BNP Paribas third-quarter net doubles
France’s largest bank’s revenue from equity and advisory operations climbed 51 per cent to 444 million euros
BNP Paribas, France’s largest bank, said third-quarter profit more than doubled after it posted higher revenue at the investment-banking unit.
The shares rose after the Parisbased company reported net income climbed to 1.32 billion euros ($1.7 billion) from 541 million euros a year earlier. That exceeded the 1.06 billion- euro average estimate of analyst survey.
BNP Paribas was among three French lenders whose credit rating was cut by Standard & Poor’s last month. BNP Paribas, led by Chief Executive Officer Jean- Laurent Bonnafe, has reached higher capital levels under new Basel III rules than rivals including Germany’s Deutsche Bank AG (DBK) as European lenders cut assets and reduce corporate- and investment-banking jobs. The French firm, among banks hurt last year by a liquidity crunch and losses on Greek sovereign debt, plans to expand services to affluent US clients and to corporate- and investment-banking clients in Asia.
“We are well positioned to redevelop and benefit from geographies or businesses that are growing,” Bonnafe, 51, said in an interview. BNP Paribas rose 4 percent to 40.69 euros at 9:05 a.m. in Paris trading, the biggest gain in three weeks. That gives the company a market value of 51 billion euros. Pretax profit at BNP Paribas’s corporate- and investment- banking unit, or CIB, rose 7.3 percent to 732 million euros, beating analysts’ estimate of 686 million euros. Revenue from equity and advisory operations climbed 51 per- cent to 444 million euros, while fixed-income sales more than doubled to 1.13 billion euros.
“We saw quite a strong rebound” in capital-markets revenue, Bonnafe said. “We rely very much on the global trend of market businesses of course, but for the time being there is no reason to believe it’s going to be that different.”
The bank, which took 3.2 billion euros in writedowns on Greek government debt in 2011, has rushed to cut its sovereign debt holdings in most European countries since mid-2011 to help protect capital levels.
BNP Paribas was among three French lenders whose credit rating was cut by Standard & Poor’s last month on concern it may be hurt by Europe’s protracted economic weakness and a potential housing slump in France. BNP Paribas, Cofidis and Banque Solfea were downgraded by S&P as “these groups are more vulnerable to the impact of rising economic risks in the euro zone, particularly in France and countries in southern Europe,” the ratings company said on Oct. 26.
French banks also face “potentially limited, but still noteworthy, impact from an ongoing correction in the housing market,” S&P said last month. The ratings company revised its outlook to negative from stable for BNP Paribas and 10 other French lenders, including Societe Generale SA (GLE) and Credit Agricole SA (ACA), France’s second and third largest by market value, respectively.
S&P’s move came as France’s largest banks have found their funding situation stabilizing, thanks to 1 trillion euros in long-term loans by the European Central Bank and ECB President Mario Draghi’s agreement in September to buy the bonds, under some conditions, of euro nations whose sovereign yields have soared.
“The French real-estate market is very, very solid, I can tell you,” Bonnafe said. “Europe as a whole has been slowing down, so this is just the same for France.” French banks, the biggest foreign holders of private and public debt in the euro-area’s problem economies, are benefiting from the ECB’s moves as the crisis enters its fourth year.