BNP Paribas, SocGen scale back operations in Eastern
Europe…
Bad debts hit DBS profit…
Go deeper with GlobalData
Obama unveils mortgage modification
programme….
RESULTS
BNP
Paribas, SocGen scale back operations in Eastern
Europe
BNP Paribas has reported a 61.2
percent fall in net income for 2008 to €3 billion ($3.8 billion), a
result negatively impacted by a €2.1 billion loss in the fourth
quarter of the year as a result of “unprecedented” market
dislocation.
Meanwhile, its French rival Société Générale
(SocGen) managed to stay in the black for the quarter with a profit
of €87 million. Full-year profit of €2 billion compared favourably
with 2007 figures that were impacted by the trading scandal in its
investment bank.
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By GlobalDataBoth SocGen and BNP Paribas took hits on their
eastern European exposure: BNP Paribas took a €272 million
provision in Ukraine and announced it will close 100 branches there
in 2009, while SocGen recognised a €300 million goodwill impairment
on its Russian operations and announced it would postpone the
implementation of its business plan in the country.
SocGen saw net income in its French networks
fall 5.7 percent to €1.3 billion, with net income in its
International Retail Banking division falling by 11.2 percent to
€609 million.
BNP Paribas’ French Retail Banking division
reported pre-tax income of €312 million, roughly flat year-on-year,
with International Retail Services pre-tax profit falling to €122
million from €327 million a year previous.
RESULTS
Bad debts hit DBS profit
DBS Group has reported full-year
2008 earnings of S$2.06 billion ($1.34 billion) and fourth quarter
net profit of S$383 million, constituting year-on-year falls of 17
percent and 31 percent respectively.
The bank, Singapore’s largest, benefitted from
customer deposit inflows despite the hit taken to its reputation
over the fallout from structured products linked to Lehman Brothers
(see RBI 602).
Deposits rose by 11 percent to S$169.9
billion, with the proportion of retail savings and current accounts
rising from 46 percent at end-2007 to 54 percent at the end of
2008. Customer loans rose by 17 percent over the same period and
net interest income grew by 5 percent.
Non-performing loans rose from 1.1 percent to
1.5 percent as a result of the deteriorating economic
environment.
The bank took a S$269 million charge on bad
debts in the fourth quarter, though this was largely as a result of
loan performance in the SME and private banking segments.
COUNTRY SNAPSHOT
Obama unveils
mortgage modification programme
US president Barack Obama has
enacted a $787 billion stimulus package designed to kick-start the
ailing US economy as well as announcing new plans to help as many
as nine million US homeowners avoid foreclosure. The three-pronged
mortgage plan seeks to revive a US housing market that continues to
sour: in January, new housing starts fell by 16.8 percent, far more
than economists had expected.
The initiative will provide $75 billion in
subsidies to lenders in an effort to encourage them to reduce
monthly payments for between 3 and 4 million of the most at-risk
borrowers, with up to $200 billion in new capital being provided to
Fannie Mae and Freddie Mac to allow the government-sponsored
enterprises to refinance a separate 4 to 5 million mortgages.
A further measure will look to refine
bankruptcy laws.
The response from US banks was largely
positive: Wells Fargo said it “supports the spirit” of the
programme; Bank of America also “offered its support”; and JPMorgan
Chase’s CEO, Jamie Dimon, called the plan “strong, comprehensive
and thoughtful”.
RESULTS
Postbank records loss, hails
retail performance
Deutsche Postbank, the country’s
largest retail bank outside of the dominant Sparkassen, has
reported a loss of €821 million ($1.04 billion) for 2008, plunging
deep into the red by virtue of a fourth quarter loss of €710
million.
Retail banking, however, performed more
soundly, with pre-tax profit of €912 million – roughly equivalent
to the €935 million earned in 2007 despite the inclusion in the
2007 statement of earnings from subsidiaries that have since been
sold or fully integrated.
Postbank also announced it had increased its
market share in all major product areas on the back of strong
growth in deposits and loans.
The bank now has 9.4 percent of the German
savings deposit market and a 9.2 percent mortgage market share.
Analysts at Société Générale, while noting
Postbank’s resilient retail results and the fact “the highly
collateralised nature of the retail bank’s lending should protect
it to some extent from the economic downturn”, nonetheless
downgraded the German institution on fears that a Tier 1 ratio of
5.5 percent was too low given continued concerns over Postbank’s
commercial real estate and structured credit portfolios.
DISTRIBUTION
MaxBips.com continues online auction trend
A new online marketplace designed to
provide the best possible rate of return for affluent retail savers
has been launched in the UK, the latest live auction site to offer
consumers a way round historically-low interest rates.
