BNP Paribas Profit Drops as Investment Banking Revenues Fall
French lender BNP Paribas came in short of profits and
revenues for the first quarter on Friday, as higher market volatility failed to
bolster performance in its investment banking unit.
France’s largest bank generated profits of €1.57 billion ($1.88
billion) in the first three months of the year, falling by 17 percent from last
year’s €1.89 billion, but still surpassed analysts’ expectations of €1.55
billion.
Operating income was at €1.92 billion ($2.3 billion), versus
€2.58 billion in the same period in 2017.
BNP Revenue Fall Behind Despite Higher Market Volatility
The declines came as overall revenues dropped 4.4 percent to
€10.8 billion ($12.93 billion), against €11.30 billion in the first quarter of
the previous year.
Revenues at its corporate and institutional banking (CIB) business
lost 9.8 percent, as it struggled with a subdued market, compared to a strong
first quarter a year ago.
BNP CIB head Yann Gérardin stated earlier this year that he
was hoping the recent surge in volatility would mean a better 2018 than 2017,
but it resulted in a wait-and-see attitude by fixed income, currencies, and
commodities clients instead.
Following the results, shares of BNP Paribas were down by
1.4 percent to €62.46 on Friday, as its revenue performance disappointed the
market.
Negative impact from a stronger euro, weak market
conditions, and a high comparative base in the first quarter, when a huge
amount of corporate banking fees were booked, also hindered earnings growth,
according to BNP Paribas.
Still, chief executive Jean-Laurent Bonnafe said even if the
market context was lackluster in Europe compared to the same quarter in 2017,
the results remained on track towards their 2020 plan and the achievement of
their targets.
The Paris-based company is currently carrying out a
three-year plan that intends to boost profitability by reducing its physical
branch network and investing more in digital services on both investment
banking and retail banking business.
BNP Paribas also aims to become one of the top three
European investment banks, partly by expanding in Germany, the US, and Asia as
competition slims down.
Quarterly revenue at its international financial services
division rose by 3.8 percent. BNP Paribas considered the unit, which includes
consumer finance, retail banking in emerging markets and the US, as well as insurance
and wealth management as its ticket to growth.
This helped offset BNP Paribas' shortcomings in its home market,
where it saw revenues plunged 1.6 percent, partly because of pressures on its
loan businesses.
Revenue from equity and prime services at the bank added
19.4 percent, but fixed income (FICC) activities fell by 31.4 percent.
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BNP Paribas Profit Drops as Investment Banking Revenues Fall
Reviewed by HQBroker
on
May 04, 2018
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