French bank’s profits up
PARIS ” BNP Paribas SA, France’s biggest bank by market capitalization, said Thursday that a strong performance in corporate investment and international retail banking powered a 14 percent increase in third-quarter earnings.
Net profit was 1.34 billion euros ($1.58 billion) in July-September, compared with 1.18 billion euros in the same quarter a year earlier, as restated under the new International Financial Reporting Standards.
The results beat analyst expectations. A Dow Jones Newswires poll provided an average net profit forecast of 1.26 billion euros ($1.48 billion). BNP Paribas is the last of France’s major listed banks to report third-quarter earnings this year. Its two main French rivals, Societe Generale SA and Credit Agricole SA, also beat expectations significantly.
The bank’s earnings were also helped by a continuing reduction in risk costs. Most French banks have boosted results in consecutive quarters in the last year by cutting back on their provisions against bad debt.
BNP Paribas said it set aside 105 million euros ($124 million) of new provisions in the third quarter, compared with 118 million euros a year ago.
Revenue for the period was up 15 percent at 5.46 billion euros ($6.43 billion), generating gross operating income growth of 19 percent. Gross operating income is considered by many analysts to be the most effective measure of bank profitability.
Operating costs rose 13 percent at 3.36 billion euros ($3.96 billion) in the third quarter. BNP Paribas attributed the higher costs to staff recruitment and investment in growth over the last year, but said costs were generally growing at a slower rate than revenue.
BNP Paribas’s corporate investment bank accounted for a significant portion of both top-line and bottom-line gains. Revenue at the division leapt 27 percent to 1.69 billion euros ($1.99 billion) from 1.33 billion euros a year ago, supported mainly by its advisory and capital markets business. The division’s pretax profit contribution to earnings was up 33 percent at 764 million euros ($890 million).
International retail banking also boosted earnings, lifted by its U.S. activities. The division’s pretax profit jumped 26 percent to 612 million euros ($721 million). The contribution from the BancWest U.S. retail bank rose 27 percent to 247 million euros ($291 million).
BNP Paribas shares fell 1.4 percent to close at 67.55 euros ($79.85) in Paris trading.