PARIS (Reuters) – BNP Paribas reported on Wednesday a net profit more than doubled in the first quarter thanks to the capital gain linked to the sale of its subsidiary Bank of the West.

The first bank in the euro zone indicates in a press release that it generated a net profit of 4.43 billion euros over the period January-March 2023, against 1.84 billion a year earlier, in line with analysts’ expectations.

The bank’s revenues rose in the first quarter by 1.4% while the cost of risk, which measures the level of provisioning for bad debts, fell by 1.4%.

BNP Paribas announces that its quarterly accounts include a capital gain of 2.95 billion euros linked to the sale of Bank of the West.

This capital gain enabled the bank to strengthen its financial solvency with a “common equity tier one” (CET1) ratio of 13.6% at the end of March, up 130 basis points compared to the end of 2022, in a banking sector which has been shaken by three resounding bankruptcies, including that of Silicon Valley Bank and more recently of First Republic Bank in the United States, and with the rescue of Credit Suisse by UBS in Europe.

These routs raised fears of a risk of contagion in the sector as regulators struggled to reassure investors.

In a research note, RBC analysts believe that BNP Paribas benefited in the quarter from the diversification of its activities, while underlining the good performance of corporate and investment banking.

INCREASE IN INTEREST INCOME

In market activities, the French bank saw its income grow by 9% in rates, currencies and commodities (FICC) in the first quarter. On the other hand, they fell 19.5% in equities.

But analysts, like at Deutsche Bank, believe that BNP Paribas is doing better than its competitors, especially on rates and currencies.

By comparison, the American bank Goldman Sachs recorded revenues down 17% in FICC activities and down 7% in equities.

In retail and commercial banking, BNP Paribas posted higher income growth than expenses over the quarter, thus benefiting from an increase in interest income.

The French bank suddenly confirmed a “strong growth trajectory” for its distributable earnings per share for this year.

At the same time, it confirmed its objectives for 2025, including a return on tangible equity (ROTE) of around 12% and average annual growth in net income group share of more than 9%.

Since the start of the year, BNP Paribas shares have gained nearly 7% after losing 12% in 2022.

(Report Mathieu Rosemain, with Matthieu Protard, edited by Jean Terzian and Kate Entringer)

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