By Mathieu Rosemain
PARIS -France’s BNP Paribas reported mixed quarterly results on Thursday, marked by rising sales and costs at its investment bank, and stuck with its profit forecast despite a deteriorating economic outlook prompted by a global trade war.
The euro zone’s biggest bank by assets said group net income over the first three months of the year fell by 4.9% from the same period a year earlier to 2.95 billion euros ($3.34 billion), against the 2.94 billion-euro consensus forecast.
BNP said that last year’s re-inclusion of its Ukrainian operation into its accounts fully explained the year-on-year decline.
The French lender’s three main divisions otherwise all posted an increase in pre-tax income, led by its corporate and institutional banking unit, which saw sales advance 12.5% to a record as turbulent financial markets spurred more client activity. Operating expenses were up 4% to 8.26 billion euros, above market expectations, led by an 8% jump at the CIB division “in support of growth,” the bank said.
Sales from equity trading and prime services jumped by 42% while revenue from trading in fixed income, currencies and commodities were up by 4.4%.
This mirrored similar performance seen at Wall Street rivals, including JPMorgan, Morgan Stanley, Bank of America and Citigroup.
“BNP delivered a mixed set of results benefiting from strong trends in CIB while elsewhere performance was better/worse than expected and loan losses remained low,” Royal Bank of Canada said in an early note to clients, adding that the “outlook is uncertain in our view”.
Jefferies highlighted the 11.5% return on tangible equity that BNP Paribas pledged to deliver this year, adding that the bank’s management needed to reassure the markets about the closing date of its 5.1 billion-euro acquisition of AXA’s asset management arm, slated in early July, on the heels of a regulatory snag.
BNP’s share were down by more than 2% in early Paris trade.
BNP is the first of the big European banks to report this quarter and after U.S. President Donald Trump unleashed a global trade war at the start of April all eyes are on the outlook and how banks expect to navigate an anticipated slowdown in economic growth that could hit loan demand.
European bank shares have tumbled in April, although they partly rebounded this week as the Trump administration signalled a willingness to de-escalate the trade war with China.
TRUMP TARIFFS
Chief Executive Jean-Laurent Bonnafe sought to paint a positive picture, saying BNP was well-positioned to benefit from any increased corporate activity created by Germany and the European Union’s big fiscal spending plans, as the region tries to rebuild its militaries and revive economic growth.
In written comments, Bonnafe did not address the economic outlook and Trump’s tariffs.
He confirmed BNP’s 2024-2026 targets published in February, including an average annual growth in net income of more than 7% and an annual average growth in sales of more than 5%.
BNP’s first-quarter numbers also showed sluggish performance at its retail business, especially at Italian unit BNL.
The French lender said it has achieved nearly a third of the 600 million euros in additional cost cuts targeted for this year, more than half of which will come from its commercial division.
The savings are part of a broader 3.3 billion euros cost-cutting plan through 2026.
Further details on a strategic overhaul of its French retail unit, which will likely contribute to the savings, are expected in June.
BNP’s car-leasing division Arval suffered an 11.8% decline in sales as used cars prices continued to fall.
($1 = 0.8826 euros)
(Reporting by Mathieu Rosemain; Additional reporting by Bertrand de Meyer;Editing by Tommy Reggiori Wilkes, Sonia Cheema and David Evans)
