PARIS (Agifi Dow Jones) – BNP Paribas on Tuesday reported higher first-quarter results after a strong increase in its activity, particularly in the financial markets.
The bank saw its net income increase 19% in the last quarter to 2.11 billion euros. This result includes lower provisions for bad debts, confirming the return of the economic environment to normal after the health crisis. Excluding exceptional items, the increase in earnings compared to the first quarter of 2021 is 34%, taking into account the significant real estate capital gains recorded a year ago.
The cost of risk, which measures provisions for bad debts, was halved to 20 basis points from outstanding loans, helped by reversal of provisions in the BankWest subsidiary being sold. Excluding reversals, the cost of risk is also low, at 30 basis points versus 42 basis points in the prior year.
Net banking income (NBI) for the third quarter was €13.22 billion, an increase of 11.7% compared to the first quarter of 2021. At constant exchange rates and their perimeter, the growth was 10.4%.
Analysts, on average, expected net income of 1.37 billion euros and revenue of 11.65 billion euros, according to FactSet.
“The dynamism at the beginning of the year (…) is good and supports a strong trajectory for 2022 in an environment with a much more differentiated short-term,” the group commented in a press release.
Strong growth in market activities
The main driver in the first quarter was that Corporate and Investment Banking (CIB) made gains in market share and saw it grow 28% in one year. The bank said market activities (global markets) grew by 53%, driven by “very strong customer demand in interest rates, foreign exchange and commodity derivatives markets”. However, investment banking advisory (Global Banking) activity decreased by 0.8% with fixed range and exchange rates, in a less buoyant market environment.
These offers enabled CIB to double its quarterly results to 1.35 billion euros.
Retail banking (banking, commercial and personal) reported an 8.1% increase in revenue with a fixed range and exchange rates in the first quarter. The division benefited from strong growth in its specialty businesses such as consumer credit and professional car rental (Arval), as well as a 4.8% increase in outstanding loans and an 8.2% increase in deposits. In France, the national investment bank rose by 8.9%, thanks to an increase in interest income of more than 6% and commissions by 12%.
The only quarterly indicator on the decline, the Group’s CET1 capital ratio fell to 12.4% at the end of March, compared to 12.9% at the end of 2021. This solvency indicator was affected by regulatory changes, an increase in budgets, and by renewed volatility in the markets in the wake of the war in Ukraine.
Low exposure to Ukraine
Already in March, BNP Paribas indicated that Ukraine and Russia account for less than 0.2% of its financial commitments (€3 billion). Faced with the conflict, the group decided to reduce the value of its stake by 90% in its Ukrainian subsidiary Ukrsibbank for 159 million euros, a figure that was charged to the result of the first quarter. Ukrsibbank still provides basic services in Ukraine, but it has closed dozens of branches since the beginning of the war and ended its activity in the areas occupied by the Russian army. The group indicated that it took care of housing more than 1,700 people from its Ukrainian employees and their families.
BNP has also halted all new financing operations in Russia and its local subsidiary BNP Paribas ZAO has not processed customer transactions since March.
The war in Ukraine has caused the group to postpone the day of its presentation to investors scheduled for March. The continuation of the war now makes it unlikely that this event will take place before the summer. However, the bank on Tuesday reiterated the targets of its 2025 Strategic Plan presented at the start of the year.
– Thomas Varela, Ajevi Dow Jones; +331 41 27 47 99; [email protected] By: VLV
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May 03, 2022 01:20 ET (05:20 GMT)