BNP Paribas beefs up capital buffer after a strong quarter

[PARIS] France's biggest bank BNP Paribas increased its capital buffer in the third quarter as it reported a better-than-expected net profit, boosted by stronger revenue at its investment banking division.

BNP Paribas sought to reassure investors over its capital ratios, as banks are penalised by the market due to uncertainty over regulatory requirements.

It was the first among major European banks on Friday to disclose a preliminary outcome of the European Central Bank's latest supervisory review and evaluation process (SREP) which set individual capital requirements for banks.

France's biggest bank raised its common equity tier 1 ratio (CET 1) - a key measure of a lender's ability to absorb losses - by 30 basis points in the third quarter to 11.4 per cent. It also confirmed its CET 1 ratio target of 12 by end-2018.

BNP Paribas said it had received a pre-notification by the ECB, which cited the anticipated level of fully loaded Basel 3 CET 1 ratio at 10.25 per cent in 2019 for BNP.

This follows better-than-expected third quarter results, when the bank's net income rose 3.3 per cent to 1.89 billion euros (S$2.87 billion). This beat the average of analyst estimates of 1.72 billion in a Reuters poll.

Revenue rose 2.4 per cent to 10.59 billion euros, above the poll average of 10.23 billion.

The bank followed US rivals and Barclays in reporting strong revenue in bond trading. BNP Paribas' fixed income, currencies and commodities trading revenue rose 41.3 per cent to 1.08 billion euros.

BNP Paribas' diversified business model helped it keep up earnings, even when revenue in its home markets, such as France and Italy, struggle.

REUTERS