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

The Pak Banker - - Front Page -


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.

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