BNP Paribas (EU:BNP)
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1 Year : From Jul 2018 to Jul 2019
Adds: share price, CEO comment, details on earnings, analyst comment
By Pietro Lombardi
Shares in BNP Paribas SA (BNP.FR) fell by more than 4% in morning trade Tuesday after the bank's third-quarter results showed trading revenues are still under pressure.
Net profit at France's largest listed bank by assets grew on year, but, like its German peer Deutsche Bank AG (DBK.XE), it reported a sharp decline in fixed-income revenue within its corporate and institutional banking business. Analysts expected European banks to lag behind U.S. peers.
BNP's third-quarter net profit rose roughly 4% on year to 2.12 billion euros ($2.41 billion), boosted by a capital gain on the sale of 30.3% of First Hawaiian Inc. (FHB) and lower corporate income tax that offset a drop in operating income.
Revenue fell to EUR10.35 billion, compared with EUR10.39 billion a year earlier.
The net profit surpassed analysts expectations of EUR2.07 billion, according to a consensus forecast provided by FactSet. Revenue was expected to be EUR10.52 billion.
However, adjusted pre-tax profit came in below expectations, analysts at UBS said.
"We expect some weakness on the back of the underlying" pre-tax profit miss, they said.
AT 0910GMT BNP shares were trading 4.2% lower.
Lower revenue and higher operating expenses contributed to a 7.9% decline in operating income.
However, the French bank reported a EUR286 million capital gain from First Hawaiian bank's stake sale.
Net profit was also helped by an almost 30% decline in corporate income tax for the period, in part due to lower corporate tax in Belgium and in the U.S.
The bank's results were dented by another difficult quarter at its corporate and institutional banking business, which "operated this quarter in a lackluster financial market environment in Europe, in particular for the FICC business," BNP said, referring to the fixed income, currencies and commodities business.
The division's revenue fell 3.5% on year, with FICC revenue down about 15%, while equity and prime services revenues rose 4.5%.
The fixed-income business had its "lowest performance since 2013," U.S. bank Jefferies said.
The bank's international financial-services division's revenues, which includes wealth management, consumer finance and insurance, rose 4.3% from a year earlier.
"The group's business continues to grow in a contrasted context of economic growth in Europe," Chief Executive Jean-Laurent Bonnafe said in a statement.
"Despite a still unfavorable market context in Europe, the revenues of the operating divisions increase slightly, driven by the specialized businesses," he said.
BNP's core Tier 1 capital ratio--a key measure of capital strength--rose to 11.7% in September, from 11.5% in June.
Write to Pietro Lombardi at firstname.lastname@example.org
(END) Dow Jones Newswires
October 30, 2018 05:37 ET (09:37 GMT)
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