BNP Paribas Bank on Thursday, April 25, released earnings data for the first quarter of 2024, which exceeded preliminary expectations.
Cost lowering and robust global banking performance helped the mentioned financial institution offset the sharp drop in fixed-income trading.
BNPP, the largest lender in the eurozone which is headed by Jean-Laurent Bonaffe, has made its investment banking unit the main factor in the growth plan and expects that the activity of this arm in the market will increase annually by an average of more than 7.5% until 2025.
The financial institution reported a 20% year-on-year drop in revenue from trading fixed-income assets, currencies, and commodities (FICC) in the first quarter of 2024. This result is significantly lower than similar indicators of the bank’s competitors on Wall Street, where the corresponding indicator fell by about 3% on average against the background of markets with a lower level of volatility. At the same time, Deutsche Bank recorded a 7% growth in fixed income and currency trading in the first quarter of 2024.
BNPP stated that currently its activities are mainly related to regions such as Europe, the Middle East, and Africa. In the mentioned regions last year, the financial institution provided 60% of its FICC sales.
Jefferies experts say that investors can nitpick the CIB (investment bank unit) indicators. According to them, this probability is realistic due to another fall in FICC and a decrease in FICC’s revenue base by 20% year-on-year. At the same time, they noted that the financial institution had demonstrated good cost control.
JPMorgan said BNPP had a solid start to 2024 in terms of revenue. Citi experts say that the lender’s operating profit has demonstrated progress in saving costs.
BNPP’s net income for the first quarter of 2024 amounted to 3.1 billion euros. This indicator showed a drop of 2.2% compared to the result for the same period last year. It is worth noting that analysts interviewed by the media expected that the bank’s net income for the first quarter of 2024 would be fixed at 2.4 billion euros.
The overall revenue of the financial institution for January-March of the current year amounted to 12.5 billion euros. This indicator decreased by 0.4% compared to the result for the same period last year. Experts expected that the bank’s overall revenue for the first quarter of 2024 would be fixed at around 12.2 billion euros.
Against the background of news about the lender’s earnings in January-March of the current year, its shares rose in price by 0.5%. The bank is currently valued at about 78 billion euros.
In February, BNPP disappointed investors by deciding to postpone the achievement of a key profitability target. This year, the financial institution plans to generate earnings of more than 11.2 billion euros.
Revenue from BNPP’s commercial and personal banking operations in the first quarter of 2024 amounted to 4.2 billion euros. This indicator increased by 1% year-on-year. At the same time, the net interest margin in the bank’s French business fell sharply in the first quarter of 2024. In January-March of the current year, net interest income, the difference between what a lender earns on loans and pay out for deposits, decreased by 8% compared to the result for the same period in 2023.
For BNPP, the French retail market has proved difficult due to regulations regarding mortgage and savings accounts. It is worth noting that this market is traditionally less profitable than in other European countries.
The financial institution’s revenues from corporate and investment banking business in the first quarter of 2024 fell by 4% year-on-year, amounting to 4.7 billion euros.
As we have reported earlier, BNP Paribas Cuts Investment Banking Bonuses.