MaxBips.com offers depositors with at least
£30,000 ($43,000) in savings the chance to run an auction in which
banks and building societies compete to offer the best rate of
interest on a no-obligation basis.
The final quote is displayed alongside more
information about the winning bank’s credit rating and other
financial information.
The site’s launch echoes that of US-based
online auction site MoneyAisle.com, which has grown in popularity
as the Federal funds rate has fallen (see RBI 606).
MoneyAisle’s CEO, Mukesh Chatter, told RBI that the site
saw more business in January than it did in November and December
put together.
Unlike MoneyAisle, MaxBips is currently
charging for its service: £49 for 49 auctions, a fee which may turn
off many prospective retail customers.
RESULTS
Strong Islamic banking growth
at Emirates NBD
Emirates NBD, the Middle East’s
largest banking group by assets (outside of Israel), saw net profit
for 2008 fall by 7 percent to AED3.7 billion ($1 billion) after
taking AED2.26 billion worth of write-downs on securities held by
the bank.
However, in contrast to the headline
performance, total income in the consumer banking and wealth
management division rose by 52 percent to AED3 billion in 2008.
Loans and deposits rose by 44 percent and 29
percent respectively in 2008, the bank said, with significant
deposit growth also seen at Emirates Islamic Bank, where customer
balances rose by 60 percent to AED23.7 billion.
The parent bank, formed from a merger back in
2007 of Emirates Bank and National Bank of Dubai, said that the
integration process remained on track, with completion still
expected to occur in the second quarter of 2009.
Online banking systems and the two banks’ ATM
networks have now been fully integrated, Emirates NBD added.
RESULTS
Nordea reports 15% fall in annual
profit
Northern Europe’s largest banking
group, Nordea, which operates in all four Scandinavian markets, has
reported a net profit after loan losses for 2008 of €3.13 billion
($3.93 billion), down 15 percent year-on-year. Total losses on
loans came in at €466 million for the year – relatively low
compared to write-offs in other established markets such as the US
and the UK.
Lending volumes were up 17 percent in local
currency while total deposits increased 12 percent. The group said
it has benefitted from a surprisingly strong increase in consumer
lending in the fourth quarter – Q4 income was €2.25 million, up 5
percent year-on-year and 13 percent higher than in the third
quarter.
In its Nordic Banking unit, which covers
retail banking in Sweden, Norway, Denmark and Finland, the group
attracted 113,000 new so called ‘gold’ customers in 2008, a 5
percent increase. Outside of the Nordic zone, Nordea opened 94
branches in 2008 and gained 170,000 new retail customers. Key
markets include Russia, Poland and the Baltics – all of which are
forecast to have a very difficult 2009. Income in its so called New
European Markets unit increased 84 percent in 2008, with a
cost-income ratio of 39 percent.
Nordea, which is raising €2.5 billion in a
rights issue in March, is forecasting risk-adjusted-profit for 2009
to be the same level as in 2008.
STRATEGY
Greenspan backs bank
nationalisation
In an interview with the
Financial Times, Alan Greenspan, the former Federal
Reserve chairman, has said the US government may have to
nationalise some banks on a temporary basis to fix the financial
system and restore the flow of credit.
“It may be necessary to temporarily
nationalise some banks in order to facilitate a swift and orderly
restructuring,” he said. “I understand that once in a hundred years
this is what you do.”
Greenspan added that “in some cases, the least
bad solution is for the government to take temporary control” of
troubled banks either through the Federal Deposit Insurance
Corporation or some other mechanism.
His comments came as US president Barack Obama
signed into law a $787 billion fiscal stimulus to kick-start the US
economy (see above).
MERGERS AND ACQUISITIONS
Bank of Ayudhya buys
rival Thai bank from AIG
Bank of Ayudhya, Thailand’s
fifth-largest lender and a group 33 percent owned by GE Capital, is
buying two consumer finance businesses from troubled US insurer
American International Group for THB2.06 billion ($59 million). The
two are AIG Retail Bank and AIG Card (Thailand).
The acquisitions, subject to approval by the
Bank of Thailand, would raise Bank of Ayudhya’s assets by THB32
billion to THB777 billion and increase its retail loans by 14
percent.
Last month, Thailand’s banks reported robust
full-year figures (see RBI 606). Bangkok Bank, the
country’s largest by assets, reported a 4.9 percent rise in net
profit to THB20.3 billion. The second-largest institution,
state-run Krung Thai Bank, reported a doubling of full-year net
profit to THB12.1 billion. Bank of Ayudhya bounced back from a THB4
billion loss in 2007 with net profit of THB4.9 billion in
2008.
MARKETING
OCBC Bank tempts savers
with cash prizes
Singapore’s second-largest retail
bank, OCBC, has rolled out a major marketing campaign to attract
local deposits.
