Banking News

BNP results meets analyst expectations

BNP results meets analyst expectations

(8 February 2018 – France) BNP Paribas has said an improving interest-rate environment is likely to support growth, as it reported fourth-quarter profit and trading results largely in sync with market expectations.

However, the bank’s corporate unit did less well than expected due to higher one-off loan loss provisions.

BNP said it is aiming for return on equity (ROE) to exceed its 2020 target of 10 percent.

“We are off to a good start” for those targets, Chief Financial Officer Lars Machenil said. 

“If, on top of that, the economic outlook crystallizes going forward, then we are expecting to beat our target of a 10 percent ROE.”

Alain Papiasse, deputy chief operating officer overseeing BNP’s corporate and investment bank, said increased volatility in rates, currencies and other securities generally translates into more demand for markets products from clients. 

COO Philippe Bordenave said the weak dollar will likely be a “negative element” weighing on the bank’s earnings in the first part of 2018.

BNP recorded quarterly revenue at its French retail network of €1.54 billion (A$2.4 billion), down 0.4 percent. Revenue at the local retail unit has shrunk for several years in a row, showing how any improvement in the rate outlook for its key markets remains crucially important.

Meanwhile, corporate banking profit before tax was €242 million, well below analyst estimates of €425 million. BNP highlighted the impact of “two specific clients this quarter,” without naming them.

In the fourth quarter, the bank had a 14 percent decline in income from the same period last year to €1.07 billion from buying and selling stocks, bonds and other securities.

The French bank posted its lowest quarterly trading revenue since 2016.

It recorded a CET1 capital ratio of 11.8 percent at the end December 2017, stable from the quarter ending September 30.

Thanks to the corporate and investment bank’s combination of different trading businesses, BNP “resisted well in the turmoil of the second half,” Machenil said.

BNP’s CEO Jean-Laurent Bonnafe said he wants to make the bank one of the top three European players in trading and corporate banking. 

BNP is eyeing growth in key markets including Asia, the UK and Germany as well as in the US.

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