suisse Group published its 3Q15 Financial Report.
Third Quarter Results
The announcement of our 3Q15 results amplifies the rationale for these important changes we are making. Market volatility, continued uncertainty over interest rates in the major economies and a depressed global investment climate, have eaten into profitability, particularly in those areas of trading at our Investment Bank that
will not be core to the new strategy.
In the third quarter, Credit Suisse reported Core pre-tax income of CHF 861 million, primarily reflecting lower results in Investment Banking due to unfavorable market conditions. Net income attributable to shareholders was CHF 779 million, down 24% compared to the same period of last year. Return on equity was 7%, a decrease of 3 percentage points compared to the previous quarter.
Reported Core net revenues decreased 8% year on year, as lower net revenues in Investment Banking and Private Banking &
Wealth Management were partially offset by higher net revenues in the Corporate Center. Reported operating expenses decreased 3% compared to 3Q14, with reductions in Investment Banking partially offset by an increase in expenses in the Corporate Center and Private Banking & Wealth Management. In the non-strategic businesses, pre-tax income improved to CHF 35 million, compared to a loss of CHF 321 million in 3Q14.
The adverse impact of difficult market conditions in the third quarter on client issuance and trading activity has continued so far
in October, offsetting a resilient performance by our Asian business and sustained higher net interest income.
Commerzbank AG
Commerzbank: Operating profit improved after nine months of 2015 to EUR 1.5 bn – CET 1 ratio increased to 10.8%
- Operating profit in Group in third quarter at EUR 429 m (Q3 2014: 343 m Euro)
- Net profit after nine months increased significantly to EUR 853 m (first nine months of 2014: EUR 525 m); in third quarter of 2015 at EUR 207 m (Q3 2014: EUR 225 m)
- Revenues before loan loss provisions in Core Bank increased by approximately 7% to EUR 7.3 bn in first nine months (first nine months of 2014: EUR 6.8 bn)
- NCA with portfolio run-down of EUR 4.0 bn in CRE and of EUR 1.1 bn in Ship Finance in third quarter – Ship Finance portfolio lower than EUR 10 bn for the first time
- Capital ratio CET 1 increased to 10.8% as of end of September 2015 (end of June 2015: 10.5%) – dividend accrual of 20 cents per share
- Blessing: “The successful turnaround at Commerzbank is right on track: In the first nine months, we have increased the revenues and the profit, as well as significantly strengthened the capital ratio. From today’s stance, the Board of Managing Directors plans to propose a dividend of 20 cents per share for the 2015 financial year.
BNP Paribas Group
The Board of Directors of BNP Paribas met on 29 October 2015. The meeting was chaired by Jean Lemierre and the Board examined the Group’s results for the third quarter 2015.
GOOD INCOME GROWTH AND SOLID ORGANIC CAPITAL GENERATION
In a context of a gradual return to growth in Europe, BNP Paribas delivered a good overall performance this quarter.
Revenues totalled 10,345 million euros, up by 8.5% compared to the third quarter 2014. They included this quarter an exceptional impact of +37 million euros in Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA) (-197 million euros in the third quarter 2014).
The revenues were up in all the operating divisions compared to the third quarter 2014: +0.8% in Domestic Markets(1), +11.6% at International Financial Services and +4.2% at Corporate and Institutional Banking. They also benefited from the positive impact of the acquisitions made in 2014 and were up by 1.7% at constant scope and exchange rates.
Operating expenses (6,957 million euros) were up by 7.3%. They included the one-off impact of Simple & Efficient transformation costs and the restructuring costs of the acquisitions made in 2014 which totalled 160 million euros (154 million euros in the third quarter 2014).
The operating expenses of the operating divisions were up by 7.3%. They increased by 2.4% in Domestic Markets(1), 12.4% at International Financial Services and 8.3% in CIB. At constant scope and exchange rates, they rose by 2.2% notably due to the investments made to implement new regulations and reinforce compliance.
Gross operating income increased by 10.9%, at 3,388 million euros. It was up by 3.2% for the operating divisions.
The Group’s cost of risk was still at a moderate level and came to 882 million euros (50 basis points of outstanding customer loans). The basis of comparison of the same quarter a year earlier had limited significance due to the scope effect related to the acquisitions made in 2014(2) and a net write-back of provisions(3) at CIB in the third quarter 2014.
Non-operating items totalled 163 million euros (149 million euros in the third quarter 2014).
Pre-tax income came to 2,669 million euros compared to 2,450 million euros in the third quarter 2014. It was up by 0.8% for the operating divisions.
Net income attributable to equity holders thus came to 1,826 million euros (1,595 million euros in the third quarter 2014). Excluding one-off items, it was up by 4.3%, illustrating the Group’s good overall performance this quarter.
As at 30 September 2015, the fully loaded Basel 3 common equity Tier 1 ratio(4) stood at 10.7%, up by 10 basis points compared to 30 June 2015. The fully loaded Basel 3 leverage ratio(5) came to 3.8% (+10 basis points compared to 30 June 2015). The Group’s immediately available liquidity reserve was 301 billion euros (291 billion euros as at 31 December 2014), equivalent to over one year of room to manoeuvre in terms of wholesale funding.
The net book value per share reached 69.8 euros, equivalent to a compounded annualised growth rate of 6.5% since 31 December 2008, illustrating the continuous value creation throughout the cycle.
Lastly, the Group is actively implementing the remediation plan agreed as part of the comprehensive settlement with the U.S. authorities and is continuing to reinforce its internal control and compliance system.
Barclays PLC
- Increased Group adjusted pre-tax profits by 4%, with Core up 7%
- Positive cost to income jaws: Group adjusted costs of £12.5bn, down 5%
- Core business continued to perform well: PBT of £6.0bn and RoE of 10.5%
- Further progress on Non-Core: £2.5bn of equity released YTD and RWAs reduced to £55bn
- Building capital: Strong capital generation of 80bps YTD taking the CET1 ratio to 11.1%
Nine months financial performance2
• PBT increased 4% to £5.2bn reflecting improved PBT in all Core operating businesses
• Income decreased 3% to £19.1bn from active run-down of Non-Core
− Core income increased 2% to £19.0bn, with growth particularly in Barclaycard
• Impairment improved 8% to £1.5bn; loan loss rate reduced 3bps mto 40bps
• Costs reduced 5% to £12.5bn primarily in Non-Core, the Investment Bank and PCB
• CTA, and litigation and conduct charges both reduced
− Excluding CTA, the Group cost base was £11.9bn
• Attributable profit was £2.9bn, resulting in a RoE of 7.1% and EPS
of 17.9p
− Core RoE was 10.5%, with dilution of Group RoE from the Non-Core of (3.4%)
• Adjusting items in Q315 included:
− Own credit gain of £195m
− Additional provision for UK customer redress of £290m
− Additional provisions for ongoing investigations and litigation including Foreign Exchange of £270m
− Loss of £201m relating to the announced sale of the Portuguese retail business within Non-Core
• Statutory PBT, after conduct provisions and other adjusting items, increased 7% to £4.0bn
2 Adjusted metrics unless stated otherwise
Source: HSBC, Credit Suisse, Commerzbank, BNP Paribas, Barclays
