BNP Paribas joins European rivals in posting boosted profits

BNP Paribas has posted higher-than-expected revenues and profits for the third quarter as it joined some of its rivals across Europe in benefiting from rising interest rates and offset a decline in share sales and dealmaking with a thriving trading business.

France’s biggest listed bank, which has made a push to extend its ties with companies across Europe in recent years, said net profit had jumped 10.3 per cent from a year earlier to €2.76bn, beating Refinitiv forecasts of €2.36bn.

In BNP Paribas’s corporate and investment bank, revenue from trading rates and commodity derivatives in particular boosted its earnings, at a time when businesses have been hedging their operations against rising energy prices.

That activity helped offset a fall in capital markets income, as companies held off on stock market listings and financing for acquisition deals slowed while recession fears gripped markets. BNP Paribas also said it had been hit by markdowns on leveraged finance loans that it had underwritten and struggled to sell down.

Overall, its corporate and investment banking business posted a 5.9 per cent rise in revenues — a slightly slowdown from a quarter earlier — to €3.8bn.

Rising revenues in BNP’s corporate and personal banking division reflected the boost from rising interest rates that has started to trickle through for lenders across Europe as profitability on their loans business improves.

Rivals from Deutsche Bank to Santander have also reported bumper profits for the July to September period as a result, even as economic headwinds rise.

Rising energy prices in Europe in particular are raising fears for businesses struggling to cope with their bills or pulling industrial investments.

BNP Paribas’s cost of risk ticked up slightly in the third quarter from a year earlier. The bank said that was owing to the one-off €204mn impact of a new Polish law that allows struggling mortgage borrowers to postpone some payments.

Across BNP Paribas as a whole, revenue was up 8 per cent from a year earlier to €12.3bn, beating forecasts of €12.09bn.

Banks benefiting from central bank policies may now become a target for windfall taxes on earnings. In France, the government has shied away from such action, although it has leant on lenders to make a gesture to help consumers struggling with inflation. French banks have agreed to limit fee increases to 2 per cent in 2023.

BNP Paribas is one of the European banks that made it through the coronavirus pandemic in the strongest shape, as it extended its balance sheet to win over clients at a time when some rivals were retreating. It has since benefited from an economic recovery.

The bank struck a deal last year to sell its US retail unit, Bank of the West, for $16.3bn, a transaction it is close to completing. It has earmarked some of the proceeds for small acquisitions.