Apr 17, 2008

Natixis maintains its objectives after a loss in 4th quarter

Natixis maintains its goals of profitability in 2010 after announcing for 2007, its first year of existence, net income divided by almost two and far removed from its original ambitions because of the crisis in credit markets.

The subsidiary of Popular Banks and savings banks, which has accused solely on the fourth quarter to a loss of 900 million euros under the impact of impairments also announced a new savings plan aimed at reducing by 5 % to 10% its cost base by 2009.

For the full year, it displays a net profit of 1,101 billion euros. Excluding exceptional items, it comes to 1,130 million, down 47% from pro forma results and a far cry from the 2.15 billion set in the strategic plan introduced in late 2006.

However, the general manager, Dominique Ferrero, provided that the targets for 2010 in terms of return on equity (ROE) (nearly 16%) as operating ratio (60%) remained "fully ".

He stressed that the development plan submitted late 2006, in a very attractive environment, included the assumption of a year of crisis and did not contain "any intermediate target."

For 2007, the return on equity of the group has reached 7% and the operating ratio 70.7% excluding the impact of depreciation on earnings.

The accounts have been undermined by the crisis in credit markets, which has affected more than Natixis bank financing and investment (BFI) weighs much higher in its operations (47% of revenue of the group in 2006) than in those of its competitors french.

ASSIGNMENT OF CIFG

The contribution of the BFI to net income was negative by 177 million euros over the year and 849 million in the 4th quarter alone.

The group had reported on Feb. 14 that its net income in 2007 would be of the order of one billion euros.

He issued Thursday includes 1.22 billion euros of impairment related to its exposure, direct or indirect, with mortgages Americans "subprime" and credit enhancers. In addition, 138 million euros of provisions on collective those establishments.

The accounts of the last quarter also include the impact (-287 million euros) from the sale of CIFG, the subsidiary that specializes in credit enhancement, the two major shareholders of Natixis for a recapitalization of 1.5 billion dollars to maintain a AAA rating vital to the preservation of its business.

The transaction has avoided a deterioration in the financial strength of Natixis, which can rely on a high Tier 1 ratio (8.3%) to December 31.

This is further reinforced by the fact that Banques Populaires and savings banks, which control more than 68% of the capital, chose to be paid in shares the proposed dividend of 0.45 euro. This dividend represents as provided for a distribution rate of 50% of annual net income.

Natixis also reported a net asset per share of 13.90 euros at December 31, a level compared with a stock-market price of 9.48 euros on Thursday at mid-day.

LOW VALUATIONS

While the placement of securities achieved in late 2006 at the establishment of the bank had been operating at a price of 19.55 euros, the accused in the past year one of the worst performances of the sector in Europe, with a decline of 38.25% and still sells nearly 28% increase since early 2008.

It is thus less than six times its 2009 earnings per share estimated, according to the Reuters Estimates consensus, compared with an average of 7 times for the values of the DJ Stoxx index of European banks.

If it confirmed its 2010 targets in terms of operating ratio and ROE, Natixis said nothing about his activity, while his plan also provided for average annual growth of its revenue by more than 10% over the period 2005 -2010.

Natixis, which last month announced an overhaul of its Executive Board to adapt "to an environment that has become more demanding," reiterated that it was ahead of its roadmap in terms of synergies disengagement, adding that " further progress in terms of efficiencies will be sought. "

The bank said on the last point that it had identified additional synergies that should help cut its costs by 5% to 10% based on their 2007 and, within two years.

In the meantime, only the poles financial services and credit insurance have distinguished themselves positively in the past year with gains of 30% of their contribution. The contribution of investment capital / private bank increased by 7% but the asset management declined 2%.

Consolidated to 20% in Natixis, the networks of Banques Populaires and savings banks saw their contribution declining by 2% to 570 million euros.

The results of the two groups, excluding extraordinary items, both showed an increase of

by erectusplus at 10:02 AM |

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