Financial analysts awaited BNP Paribas’ second-quarter results with some caution, watching for the slightest sign of a slowdown in activity. Finally, the first bank in the euro zone surprised by publishing a record net profit of 3.2 billion euros, up 9%, well above consensus expectations, with a positive contribution from all business lines. Once again, revenue growth (8.5%) exceeded cost growth (+7.5%). For the half year, net revenues were almost 5.3 billion euros (+13%), net banking revenues increased by 10% to 26 billion euros.
The bank points this out “its solid trajectory” confirmed by these results. In particular, they reflect excellence in retail banking in France, car leasing (Arval) and corporate and investment banking. That bodes well for Societe Generale, which is due to report its results next Wednesday, despite the €3.2 billion loss the bank will incur as it settles its Russia adventure.
In detail, the good quarterly performance of the business area retail banking and specialized financial services stands out with an increase in income of 11% to 7.2 billion euros. In particular, note the strong growth in outstanding loans (+7%) and deposits (+7.5%). Arval’s business and leasing solutions grew by 33% and pre-tax profit increased by 72% to 545 million euros. As in the first quarter, the CIB activities supported the group as a whole with a sales increase of 10.6% to 4.1 billion euros.
Low risk costs
In a difficult market environment, the bank relied on its strengths such as interest rate and foreign exchange products and commodities. Equity derivatives also received a boost as equity markets endured a disastrous semester. On the other hand, financing transactions with large companies, which have relaxed their refinancing in view of the rise in interest rates, are declining. Another salient point is that risk costs remain low at 33 basis points despite re-allocation of ex-ante provisions, i.e. on unproven risks.
Finally, with the exception of the Swiss banks, the big European banks tend to publish results above the consensus. This is the case with Deutsche Bank in Germany or BBVA in Spain. As if economic activity would remain at its 2021 momentum despite inflation, rising interest rates and the war in Ukraine.