BNP Shares Rise After Disposals, Fixed Income Boost 1Q Results -- Update
May 02 2019 - 03:48AM
Dow Jones News
Adds CEO comments, background, earnings details, analysts
comments, share price
--BNP Paribas first-quarter net profit rose 22% to 1.92 billion
euros.
--Fixed-income revenue jumped roughly 29%
--The sale of 14.3% of SBI Life boosted results
By Pietro Lombardi
Shares in BNP Paribas SA (BNP.FR) gain ground after
first-quarter net profit rose 22%, boosted by capital gains on some
disposals and an unexpected strong performance of its fixed-income
business.
Net profit for the period was 1.92 billion euros ($2.15 billion)
compared with EUR1.57 billion a year earlier. The sale of 14.3% of
SBI Life Insurance Co. (540719.BY)--BNP's Indian joint venture with
the State Bank of India--boosted the bottom line, France's largest
listed bank by assets said Thursday.
Revenue increased 3.2% on year to EUR11.14 billion.
"These results showed better-than-expected CIB results (mainly
in fixed income), resilient domestic market (excluding Italy),
strong insurance that more than offset weaker BancWest and wealth
management," Citi said.
BNP shares trade 1.8% higher at 0703 GMT.
"Revenues were up thanks to business growth in the operating
divisions with in particular an upturn in client business at CIB,"
Chief Executive Jean-Laurent Bonnafe said, adding that the results
are line with the bank's plan.
"Operating expenses were well contained and benefited from cost
saving measures, generating a positive jaws effect," he said,
referring to income growth exceeding expenses.
BNP's fixed-income revenue jumped roughly 29%, supported by a
strong performance in rates and foreign-exchange transactions.
Equity revenue, however, was down about 30%. Revenue at the
corporate and institutional banking division was up 3.5%.
The unit "recorded this quarter an upturn in client activity
despite a still lackluster market context at the beginning of the
quarter," the bank said.
In February, BNP cut its 2020 revenue growth and profitability
targets and vowed to increase cost savings as weak trading revenue
hit its investment bank arm in the last quarter of 2018.
BNP increased its recurring cost savings target to EUR3.3
billion from 2020, up from a previous target of EUR2.7 billion. Of
the additional EUR600 million, roughly EUR350 million will come
from its corporate and institutional banking unit, it said.
The low interest-rate environment weighed on the bank's
domestic-markets division, whose revenue declined slightly.
The bank's international financial-services unit, which includes
wealth management, consumer finance and insurance, posted a 9.5%
growth in revenue.
BNP's core Tier 1 capital ratio--a key measure of capital
strength-- slipped to 11.7% in March from 11.8% at the end of
December.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
May 02, 2019 03:33 ET (07:33 GMT)
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