BNP Paribas beats quarterly expectations as equity trading rebounds

[PARIS] France's BNP Paribas on Friday reported a better-than-expected first-quarter profit, helped by lower provisions for pandemic-related bad loans and a rebound in its equity trading business that the bank aims to expand.

The eurozone's biggest listed lender said net profit rose 37.9 per cent to 1.77 billion euros (S$2.84 billion) from a year earlier, beating a mean forecast for 1.20 billion in a poll of analysts compiled by Refinitiv.

Revenue was up 8.6 per cent at 11.83 billion euros, above the 11.2 billion expected by analysts.

In its corporate and investment banking activities, revenue rose by 24.3 per cent, spurred by a 41.4 per cent jump in its markets business.

BNP Paribas said a rebound in equity trading offset a 15.7 per cent drop in fixed income, currencies and commodities trading.

"Primary, credit and commodity derivatives activities performed very well but the context was less favourable than in the first quarter of 2020 for rates and forex activities," the bank said in a statement.

It reported no impact from the implosion of US investment fund Archegos, which has caused more than US$10 billion of losses across other global banks.

JPMorgan said in a note that BNP Paribas had "a strong start to the year" with revenues up 7 per cent year on year in operating divisions and provisions back to normal levels.

BNP Paribas, which said two months ago that the worst of the global coronavirus crisis was over for its loan book, said it expected the economy to gradually recover from the pandemic.

Its cost of risk, reflecting provisions for bad loans, was down 37 per cent to 896 million euros. The bank said impairments of non-performing loans were at low level with a cost of risk close to 2019 levels.

BNP's equity business brought in 697 million euros, a strong showing compared with a year ago, when widespread dividend suspensions wiped out all of its earnings.

The bank has expanded its equities business, buying Deutsche Bank's prime broking and electronic trading units in 2019. Last month it said it would take full control of its equity brokerage Exane to bolster its European business.

However, its larger fixed income, commodity and currency business lagged rivals. Deutsche Bank's fixed-income and currency sales revenue increased 34 per cent, while Goldman Sachs reported a 31 per cent rise in such trading.

Shares in BNP Paribas have gained 24.7 per cent so far this year, outperforming a 23.8 per cent rise for the Stoxx Europe 600 Banks Index .

REUTERS