BNP Paribas beats estimates as trading revenues jump
BNP’s results were aided by a 58 per cent jump in sales from equity and prime brokerage services
FRANCE’S BNP Paribas posted better-than-expected quarterly earnings on Wednesday (Jul 24) after investment banking revenue jumped due to a surge in equities trading, offsetting a sharp drop in net interest income at its French retail business.
The eurozone’s biggest bank by market value said second-quarter net income grew by 21 per cent on a reported basis from a year earlier to a record 3.4 billion euros (S$4.95 billion), exceeding the 2.91 billion-euro average of 16 analyst estimates compiled by the group.
Group revenues rose about 8 per cent to 12.3 billion euros, beating the 11.9 billion-euro average estimate. The cost of risk, or money set aside for failing loans, was a lower-than-expected 752 million euros.
BNP’s results were aided by a 58 per cent jump in sales from equity and prime brokerage services, which involve facilitating the buying, selling and lending of shares and providing other services to clients such as hedge funds.
BNP said its overall second-quarter investment bank revenues climbed 12 per cent from a year ago to 4.48 billion euros. Rival Deutsche Bank on Wednesday reported a 10 per cent rise in second-quarter investment banking revenues.
BNP’s results will be a boost for CEO Jean-Laurent Bonnafe, who has made its investment banking division a key driver of growth plans but has struggled to lift the bank’s shares in recent months.
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The bank’s stock price has risen just 3.3 per cent in 2024, against a close to 22 per cent rise for the STOXX Europe 600 banks index , dragged down partly by the lender’s underwhelming performance and partly by recent political uncertainty following French President Emmanuel Macron’s decision to call snap parliamentary elections.
BNP, which forecast annual revenues from market activities rising by more than 7.5 per cent on average over 2021-2025, delivered a better performance at its equities trading business in the second quarter than some rivals on Wall Street.
Yet overall, the largest US investment banks outperformed BNP in the second quarter on the back of a strong US economy. Citigroup reported a 60 per cent jump in investment banking revenues while JPMorgan’s investment banking fees grew 50 per cent. At Wells Fargo, investment banking revenue was up 38 per cent.
France has seen a slow return of initial public offerings (IPO) in 2024, with the listings of Exosens and Planisware, for which BNP acted as global coordinator.
BNP’s second-quarter sales from trading in fixed income, currency and commodities (FICC) fell 7 per cent, as demand retreated, in particular for commodities.
The bank’s retail division was hit by an 11 per cent drop in net interest income (NII) – the difference between what banks earn on loans and what they pay on deposits – in France.
BNP notably suffered from the cost of inflation hedges against the regulated remunerating rate of France’s most popular savings account, Livret A, and the European Central Bank’s decision not to pay interest on mandatory deposits banks must keep at the central bank.
Rising NII has swelled bank coffers this year, but analysts are concerned about it slowing as the ECB reduces interest rates.
BNP confirmed its full-year targets, including revenue growth of more than 2 per cent compared to 2023 distributable revenues and group net income of more than 11.2 billion euros. REUTERS
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