BNP Paribas buoyed by decline in bad loan provisions
French bank BNP Paribas SA announced net profit in the second-quarter was flat as lower provisions set against bad loans and a gain on the sale of its shares in Visa Europe helped make up for a sharp decline in equity trading.
The Paris-based lender, France’s largest listed bank by assets, said net profit rose 0.2% to EUR2.56 billion ($2.82 billion) in the three months ended June 30 while revenue grew by 2% to EUR11.32 billion.
The net profit figure was ahead of analysts’ expectations of EUR2.23 billion, according to a poll by FactSet, pushing BNP Paribas’ shares up more than 2.5% early Thursday.
The bank’s results this quarter reflect the turmoil in Europe’s markets, shaken by the prospect of the U.K.’s exit from the European Union, low energy prices and persistent concerns over global economic growth. Like other big European banks, BNP Paribas’ trading revenue was hit by the region’s wobbly economy and political uncertainty while U.S. lenders benefited from a more resilient market at home.
BNP Paribas’ corporate and investment bank posted an 8% drop in pretax profit to EUR907 million in the second quarter, from EUR981 million a year earlier. The bank’s fixed income business posted a 17% jump in second quarter revenue to EUR1.05 billion but revenue from equity trading fell by 19% to EUR509 million.
BNP Paribas’ retail bank in France, Italy, Belgium and Luxembourg was better off, as total pretax profit declined by just 2% to EUR1.06 billion in spite of low interest rates.
The bank’s international financial services division, which includes retail banks outside the eurozone, wealth management, consumer finance and insurance, reported a 0.7% decline in pretax profit to EUR1.26 billion.
Despite lower earnings, BNP Paribas’ core tier one ratio, which measures its top quality capital such as equity and retained earnings against risk-weighted assets, stood at 11.1% in June, up from 11% in March, partly lifted by a EUR597 million capital gain on the sale of its shares in Visa Europe.
Visa Inc. said in November it would buy its European counterpart Visa Europe for EUR21.2 billion in cash and stock, a long-awaited deal that will bring the payment network’s global operations under one roof.
The French bank’s leverage ratio, another gauge of a bank’s financial strength that measures capital held against total assets, was stable in June at 4%.
BNP Paribas is the first major French bank to report second quarter earnings. Société Générale SA and Crédit Agricole SA publish their results on Aug. 3.
Source: MarketWatch
