By Simon Clark 

BNP Paribas SA's net profit held steady in the third quarter as income from trading securities offset a decline in retail banking earnings.

France's biggest bank said net profit for the three months to Sept. 30 was EUR1.89 billion, equivalent to $2.2 billion, slightly down from the same period in 2019. Pretax profit from the Paris-based bank's global markets unit soared 67% to EUR648 million. BNP Paribas's shares rose more than 5%.

European banks have reported better-than-expected results for the third quarter as the coronavirus pandemic hit the economy. It is unclear if the progress can continue as France, Germany and other nations lock down their populations to stem soaring infection rates.

BNP Paribas Chief Executive Jean-Laurent Bonnafé said the bank was demonstrating high resilience in extraordinary times.

European governments have provided hundreds of billions of euros of financial support to companies and workers to prop up the economy and banks. In exchange, the European Central Bank told banks to refrain from paying cash dividends in 2020. BNP Paribas's common equity Tier 1 ratio rose to 12.6% from 12.1% in the first nine months of the year, partly because it didn't pay dividends.

France and Germany announced new lockdowns last week and the U.K. government said England is set to follow this week under the pressure of mounting cases and deaths. French President Emmanuel Macron has announced tough restrictions requiring people to remain inside their homes while restaurants, bars and shops deemed nonessential close.

Some investors and analysts worry the government support has kept the real extent of problem loans and underlying damage to bank balance sheets at bay and that a clearer picture will emerge only when these programs end. BNP Paribas said provisions for bad loans rose 47% to EUR1.25 billion in the third quarter of the same period last year. The provisions declined from the previous quarter, in which EUR1.45 billion was set aside.

The French bank joined London-based Barclays PLC and Frankfurt-based Deutsche Bank AG in reporting strong results from trading and investment banking during the third quarter.

The Stoxx Europe 600 Banks index has fallen 38% this year. BNP Paribas's shares are down 37% in 2020, faring better than crosstown rival Société Générale SA, whose shares have fallen 59% after the bank was hit by coronavirus-related trading losses in its investment bank. Société Générale will publish its third-quarter results Thursday.

Write to Simon Clark at simon.clark@wsj.com

 

(END) Dow Jones Newswires

November 03, 2020 06:17 ET (11:17 GMT)

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