Chillin' out till it needs to be funded
After the whirlwind of regulation and the global credit squeeze resulting in countless bank failures in the US and UK, one expected only a few like Societe Generale and Spanish Bank Santander to show a sterling come back on the back on unwitting lack of credit exposure and fundamentally sound cost structures. But as we followed 2009, we found always that despite MTM reparations at most banks, the paper profits of MTM valuations, IFRS dictates and other changes from balance sheet dressing on March 31 to cash payments in super tax actually never took down the European majors Bank Paribas ( which bought Fortis in 2009), Deutsche Bank ( which just appointed Anshu Jain as Global Markets head and Barclays which continues with Diamond at the helm. Despite their hands off approach to the crisis, they have each managed to finagle grand properties in the banking world and / or trading and investment banking staff from the millions rendered jobless, as mostly attributed to DB during 2009. the new Basel for example has led to significant paring down of the interbank market and thus Deutsche Bank’s Global portfolio which was more than 4 in 5 funded by Inter bank debt. Its ABN AMRO Amsterdam portfolio is now part of the bank’s financials
BNP Paribas exposure to PIIGS turned out to be a manageable EUR 18 billion or $24billion, wich is comparable with SocGen and Credit Agricole, BNP Paribas results showed a usual 31% jump in Net profit after provisions for loan losses were reduced at the bank and much like its peers, trading revenues fell in the Q2 squeeze.
Investment Bank, Retail
Pretax profit at BNP Paribas’s corporate- and investment- banking division fell 7.3 percent to 1.28 billion euros, beating the 1.19 billion-euro estimate of analysts. The second-quarter advisory- capital-markets revenue of 1.53 billion euros “is a level from which we can hope to do better, especially in the equities business,” Prot told reporters today in Paris.
BNP Paribas’ equity and advisory business, whose revenue declined 66 percent to 268 million euros, remained profitable in the second quarter as the bank had hedging costs as part of a “rather conservative” risk management policy, Prot said.
“This quarter, for the first time since the second quarter 2007, provision write-backs exceeded new provisions,” BNP Paribas said. The unit’s loan book “saw no new significant doubtful loans.”
BNP Paribas’s French branch network had second-quarter pretax earnings of 479 million euros, up from 414 million euros a year earlier, the bank said. The consumer-banking unit in Belgium and Luxembourg had a 156 million-euro pretax profit, compared with a 26 million-euro loss last year.
BancWest, BNP Paribas’s U.S. branch network, had a 153 million-euro pretax profit, compared with a 62 million-euro loss last year. BNP Paribas is seeking “a growth drive in the United States, taking advantage of the group’s new size with large clients and consolidating BancWest’s return to profit,” it said.
Deutsche Bank also had happier times and were the veritable first to have cleared the stress tests, rising to a virtual hegemony in Europe but staying in its regional strengths despite presence in France, Belgium and Luxembourg or with the trading desks well-informed and well situated in London. They may yet make a global play but their unstated ambition may likely die a n early death in the new regulation. They had also invested $3 billion in one of the larger emerging markets of India in 2009 and have wealth, retail banking, retail trading, asset management and investment banking operations in the country much in tune with the universal banking superstructure
Frankfurt, July 27, 2010
– Net revenues of EUR 7.2 billion
– Income before income taxes of EUR 1.5 billion
– Solid result within Private Client and Asset Management (PCAM) and Global Transaction Banking (GTB)
– First-time consolidation of parts of ABN AMRO
– Tier 1 capital ratio of 11.3%
– Leverage ratio, per target definition, steady at 23
Deutsche Bank today reported results for the second quarter and first half of 2010. Net income for the quarter was EUR 1.2 billion versus EUR 1.1 billion in the second quarter 2009. Income before income taxes was EUR 1.5 billion, up 16% versus EUR 1.3 billion in the prior year quarter. Diluted earnings per share were EUR 1.75 versus EUR 1.64 in the prior year quarter. Pre-tax return on average active equity, on a reported basis was 15%, and as per the bank’s target definition, which excludes significant gains and charges, was 13%.
For the first six months of 2010, net income was EUR 2.9 billion versus EUR 2.3 billion in the first six months of 2009. Income before income taxes was EUR 4.3 billion versus EUR 3.1 billion. Diluted earnings per share were EUR 4.35 versus EUR 3.53 in the first six months of 2009. Pre-tax return on average active equity was 22% versus 19%, while per the firm’s target definition, pre-tax return on average active equity was 21% versus 20%.
European Banks have come out strong and regionally focussed according to latest analyses from Accenture and the IBM Global Services team and that is not necessarily a good thing. However, the economies have come out tougher and the banks in each case have shown the resilience and structure to survive in a market where there leadership or culture is neither recognised nor appreciated
While Lloyds (41% state owned) and RBS ( 83% state owned) have already presented results Lloyds coming into the black. Barclays report further in the week, on 05th .
StanChart reduced impairments by $660 million to take profits for the six months to $3.12 billion, Operating/Pre Tax Marging staying at 33% despite a higher effective tax rate of 32.5%. Stanchart results will be updated after the afternoon conference bits fly in.but the Earnings of $1 per share seem to be a concern going forward as revenues stayed put at $7924 million and Indian IDRs raised its core Tier I Capital to a minimum 9% after the Basel III requirements, however StanChart may not have to change much but still an equivalent of this quarters $5-6 billion will be required again
Apart from its stake in Bohai Bank that has $25b in assets and 42 branches in mainland china, StanChart has also become a Cornerstone investor in AgBank with 320 million retail customers and 2.6 million corporate clients in China mostly SMEs. Stanchart has also grown its Corporate Finance advisory revenues 50% year on year for the six months eded June 2010, getting closer to $1bn in revenues. Profits from India alone are up 19% to $624 million making it a key proponent in StanChart, with Asia CEO also part of the Group Executive Board. Thats the largest market for Stanchart right now. Retail Banking led contribution to Operating income at $2 billion another $1 billion added by unsecured lending ( cards and personal loans) while Investment Banking featured acquisitions in Oil and Gas Harrison Lovelace. Equities ( Cazenove Asia ) and Africa (First Africa) India’s consumer Banking footprint is restricted to $250 million in Operating income and $94 million in Profits (working profis/segment profits)
Banking, Europe, Bank results season