BNP Paribas beats expectations in second quarter, title gains
BNP PARIBAS EXCEEDS EXPECTATIONS IN THE SECOND QUARTER, THE SHARE PROFITS
by Julien Pontus
PARIS (Reuters) – BNP Paribas on Friday reported better-than-expected second-quarter results thanks to lower provisions for bad debts despite the economic slowdown and buoyant activity in both capital markets and retail banking.
On the stock market, investors welcomed the bank’s quarterly results. At 10:25 a.m., the action rose by 3.76% to EUR 46.38, outperforming the European banking index (+1.45% at the same time).
“There’s a positive scissor effect,” with revenue growth outpacing costs, notes Arnaud Journois, credit analyst at DBRS Morningstar.
“But if these results are good, that doesn’t mean the outlook has improved,” he continues, as the bank has set aside provisions on its books in case the euro-zone economy deteriorates further. “It is possible that Q3 or Q4 will be less good for European banks.”
For Jefferies analysts, BNP Paribas’ quarterly results “continue to show strong momentum” despite a lower-than-expected Common Equity Tier One (CET 1) solvency ratio.
SUSTAINABLE ACTIVITIES AT EQUITIES
In the second quarter, the first French bank by market capitalization reported a 9.1% increase in net profit to 3.18 billion euros, while analysts had expected 2.7 billion euros, according to an informal consensus.
Its risk costs rose to 789 million euros during the quarter, or 100 million euros less than analysts had expected, with the bank stressing that it has a “cautious risk profile”.
Revenue increased by 8.5% over the period. They increased by 11.1% in retail banking and by 10.6% in corporate and investment banking (BFI).
While financial markets have experienced one of the worst first half-years in their history, BNP Paribas stresses that demand for financial instruments has been strong.
“In the interest rate, foreign exchange and commodity derivatives markets, strong customer demand, which is linked in particular to the shifting and hedging needs observed in the first quarter of 2022, continues,” emphasizes the bank in a press release.
“The level of activity in equities is supported by good momentum in derivatives,” she continues.
Earnings were up nearly 15% in rates, currencies and commodities and 16% in equities.
European banks delivered a slew of good earnings news this week as investors look for signs that slowing economic growth, inflationary pressures and the war in Ukraine could affect their forecasts.
In Germany, Deutsche Bank beat expectations with a 51% profit increase in the second quarter, driven by higher investment banking revenues. For its part, in Spain, bank BBVA used its lending activity to also perform better than expected.
(Report Julien Ponthus, French version Matthieu Protard, edited by Kate Entringer)