The bank is offering all savings and current
account customers, including children’s savings account customers,
the opportunity to win S$360,000 ($234,996) in cash prizes in the
OCBC Happy Savings Draw. Besides the opportunity to win the top
prize of S$200,000 cash and 20 consolation prizes of S$1,000 each
in the Grand Draw, which will take place on 30 August 2009,
customers can also win other cash prizes that range from S$5,000 to
S$20,000 in six monthly draws and a Mid-Draw on 31 May 2009.
To qualify, customers need to maintain a
minimum monthly average balance of S$1,000 in an OCBC
Singapore-dollar personal savings or current account.
RESULTS
BEA reports full-year profit of
HK$104m
The Bank of East Asia, Hong Kong’s
third-largest banking group, suffered a near 100 percent fall in
annual profits to HK$104 million ($13.4 million) for 2008 – in
2007, it posted income of HK$4.22 billion.
As at 31 December 2008, the BEA Group’s total
consolidated assets totalled HK$415.3 billion, up 5.4 percent;
total deposits increased by 11.1 percent to HK$329.3 billion.
Return on average assets and return on average equity were 0.01
percent and 0.12 percent, respectively, indicating just how tough
trading has been for the year. The cost-income ratio rose from 53.2
percent in 2007 to 89.5 percent in 2008.
Net interest income grew by 13.7 percent to
HK$6.79 billion. Total non-interest income decreased by HK$3.17
billion or 111.9 percent, due in large part to losses on
collateralised debt obligation holdings which were sold or written
off entirely in October 2008.
David Li, chairman and CEO of BEA, said the
group’s wholly-owned subsidiary, The Bank of East Asia (China) will
continue to lead BEA’s growth in 2009. “We will maintain our growth
strategy on the mainland. As we have in 2008, we will continue to
open new branches and sub-branches in order to expand our customer
and deposit base.”
In addition to becoming the first foreign bank
to launch debit and credit cards on the mainland, BEA China also
expanded its branch network from 49 outlets in January to 68 at
year-end.
By the end of the first quarter of 2009, BEA
will also have 16 branches in the US.
DISTRIBUTION
M-banking push from
philanthropic GSMA
The GSMA, which represents the
interests of the worldwide mobile communications industry, and the
Bill & Melinda Gates Foundation, have announced a new programme
that aims to expand the availability of financial services to
millions of people in the developing world through mobile
phones.
The Bill & Melinda Gates Foundation is the
world’s largest charitable organisation.
The Mobile Money for the Unbanked (MMU)
programme, supported by a $12.5 million grant from the foundation,
will work with mobile operators, banks, microfinance institutions,
government and development organisations to encourage the expansion
of reliable, affordable mobile financial services to the
unbanked.
“There are over 1 billion people in emerging
markets today who don’t have a bank account but do have a mobile
phone,” said Rob Conway, CEO and Member of the Board of the GSMA.
“This represents a huge opportunity.”
Based on the initial findings of research
conducted with the microfinance centre CGAP and McKinsey &
Company, the GSMA believes that MMU has the potential to become a
$5 billion market opportunity over the next three years.
Last year, US m-payment specialist Obopay and
Bangladesh-based Grameen Bank – led by Nobel Peace Prize winner Dr
Muhammad Yunus – announced plans to use mobile banking to bring 1
billion people in developing economies into mainstream banking
(see RBI 599).
RESULTS
BankWest acquisition boosts
CBA profits
Commonwealth Bank of Australia
(CBA), the country’s second-largest bank by market cap, has
reported a 9 percent year-on-year rise in profit to A$2.57 billion
($1.67 billion) for the six months to 31 December, boosted by a
one-time gain of A$547 million from its acquisition of former HBOS
unit BankWest.
Without that gain, the bank’s A$2 billion
profit represented a 16 percent fall year-on-year. Impairment
expense in the retail banking division rose by 68 percent on the
year to A$237 million, but cash net profit after tax rose by 15
percent to A$1.1 billion.
As with many banks with a strong position in
their domestic market, CBA said it had benefited from a flight to
quality, with deposit income rising by 10 percent year-on-year to
A$1.6 billion over the six month period.
Increased competition and declining interest
rates did, however, mean that the figure represented a small
decrease compared with the prior six months.
Home loan income, meanwhile, rose by 11
percent on the year to A$801 million. The figure also constituted a
34 percent rise on the prior six month period.
CORPORATE SOCIAL RESPONSIBILITY
Co-op
strengthens ethical credentials
The UK’s Co-operative Bank, in the
process of merging with the Britannia Building Society (see RBI
606), has revamped its much-touted Ethical Policy following a
consultation with 80,000 of its customers.
