BNP Outpaces European Rivals With Surge in Trading Revenueby
French bank is in a ‘position to grow,’ CFO Machenil says
Earnings beat estimates even as French retail revenue declines
BNP Paribas SA posted trading revenue that trounced its European rivals, helping drive a surprise increase in first-quarter profit.
Revenue at the global-markets division climbed 33 percent from a year earlier to 1.75 billion euros ($1.9 billion), the Paris-based bank said Wednesday. Net income rose 4.4 percent to 1.89 billion euros, topping the 1.5 billion-euro average estimate of six analysts surveyed by Bloomberg.
Chief Executive Officer Jean-Laurent Bonnafe is one of few European banking bosses targeting growth from his trading business, aiming to increase global-markets revenue by about 5 percent annually through 2020. At BNP’s big European peers -- Deutsche Bank AG, Credit Suisse Group AG, Barclays Plc and UBS Group AG -- dollar revenue from trading stocks and bonds fell a combined 6 percent in the quarter.
“We are in a position to grow our business,” BNP Paribas Chief Financial Officer Lars Machenil said in an interview with Bloomberg Television.
BNP shares rose 0.4 percent to 66.02 euros at 11:27 a.m. in Paris trading.
“They are moving in the right direction,” said Robert Jakobsen, an analyst at Jyske Bank AS in Silkeborg, Denmark, who has a buy rating on the stock. “It’s one of the strongest results we have seen among banks in fixed income and there are strong earnings improvements in all divisions.”
Revenue from fixed income, currencies and commodities rose 32 percent to 1.17 billion euros. Equities income jumped almost 36 percent to 580 million euros, driven by “strong growth of prime services and a rebound in the derivative business,” the bank said. Total revenue at the corporate and institutional banking division increased 20 percent.
Profit also got a boost from a 22 percent decline in provisions for bad loans to 592 million euros, beating estimates for 782 million euros.
French bank shares have climbed since the first round of voting in the presidential election on April 23, on optimism 39-year-old centrist Emmanuel Macron will defeat the anti-euro Marine Le Pen of the National Front in a runoff this Sunday.
“Ahead of the first round of the French presidential vote, companies accelerated bond issuances to avoid political uncertainties, and demand for hedging was also probably higher than usual,” Jean-Pierre Lambert, an analyst at Keefe, Bruyette and Woods in London, said before the earnings were released. He rates BNP Paribas shares outperform.
Offerings of euro-denominated corporate bonds amounted to 115 billion euros in the first three months of the year, the second-highest quarterly level in eight years, according to data compiled by Bloomberg.
Still, record-low interest rates in Europe continued to weigh on consumer-banking results. Revenue at BNP’s French retail network contracted 1.4 percent from a year earlier, and pretax profit fell 11 percent.