BNP Paribas Q2 results please investors

French bank BNP Paribas turned in a good set of quarterly results, say analysts, hitting a capital ratio target six months early, and reporting a smaller-than-expected fall in Q2 profits after tough measures to control costs and boost asset sales.

European banks are generally having a poor reporting season, with many obliged to sell top assets, cut jobs and dividends to defend their balance sheets and comply with a wave of new regulations introduced since the 2008 financial crisis.
However, BNP Paribas, which has more than half its credit risk in the eurozone, reported lower than feared provisions for losses on loans. The share lifted slightly as the results were announced.

The bank saw Q2 net income fall 13.2% to €1.85bn, beating the average of analyst estimates of €1.74bn in a Reuters poll. Revenue dropped 8%to €10.10bn, broadly in line with the poll average of €10.13bn.

At BNP’s corporate and investment bank, pre-tax profits were down 40% and revenue down by a quarter. Retail banking, a division that has proven a lucrative counterweight to market turmoil, saw pre-tax earnings slip by a mild 2%. In the wealth management business, asset flows remained positive, especially in Q2, mainly from domestic markets and Asia.

BNP has sold loan portfolios to banks such as Wells Fargo as well as a chunk of its property subsidiary Klepierre as part of its response to volatile markets.

Chief executive Jean-Laurent Bonnafe told Reuters Insider television he is now “very confident” for the second part of the year. “This quite positive positioning will allow the group to concentrate on mid-term issues.”

Comparisons with local rival SocGen flatter BNP Paribas, which hit a Tier 1 capital ratio of 8.9% under tougher Basel III rules at end-June – six months ahead of schedule. It said its deleveraging was 90% done. SocGen, meanwhile, is eyeing a Basel III ratio of at least 9% by end-2013. Its deleveraging is 60% done.

Asked by Reuters Insider whether BNP was embroiled in the Libor rate-fixing scandal, Bonnafe said the bank was “absolutely not” involved. He said regulators would have to change the way Libor was calculated.


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