Press Zone

28/03/2007: Cetelem financial results for 2006

Strong growth for Cetelem driven by 2 motors: innovation and responsible credit

With production having climbed by 18% and profits* by 22%, Cetelem once again combined development and profitability in 2006.
This makes it Cetelem’s best year since BNP Paribas was created.
With outstanding loans totalling 52.1 billion Euros (excluding outstanding loans managed on behalf of the parent company), of which 29.7 billion Euros are managed in France, Cetelem confirms its position as leader in continental Europe and France. Cetelem has grown twofold over the past four years (in terms of outstanding loans and profits).

Internet

Cetelem ends 2006 one year ahead on its business plan.With over 15% of its direct-to-customer business already available via Internet in Europe, Cetelem, which is currently developing an Internet solution in 14 countries, is number 1 in Europe for on-line credit.

France

The launch of the “Défi 2008” project, focused on commercial innovation and process re-engineering, has led to the opening of the first customer relations centres which are already performing as expected.
Business for the Cetelem France Network (+7%) has surpassed market levels (+4.8%).
Responsible credit: For the second year running, Cetelem has published its indicators: at 1.31% (IAS standards), the risk rate in France continues to decline. Between 2003 and 2006, this rate has been almost halved. Cetelem attributes its performance to the development of responsible credit that complies with certain commitments for each stage of customer relations.

Cetelem’s new financing production, 38.9 billion Euros, is up by 18% as compared to 2005. For all geographical zones, France, Western Europe, Central Europe, Asia/America/Africa, two-figure rate increases have been recorded.

In France, Cetelem, the market leader, has recorded business growth in excess of overall market levels in a very competitive environment with numerous promotional offers available all year round. New loans financing in France, largely driven by on-line credit production, is up by 15% overall as compared to 2005.

Production of the Cetelem France Network has risen by 7% whilst activity generated through existing partnerships – Axa, Caisses d’Epargne (CEFI), EdF (Domofinance) and S2P (Carrefour) – has recorded a climb of almost 30%, mainly driven by the development of a personal loan offer that is available through the Caisses d’Epargne network.

Outside France, Cetelem’s business increased by 19% in 2006, representing 55% of overall production. Cetelem has made Europe its local market and is now clearly positioned as an international company present in 27 countries, of which 16 are rapidly growing emerging countries, and on four continents, Europe, Africa, Asia and America. In 2006, Cetelem commenced its business activity in Algeria – putting it ahead of its objectives by 50% - and finalised its implantation in Russia and in Ukraine.

Finally, production of LaSer Cofinoga across the globe has grown by 20%, excluding the disposal of Linea and Crediplus.
In France, direct-to-customer business activities via Mediatis and debt consolidation have contributed to more rapid growth. As for international business activity, the main highlights were the buyback of Open & Direct in England and the further development of international subsidiaries located in other countries, mainly via offers intended for sub-prime customers.

Internet: Cetelem is number 1 in Europe for on-line credit.
Cetelem is developing Internet solution in 14 countries: France, Italy, Spain, Portugal, Germany, Belgium, Czech Republic, Slovakia, Hungry, Poland, Greece, Brazil, Argentina and Thailand. Over 15% of European production, excluding point of sale business, is conducted via Internet. In 2006, the 1 billion Euro mark was surpassed, making on-line credit a major player in Cetelem’s development worldwide.

In France, 35% of new customers are derived from Internet business. One hundred employees are dedicated to on-line credit business activity including both B2C and B2B operations with over 60 partnership agreements: Dell, Rue du Commerce, Priceminister, Voyages SNCF, Centrale des Particuliers…

France: “Défi 2008”
Cetelem is always adapting its model in terms of distribution, production, managing changing customer demand and any technological advances affecting its trade.
To further strengthen its leader position in France, Cetelem has launched an ambitious development project bearing the name of “Défi 2008” [2008 Challenge] and is making changes to its operational procedures.
The project revolves around commercial innovation and process re-engineering in terms of products, distribution channels and trades. It is also based on the desire to progressively balance out operational procedures between Paris and the regions: 17 customer relations centres have been set up in 7 cities:
Lille, Nantes, Metz, Paris, Lyons, Bordeaux, Marseilles.

Responsible credit: 2 publication of Cetelem’s indicators Consumer credit is one of the best means of generating growth available in Europe and for many consumers, it is the means of achieving their goals. Cetelem has modernised this trade and intends to achieve sustained development with the same responsible attitude it has always had.

Cetelem is convinced that the development of easily accessible responsible credit is compatible with its active commitment to the prevention of excessive debt and for the second year running, is publishing its responsible credit indicators.

1st indicator: denial rate

The denial rate is almost stable representing approximately 30 % of applications, the result of a well-controlled loan approval policy.

Cetelem France 2004 2005 2006
Denial rate 32% 31% 30%

2nd indicator: non-payment rates

  • 98 % of Cetelem accounts are fully settled,
  • 93% of Cetelem accounts have no record of non-payment incidents (excluding any technical incidents such as an error regarding the automatic debit date or the debit account number, restated by the end of the month).
Cetelem France 2004 2005 2006
no more than 1 non-payment incident 93,5% 93,6% 93,0%
Accounts fully settled 98,2% 98,1% 97,7%

3rd indicator : risk rate (as a % of outstanding loans)

An ever-declining risk rate

Cetelem France Year-end 2004 Year-end 2005 Year-end 2006
Risk rate (IAS standards / France) 2,21% 1,64% 1,31%
Change -12,0% -25,8% -20,1%

The risk rate recorded by Cetelem in France dropped sharply again in 2006 (-20.1%). This drop is the result of a well-controlled approval policy and illustrates Cetelem’s active participation in the prevention of excessive debt. This risk level is extremely low when compared alongside the average rate recorded for consumer credit markets in both the UK and the USA.

CETELEM’s FINANCIAL RESULTS: KEY FIGURES

New loan financing
Euros, in billions		 2005 2006 Change 2006/2005
France 12,3 14,2 +15%
International 14,2 17,0 +19%
LaSer Cofinoga (excluding Linéa and Crédiplus) 6,4 7,7 +20%
Total 32,9 38,9 +18%
Outstanding loans under management
Euros, in billions		 2005 2006 Change 2006/2005
France
(of which outstanding loans managed by the parent company)		 19,5
1,2		 22,6
1,2		 +16%
=
International 15,8 19,5 +23%
LaSer Cofinoga (excluding Linéa and Crédiplus) 9,5 11,2 +18%
Total 44,8 53,3 +19%
Total, excluding loans managed by the parent company 43,6 52,1 +19%
Financial results*
Euros, in millions		 2005 2006 Change 2006/2005
NBI (net bank income)
 2 015
 2 684
 +33%
Gross operating profit**
 917 1 166
 +27%
Operating profit***
 464 646 +39%
Pre-tax profit 602 734 +22%
Intermediation coefficient****
 76,9%
 75,9%
 - 1 pt
Gross ROA 1,8% 2,0% +20 bp