(News Bulletin 247) – The French bank published profits above expectations. The group recorded a positive jaws effect, with better than expected revenues and lower costs.

The market did not have a good impression of BNP Paribas. The rue d’Antin bank had investors upset when it published its annual accounts in February, with results below expectations and the lowering of certain targets for 2025. The stock had lost more than 9%.

This time, the rendered copy is much stronger. The establishment headed by Jean-Laurent Bonnafé published results generally higher than forecasts.

Net banking income, equivalent to turnover, stood at 12.48 billion euros over the first three months of the year, down 0.4% year-on-year, while net income was from group recorded 3.1 billion euros, down 2.2%.

Royal Bank of Canada notes that the profit clearly exceeded the consensus, standing at 2.4 billion euros.

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A BFI much better than expected

Jefferies notes for its part that gross operating profit, at 4.56 billion euros, exceeded expectations by 12%. This is due to a positive “scissors effect”: revenues were 2% higher than expectations for costs 3% lower than consensus, explains Morgan Stanley.

By division, the corporate and investment bank (BFI) performed well and drove the bank’s outperformance compared to expectations. All of these businesses generated a pre-tax profit of 2.03 billion euros, or 29% more than the consensus.

In absolute terms, this division saw its revenues decline by 4%. But this is partly explained by the very high basis of comparison in fixed rate products (commodities, currencies and bonds), a business called “FICC”, and whose revenues are falling by more than 20%.

“The EMEA region (Europe-Middle East-Africa) from which FICC generated approximately 60% of its revenues in 2023 is the one which was most impacted by the normalization in the interest rate, foreign exchange and raw materials market after a period of very strong customer activity in 2022 and the first quarter of 2023. This normalization was characterized in particular by very low volatility, particularly in January and February 2024, leading to less sustained customer activity compared to high volumes in the first quarter of 2023.” , develops BNP Paribas.

Still in the CIB, the equities and securities management businesses on the market (“equity and prime services”) saw their net banking income increase by 11% over one year. Royal Bank of Canada notes that this growth is higher than the average for large American banks. The “Global Banking” division, which provides market financing services, recorded growth of 6% and generated a pre-tax profit of 901 million euros, an increase of more than 35% year-on-year.

Retail banking in France is still declining

Retail banking saw its revenues increase by 0.4% to 6.7 billion euros while its pre-tax profit fell by 12.4%.

In France, the net banking income of retail banking fell by 1.9% with a drop in interest income (i.e. the money generated via margins on the rates of loans granted to customers) of 8%. By excluding negative impacts, linked in particular to inflation hedges, this interest income is stable.

Regarding other indicators scrutinized by the market, the cost of risk remained contained, with provisions representing 29 basis points (0.29 percentage points) of outstanding credit, below the target of 40 basis points. targeted by the group for the entire year. In terms of amount, the cost of risk stood at 640 million euros compared to a consensus of 819 million euros, according to Royal Bank of Canada.

The solvency ratio, which measures equity compared to risk-weighted outstanding assets, stood at 13.1% at the end of March, a tiny bit below expectations, at 13.2% according to Morgan Stanley.

The American bank estimates that, overall, BNP Paribas has delivered “robust results” while Royal Bank of Canada appreciates “a good start”, with also the confirmation of the 2024 and 2025 objectives.

On the Paris Stock Exchange, BNP Paribas advanced 1% around 12:50 p.m., outperforming the CAC 40 which lost 0.8% at the same time.