The bank will consequently decline business in
connection with biofuels that have a particularly high global
warming potential, organisations advocating discrimination and
incitement to hatred, and any exploitation of the great apes.
The Co-op added that some 28 percent of its
business and corporate lending is now directed towards social and
environmental organisations.
Since 1992, the bank has increased its
commercial lending from £571 million ($819 million) to £4.4 billion
despite turning away more than £1 billion in business deemed to be
unsuitable.
A further £400 million worth of green
initiatives and £25 million worth of microfinance projects will be
now funded by the bank “in line with customers’
expectations”.
CORPORATE SOCIAL RESPONSIBILITY
BNP
Paribas launches new CSR website
BNP Paribas has launched
forachangingworld.com, a website aimed at displaying the bank’s
commitment to corporate social responsibility (CSR) as well as
“facilitating discussion” between customers interested in CSR
initiatives.
The French bank will launch a social
responsibility blog on the site featuring discussions of topical
issues, as well as debates, video reports and interviews designed
to encourage participation from visitors to the site.
Forachangingworld.com is also seen as a forum
for the exchange of best practice, through which BNP Paribas will
be able to instigate more effective CSR policies in future.
Separately, the bank has also announced that
4,000 students from 106 countries have signed up to Ace Manager,
the online banking adventure game designed to test participants’
aptitude across three business lines: retail banking, asset
management and corporate and investment banking.
RESULTS
Poor Q4 figures prompt
full-year loss at KBC
Belgian bancassurer KBC has
announced a full-year 2008 loss of €2.48 billion ($3.15 billion), a
figure which reflects a tumultuous fourth quarter in which the
group reported a €2.62 billion loss.
Write-downs, which included a €1.7
billion hit on KBC’s structured credit portfolios, totalled €2.6
billion.
The bank, which has now received €5.5 billion
in financial support from the Belgian government following a fresh
round of capital support in January, added that profitability on
the domestic front had been limited by deposit pricing pressure but
maintained that the cost of risk in its Eastern European markets
remained at a reasonable level.
Despite the difficult environment, KBC
increased its mortgage lending in Central and Eastern Europe by 52
percent in 2008, and by 9 percent in Belgium, bringing total
mortgage growth to 19 percent and overall loan growth to 8 percent.
Total customer deposits rose by 2 percent over the same period.
In its CEE and Russia business unit, pre-tax
profit rose by 7 percent to €687 million, but fell by 16 percent to
€1.15 billion in the Belgian business unit. KBC’s full-year net
interest income rose from €4.09 billion to €4.99 billion.
DISTRIBUTION
BofA m-banking customer
numbers near 2m mark
The number of customers using Bank
of America’s (BofA’s) m-banking service now stands at 1.9 million,
according to the Wall Street Journal newspaper.
The figure, which incorporates active users
only, represents a fast acceleration in sign-up rates for the
service, which was launched in March 2007.
By June of last year the bank had one million
subscribers (see RBI 594), a figure far in excess of
numbers seen at rivals such as Wells Fargo, Wachovia, JPMorgan
Chase and Citigroup.
Furthermore, some 40 percent of its mobile
customers use the service via either an iPhone or iPod touch, the
newspaper reported.
The findings would seem to support Bank of
America’s interest in the platform: the bank was the first to
provide an iPhone-specific website in August 2007, and recently
upgraded its service to allow iPhone and iPod touch users to locate
their nearest BofA branch or ATM at the touch of a button.
Other institutions which have followed Bank of
America’s lead include Wells Fargo, Deutsche Postbank and
ANZ.
RESULTS
DnB NOR beats expectations, scales
back expansion plans
DnB NOR, the largest bank in Norway,
has reported a full-year profit of NOK9.2 billion ($1.3 billion), a
38.5 percent year-on-year fall, but fourth-quarter performance was
healthier than analysts had anticipated.
Fourth-quarter net profit fell some 61.7
percent to NOR1.9 billion, a figure that nonetheless came as a
relief to investors and analysts who had taken a dim view on the
bank’s exposure to the Baltic region.
Improved lending and deposit spreads and
volumes helped push net interest income to NOK6.2 billion for the
quarter, an annual rise of 23.6 percent.
Pre-announced write-downs of NOR2.3 billion
for the fourth quarter have prompted the bank to tone down its
expansion plans outside of Norway and announce that it intends to
strengthen its core capital ratio from a current level of 6.7
percent to over 8 percent by the end of 2010.
At its retail banking unit, full-year profit
fell to NOR3.5 billion, a 16 percent year-on-year decrease. On an
annualised basis, average retail lending rose by 6.2 percent and
deposits saw a 8.9 percent increase in the fourth quarter.
