BNP Paribas Profit Drops as Structured-Products Business Takes Hit - Update
May 05 2020 - 5:44AM
Dow Jones News
By Noemie Bisserbe and Pietro Lombardi
PARIS -- BNP Paribas SA reported Tuesday a drop in first-quarter
net profit as France's largest bank set aside new provisions to
prepare for a flood of customers to default on their loans because
of the coronavirus pandemic.
Like crosstown rival Société Générale SA, companies that
canceled their dividend payments dealt a big hit to BNP Paribas's
equity derivatives unit -- a business where the two French banks
have a strong foothold. The move wiped EUR184 million ($200
million) from BNP Paribas' structured products revenue this
quarter.
Banks world-wide have been setting aside billions of dollars to
cover bad loans and have been shoring up capital by canceling
dividends and share buybacks, as lockdowns and uncertainty as a
result of the novel coronavirus pandemic have slammed the brakes on
the global economy.
The Paris-based lender, the biggest by assets in France, said
net profit fell by 33% to EUR1.28 billion in the three months ended
March 31, while revenue declined by 2% to EUR10.89 billion.
BNP Paribas warned net profit for 2020 might fall by 15% to 20%
as a result of the health crisis. The lender pledged to intensify
its efforts to cut costs, but warned this could be offset by
increasing provisions.
It set aside EUR657 million to cover bad loans, raising its
total provision to EUR1.43 billion.
Strong fixed revenue, up 34% to EUR1.39 billion, helped offset
the EUR87 million loss posted by the bank's equity business. As a
result, BNP Paribas's corporate and investment bank reported a 1.9%
decline in revenue to EUR2.95 billion. The bank's domestic-markets
division, which includes retail operations in Italy, France and
Belgium, posted a 1.6% decline in revenue to EUR3.76 billion.
Revenue at its international financial-services unit -- which
includes wealth management, consumer finance and insurance -- were
also down 5.4% at EUR4.05 billion.
Still, BNP's core Tier 1 capital ratio -- a key measure of
capital strength -- stood at 12% in March from 12.1% in December,
well above the requirements notified by the European Central Bank,
and in line with the bank's target.
BNP Paribas shares were up 4.6% at EUR28.35 in early morning
trading in Paris.
Write to Noemie Bisserbe at noemie.bisserbe@wsj.com and Pietro
Lombardi at Pietro.Lombardi@dowjones.com
(END) Dow Jones Newswires
May 05, 2020 05:29 ET (09:29 GMT)
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