BNP Paribas Outshines Rivals as Trading Prospers
July 31 2020 - 7:23AM
Dow Jones News
By Simon Clark and Noemie Bisserbe
BNP Paribas SA shares rose as much as 6% Friday as the French
lender's earnings suggested it is navigating the coronavirus
pandemic better than several other European banks, driven by a boom
in its trading businesses.
The lender benefited from heavy trading by clients who took
advantage of favorable market conditions, as volatility caused by
the pandemic forced investors to reposition their portfolios in a
hurry.
Global markets revenue jumped almost 64% in the second quarter,
with revenue at the bank's fixed-income operations more than
doubling from a year earlier to EUR2.01 billion ($2.38 billion),
the bank said in a statement.
BNP Paribas fared better than several of its European rivals in
the quarter. Germany's Deutsche Bank AG and the U.K.'s Barclays PLC
reported much smaller profits. Spain's Banco Santander SA posted an
unexpectedly large loss after booking a EUR12.6 billion charge to
lower the valuation of some previous acquisitions, which it
attributed to the deteriorating economic outlook. About half of the
charge came from Santander's U.K. business.
National lockdowns to stop the spread of the coronavirus have
taken a heavy toll on European companies and banks have been forced
to set aside billions of euros to provision for defaults. European
banks had already been struggling for years with low interest
rates, stringent regulatory capital requirements and sluggish
economies.
BNP Paribas, one of Europe's largest banks, beat analyst
expectations as its overall net profit fell 7% to EUR2.3 billion in
the three months ended June 30 compared with a year earlier.
The Paris-based lender set aside EUR1.45 billion in the quarter
to cover credit losses. In the same quarter last year, provisions
were EUR621 million. The second-quarter provisions add to the
EUR1.43 billion it stowed away in the first quarter.
"Our diversified banking model has proven its effectiveness,"
Chief Executive Jean-Laurent Bonnafé said. "BNP Paribas was able to
quickly mobilize its teams, resources and expertise."
The French bank was optimistic about the rest of the year. After
a low point in April and May, "the rebound in June in Europe was
stronger than expected," BNP Paribas said.
In the U.K., which has reported the most deaths from the
coronavirus in Europe, NatWest Group PLC said Friday it swung to a
GBP993 million ($1.29 billion) loss in the second quarter after it
set aside GBP2.06 billion in provisions for bad loans.
Write to Simon Clark at simon.clark@wsj.com and Noemie Bisserbe
at noemie.bisserbe@wsj.com
(END) Dow Jones Newswires
July 31, 2020 07:08 ET (11:08 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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