Natixis beats Q3 profit forecasts, cuts M&A budget

FILE PHOTO: The logo of Natixis is displayed in Hong Kong, China December 1, 2015. REUTERS/Bobby Yip/File Photo

PARIS (Reuters) - French investment bank Natixis CNAT.PA reported higher-than-expected quarterly earnings on Thursday and kept its dividend policy, while trimming its budget for potential acquisitions as it focuses on reinforcing existing businesses.

The company also announced plans to strengthen governance and risk controls at its asset management business, after one of its units suffered outflows earlier this year due to concerns over illiquid holdings.

Natixis, controlled by unlisted French cooperative bank BPCE, cut its 2018-2020 budget for mergers and acquisitions by 200 million euros ($221 million) to 800 million euros, out of which it has already invested 500 million.

“In payments (industry) valuations are high, very high,” Chief Executive Francois Riahi said.

The bank confirmed its dividend policy to pay out at least 60% of earnings and distribute excess capital, while raising its common equity tier one ratio - a key measure of financial health - to 11.2% from 11%.

Net profit came in at 415 million euros in the third quarter, up from 358 million a year earlier. That compared with expectations for 377 million in a Reuters poll of four analysts.

Revenue grew in all of the company’s business lines, such as asset and wealth management, corporate and investment banking, and insurance and payments.

“In the third quarter of 2019 our revenues grew in line with or faster than our costs in each of our businesses,” Riahi said in a statement.

Reporting by Maya Nikolaeva and Matthieu Protard; Editing by Sarah White and Mark Potter