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By Mathieu Rosemain
PARIS (Reuters) -France’s BNP Paribas (OTC:) exceeded expectations with a giant leap in earnings on Wednesday due to a lift in equities buying and selling, though a pointy drop in web curiosity revenue at its home retail enterprise unnerved traders.
The euro zone’s largest financial institution mentioned web revenue grew by 21% on a reported foundation from a 12 months earlier to three.4 billion euros ($3.69 billion), its best-ever second quarter, exceeding the two.91 billion-euro common estimate of 16 analysts compiled by the group.
Group revenues rose about 8% to 12.3 billion euros, beating the 11.9 billion-euro common estimate.
BNP’s outcomes have been aided by a 58% leap in gross sales from fairness and prime brokerage providers, which contain facilitating the shopping for, promoting and lending of shares and offering different providers to shoppers equivalent to hedge funds.
But BNP’s shares fell 2% in early Paris buying and selling, after it mentioned its French retail division was hit by an 11% drop in web curiosity revenue (NII) – the distinction between what banks earn on loans and what they pay on deposits.
Barclays’ analysts mentioned in a word that BNP reported “blended outcomes”, including the financial institution’s retail actions in France and Italy regarded “poor.”
BNP mentioned its general second-quarter funding financial institution revenues climbed 12% from a 12 months in the past to 4.48 billion euros. Rival Deutsche Financial institution on Wednesday reported a ten% rise in second-quarter funding banking revenues.
These outcomes are a lift for CEO Jean-Laurent Bonnafe, who has made its the division a key driver of progress plans to carry the financial institution’s underperforming shares.
The financial institution’s inventory worth has risen simply 3.3% in 2024, in opposition to a near 22% rise for the STOXX Europe 600 banks index (). It has partly been dragged down by the lender’s underwhelming efficiency and by latest political uncertainty following French President Emmanuel Macron’s determination to name snap parliamentary elections.
BNP, which forecast annual revenues from market actions rising by greater than 7.5% on common over 2021-2025, delivered a greater efficiency at its equities buying and selling enterprise within the second quarter than some rivals on Wall Avenue.
But general, the biggest U.S. funding banks outperformed BNP within the second quarter on the again of a robust U.S. economic system.
Whole funding banking revenues, together with buying and selling, of the 5 largest Wall Avenue banks (Goldman Sachs, Financial institution of America, Citi, JPMorgan, Morgan Stanley) grew by 16% on common over the interval, in keeping with Jefferies.
SLOW RETURN OF IPOS
France has seen a sluggish return of preliminary public choices (IPO) in 2024, with the listings of Exosens and Planisware, for which BNP acted as international coordinator.
BNP’s second-quarter gross sales from buying and selling in fastened revenue, foreign money and commodities (FICC) fell 7%, as demand retreated, particularly for commodities.
BNP’s French retail actions notably suffered from the price of inflation hedges in opposition to the regulated remunerating price of France’s hottest financial savings account, Livret A, which the financial institution mentioned would vanish within the third quarter.
The European Central Financial institution’s determination to not pay curiosity on obligatory deposits banks should hold on the central financial institution additionally weighed, whereas an unspecified “credit score scenario” in France led BNP to place 123 million euros apart within the quarter.
Rising NII has swelled financial institution coffers this 12 months, however analysts are involved about it slowing because the ECB reduces rates of interest.
BNP confirmed its full-year targets, together with income progress of greater than 2% in comparison with 2023 distributable revenues and group web revenue of greater than 11.2 billion euros.
($1 = 0.9213 euros)
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