BNP Paribas beats Q2 profit forecast, investment bank has mixed quarter
Overall it was a somewhat mixed quarter for the euro zone's largest bank by assets, with signs of a revival in its domestic retail unit offset by underwhelming performance at its investment bank that lagged Wall Street rivals.
BNP is among the first of the big European banks to publish second-quarter numbers.
Net income in the April-to-June period fell 4% from a year earlier to 3.26 billion euros ($3.83 billion), slightly above analyst forecasts. Revenue rose 2.5% to 12.6 billion euros, in line with expectations, while provisions for bad loans matched estimates.
At its investment bank, fixed income, currency and commodity trading revenues soared 27% on the back of market volatility sparked by U.S. President Donald Trump's tariffs, but equity trading revenue suffered a steep decline and income from global banking fell. Overall investment banking revenue was up 4% year-on-year.
CEO Jean-Laurent Bonnafe, whose tenure was recently extended, has made the investment bank a key part of his efforts to boost BNP's profits, while also cutting costs and bulking up in asset management with the recent acquisition of AXA Investment Managers.
The bank's shares have underperformed rivals, however, and even this year's 22% gain is behind the wider European banking sector (.SX7P), opens new tab, with investors cautious about BNP's relative growth prospects.
BNP said its average tax rate for the quarter was nearly six percentage points higher than a year ago, following changes to U.S. tax rules on financing expenses. That weighed on net earnings, with pre-tax income up 3.1%.
Earnings from BNP's insurance operations rose sharply, driven by solid operating income and a one-off gain related to a financial stake in China.
BNP's retail and consumer division saw a 4.3% rise in net interest income (NII) in France. Analysts expect further improvement following a recent cut in the regulated rate on the country's popular Livret A savings account, which offers room for margin expansion.
"Outlook for the second half of the year is very encouraging, with expected revenue acceleration driven by Commercial & Personal Banking," Bonnafe said.
BNP announced an interim dividend of 2.59 euros per share, to be paid September 30.
($1 = 0.8503 euros)
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