BNP beats expectations in Q2, brisk market activity

BNP EXCEEDS EXPECTATIONS IN THE SECOND QUARTER, STRONG MARKET ACTIVITY

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, particularly in markets.

The first French bank by market capitalization says its net profit rose 9.1% 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 the financial markets had one of the worst first half-years, BNP Paribas emphasizes 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.

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.

European banks delivered a slew of good earnings reports 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. Conversely, in Switzerland, bank UBS underperformed as it was penalized by its wealth management activities.

On the stock market, BNP Paribas shares have underperformed the European banking index, down 26.5% year-to-date versus a 22% fall for the index.

(Report Julien Ponthus, French version Matthieu Protard, edited by Kate Entringer)