Change Edition

BNP reaps record profit as higher rates boost lending, trading
BNP Paribas

BNP reaps record profit as higher rates boost lending, trading

2 min. 29.07.2022
French lender beats on revenue and profit in volatile quarter; CEO Bonnafe has bulked up key units as rivals had to sell
Jean-Laurent Bonnafe, CEO of BNP Paribas
Jean-Laurent Bonnafe, CEO of BNP Paribas
Photo credit: Photo: AFP

BNP Paribas SA posted its highest profit on record as lending income rose amid the prospect of higher interest rates and volatile markets lifted securities trading in the second quarter.

Revenue at the unit that houses BNP’s retail operations rose 11%, reflecting higher fees, rising rates and gains in specialised businesses, the Paris-based firm said in a statement Friday. In the corporate and investment bank, equities trading rose 16%, double what the biggest Wall Street banks reported, after a series of deals to make BNP one of the top European firms in that business.

Net income of €3.18 billion was the highest in Bloomberg records going back to 2000.

Chief Executive Officer Jean-Laurent Bonnafe has used the financial strength of BNP, one of the biggest and most valuable banks in the region, to bulk up in recent years as rivals struggled with negative rates. After agreeing to sell his firm’s US arm, he’s well positioned to deploy excess capital for more deals as rising borrowing costs make banking in Europe profitable again.

Bloomberg reported last month that BNP is among lenders who have expressed interest in a potential acquisition of ABN Amro Bank NV, the Dutch consumer lender that’s been government-owned since the financial crisis. Chief Financial Officer Lars Machenil said in an interview with Bloomberg TV on Friday that the lender favors bolt-on deals, rather than buying a full-fledged bank.

“It can be a team on asset management, it can be an insurance product,” Machenil said. “But no banks.”

BNP Paribas rose 3.6% at 12:19 p.m. in Paris trading, paring losses this year to 24%.

Under Bonnafe, BNP has already struck deals to take on Deutsche Bank AG’s prime brokerage assets as well as hedge funds clients from Credit Suisse Group AG. The bank also agreed to buy the stake it didn’t already own in Exane SA.

That paid off as revenue from equities trading rose to 878 million euros in the second quarter, beating analyst estimates as well as its biggest peers. Fixed-income trading also beat estimates, though it fell short of the 30% plus gains at peers including Deutsche Bank.

With deals almost grinding to a halt worldwide, BNP’s corporate banking unit was the one investment banking unit to fall short of estimates, if only slightly. The business, which usually contributes roughly a third of the top line at the securities unit, still managed to avoid the steep declines seen across Wall Street, where revenue from advising on mergers, stock and bond issuance slumped by more than half.

BNP’s Commercial, Personal Banking and Services unit, which includes its retail operations, saw rising volumes of loans outstanding and deposits across most of its units. Specialised services such as leasing drove growth in the quarter, gaining more than 14%.

The firm’s insurance, wealth and asset management unit, which BNP calls investment and protection services, recorded the weakest growth of the three operating units, as the market sell-off weighed on assets and fees for overseeing them. Revenue at the unit grew 2.2% from a year earlier.

©2022 Bloomberg L.P.

More on this topic