PARIS: BNP Paribas has said a surge in fixed-income trading helped it to achieve stronger than expected performance in the third quarter even though it suffered a drop in revenue at its French and Italian retail operations.
On Friday, the Paris-based lender reported that revenues from fixed income, currencies and commodities trading rose 41.3 per cent in the three-month period, helping the group to report a forecast-beating 3.3 per cent rise in net income — to €1.89bn.
BNP’s stronger quarterly performance follows robust results earlier this week from European groups Deutsche Bank and Barclays on the back of strong fixed-income activity that helped dispel some of the investor gloom surrounding the sector.
Barclays’ fixed income, currencies and commodities revenues were up 40 per cent, and Deutsche Bank’s were up 14 per cent. US banks also averaged a 49 per cent rise in fixed-income trading revenues in the third quarter, compared with a year earlier.
BNP benefited from this strong trading, but said its European retail operations had to deal with the challenging backdrop of ultra-low interest rates, which weighed on its results in the period.
In France, BNP said retail banking revenues were down 3.1 per cent and net interest income — a key measure of lending profitability — was down 4 per cent “given the impact of persistently low interest rates.” In Italy, revenue was down 2.9 per cent and net interest income was down 4.6 per cent.
However, this was offset somewhat by growth in the group’s retail operations in Belgium and Luxembourg, as well as improvement in its car and equipment leasing businesses, which is included in the same “domestic” division as its retail operations. Its San Francisco-based retail arm, Bank of the West, reported a 4.4 per cent rise in revenue.
Jean-Laurent Bonnafé, the chief executive of BNP, said the bank had “delivered a good performance this quarter” and had “good growth in the revenues of the operating divisions despite the low interest-rate environment”.
Azzurra Guelfi, analyst at Citi, described the quarterly results a “solid” and noted that corporate and institutional banking operations were “stronger than expected” while “French retail and wealth management were weaker”.
