(Reuters) – BNP Paribas fell on the stock market on Thursday after reporting weaker than expected results for its retail and consumer credit activities in France, in a context of collapse in the European banking sector.
Although generally in line with market expectations, the mixed quarterly results of the leading French bank by market capitalization were not enough to reassure investors. The banking sector is indeed evolving in a complex context of rapidly rising interest rates and uncertain economic prospects.
Third-quarter results for BNP’s retail banking business in France and Italy fell short of expectations, hurt by lower revenues and higher provisions, Jefferies and JP Morgan said.
“Revenues were slightly higher but showed unexpected weakness in retail banking in France and Italy,” Jefferies says, adding that BNP’s car rental business, Arval, and consumer finance unit from the lender were also disappointed.
BNP shares fell around 4% to 56.18 euros at 09:20 GMT, after falling more than 5% in early trading.
The group’s net profit of the leading French bank by market capitalization shows a drop of 4% in published data in the third quarter, to 2.66 billion euros, a figure close to the expectations of analysts who were counting on 2.64 billion euros, according to a consensus compiled by the company.
Net banking income over the period increased by 4% to reach 11.58 billion euros, a result slightly higher than the 11.52 billion euros expected.
BNP’s trading activity benefited for several quarters from the high volatility observed on the markets following Russia’s invasion of Ukraine.
The group is now following the same trend as its competitors, who have recorded a sharp drop in revenues from demand for hedging instruments against currency and interest rate risks. The “Global Markets” division, which brings together trading services, recorded a 9% drop in revenues in the third quarter, driven by a drop of nearly 14.3% in rates and currencies activity. and raw materials (FICC). During the same period, Deutsche Bank and Barclays recorded a decline of 12% and 13% respectively in their revenues from these activities.
This decline is offset by the good performance of the “Global banking” activity – which includes bond issues, syndicated loans and cash management – whose revenues increased by around 20%.
The cost of risk, which measures BNP’s potential exposure to non-repayment of loans, stood at 734 million euros, well below the 815 million euros expected by analysts.
The group, which confirmed its target of reaching 12% return on tangible equity (RoTE) in 2025, also said it had completed 85% of its €5 billion share buyback program in 2023.
(Written by Augustin Turpin, edited by Blandine Hénault and Kate Entringer)
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