BNP Paribas beats Q3 profit forecast, unveils €1.3 billion share buyback
- France’s BNP said quarterly net income climbed 14% to €3.46 billion, beating the €3.23 billion average forecast of analysts polled by the bank
BNP Paribas exceeded Q3 profit forecasts, driven by strong investment banking performance and equity trading. The bank announced a –1.3 billion share buyback, downplaying sovereign bond yield concerns.
- Forecast-beating Q3 profit and revenue growth
- –1.3 billion share buyback announcement
- Strong equity trading and investment banking performance
- Limited exposure to French sovereign bond yields
BNP Paribas posted a forecast-beating rise in third-quarter profit on Wednesday, aided by its investment bankers, as the lender announced a €1.3 billion ($1.45 billion) share buyback and played down the impact of soaring government bond yields.
France’s BNP said quarterly net income climbed 14% to €3.46 billion, beating the €3.23 billion average forecast of analysts polled by the bank. Revenue at the euro zone’s biggest bank by assets rose year-on-year to €13.76 billion, slightly above expectations.
BNP is reporting alongside a flurry of European banks this week including Deutsche Bank, UBS, and Santander, with investors watching closely to see if lenders can sustain recent record profits.
HSBC on Tuesday sent a chill through the sector after it disappointed with its revenue growth, sending its shares down nearly 7%.
French banks face further challenges, with soaring euro zone sovereign bond yields - especially in France amid concerns about the country’s fiscal position - reviving worries about lenders’ exposure to government debt.
BNP said its exposure to French sovereign bonds was limited, roughly at €19 billion at end-September and that France accounted for under 10% of its pre-tax income last year.
Equity trading jumps
The French lender’s results were helped for a second consecutive quarter by a record jump in equity and prime services revenue.
The 50% rise year-on-year surpassed the average 37% gain in equities trading across the top five US players, according to a Reuters calculation from company statements.
Overall sales at BNP’s corporate and institutional banking unit, which long-time CEO Jean-Laurent Bonnafe has made critical to its success, rose by 17% year-on-year.
Fixed-income, currencies and commodities trading revenue was flat, reflecting an industry wide weak quarter for fixed income. BNP’s retail business saw income rise by 4%, boosted by higher interest rates.
The bank said it would launch a €1.3 billion share buyback in November after it met its Common Equity Tier 1 (CET1) capital ratio, a key measure of financial strength, at end-June, ahead of schedule.
RBC analysts said before the results they expected BNP to bring forward a buyback totalling €1.2 billion euros “to express confidence in its outlook”.
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