CFM INDOSUEZ Wealth Management - 2019 annual report

33 2019 Activity Report presentation of cfm indosuez wealth management group ’ s 2019 consolidated financial statements (under IFRS) CFM Indosuez Wealth Management Group’s consolidated net banking income for 2019 amounted to € 127.4 million, an increase of 5.9% on 2018, driven by brokerage activities and by transactions involving our working capital relating to adjustments to CFM Indosuez’s real estate portfolio. CFM Indosuez Wealth Management Group’s operating expenses totalled € 95 million in 2019, up by € 3 million in relation to 2018, reflecting CFM Indosuez’s strategy of ramping up its digital transformation while keeping expenses under control. Gross operating income came to € 32.4 million in 2019, compared t o € 28.3 million in 2018 as reported, a 14.5% increase. CFM Indosuez Wealth Management Group’s net income, Group share stood at € 49.1 million, factoring in the cost of risk ( -€ 1.3 million), extraordinary items due to real estate portfolio adjustments ( € 31.9 million), the current income tax expense (- € 5.9 million) and the provision for deferred taxes (- € 7.9 million). By way of comparison, net income, Group share totalled € 23 million in 2018. activities and results ( cfm indosuez wealth management scope ) At 31 December 2019, wealth under custody was up 9.5% on the previous year, due to a combination of an extremely positive market effect and strong inflows. Loans and receivables granted to clients rose by 4.8% compared to 31 December 2018. Amounts due to clients amounted to € 5,510 million, an increase of 6.7% over the year. presentation of the cfm indosuez wealth management 2019 separate financial statements ( under french accounting standards ) CFM Indosuez Wealth parent company/separate financial statements under French accounting standards The balance sheet total came to € 6,026 million at 31 December 2019, up 2% compared to 31 December 2018. On the assets side, loans granted to clients amounted to € 3,432 million, an increase of 5% over the year. The volume of securities in the portfolio and central bank deposits ensure the overall liquidity coverage ratio (LCR) is observed. Loans and receivables to credit institutions declined by € 152 million to € 1,640 million. On the liabilities side, shareholders’ equity totalled € 336 million, excluding € 4.5 million in funds for general banking risks. The increase in equity between December 2018 and December 2019 (+ € 32 million) resulted from the rise in income over the period and the appropriation of income for 2018. Net banking income increased by 23% in relation to 2018 to € 122 million, but cannot be compared with the previous year due to extraordinary income recorded in 2019, including € 15.7 million in dividends received from our investment management subsidiary. Operating expenses were up by 4% from the previous year, reflecting CFM Indosuez’s policy of ramping up its digital transformation while keeping expenses under control. CFM Indosuez Wealth Management’s separate financial statements show a profit of € 57 million in 2019 (after income tax for an amount of € 6 million), up sharply on the previous year. This increase partly reflects income from adjustments made to CFM Indosuez’s real estate portfolio (+ € 31.9 million), dividends received from the investment management subsidiary and strong sales activity. In view of the above, at its meeting on 12 March 2020, the Board of Directors proposed that the Annual General Meeting to be held on 18 May 2020 approve a dividend payout of 70%, or € 69.70 per share, compared with € 44.44 the previous year. The dividend would be paid from 5 June 2020. This decision reflects both the bank’s strong performance overall and the non-recurring transactions impacting our net assets. The Board of Directors proposed that shareholders record the balance in retained earnings, in the amount of € 17.1 million. The Bank’s intention to pay a dividend in respect of fiscal year 2019 conflicts with the recommendations made by the European Central Bank (ECB) on 27 March 2020. The ECB has asked banks under its supervision, which include Crédit Agricole SA, and those under the supervision of the ACPR, which is responsible for credit institutions in Monaco, not to pay dividends during the coronavirus crisis and “until at least 1 October 2020”. Accordingly, the Board of Directors of CFM Indosuez Wealth, meeting via video-conference on 5 May 2020, decided to recommend that the Annual General Meeting, initially scheduled for 18 May 2020 but postponed to 19 June 2020, allocate the entire profit