BNP Paribas sees strong retail recovery, cushions profit fall
The euro zone's biggest bank by assets said it expected second-half revenue to rise more than 5% from a year earlier, fuelled by prolonged strict cost control and stronger sales in its retail and consumer businesses.
The upbeat outlook helped overshadow a mixed quarter for BNP, as its investment bank lagged Wall Street rivals.
BNP shares rose 2% in early Paris trading, outpacing France's blue-chip CAC 40 index (.FCHI), opens new tab.
Deutsche Bank and other European lenders also reported second-quarter results on Thursday, with the German bank beating expectations. While the economic outlook remains uncertain, banks so far are not expecting a major hit from the latest wave of U.S. trade tariffs.
BNP's net income in the April-to-June period fell 4% from a year earlier to 3.26 billion euros ($3.8 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 jumped 27%, lifted by market volatility due to U.S. President Donald Trump's tariff policies, but equity trading slumped and pre-tax income from global banking declined. Overall, investment banking revenue rose 4% from a year earlier.
Several analysts welcomed the bank's lower-than-expected costs and the rebound in its retail operations.
"Revenue performance in European retail was a standout and sets up well for H2 '25 acceleration," Jefferies analysts said in a note. "Elsewhere, the group exhibited strong cost control."
CEO Bonnafe, whose tenure was extended in May, 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 lags 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 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.
French banks typically lag their Spanish and Italian peers in benefiting from higher interest rates, as 96% of French mortgages are on a fixed rate.
BNP announced an interim dividend of 2.59 euros per share, to be paid on September 30.
It also said it expected to surpass 12.2 billion euros in net income this year, in line with its 2024-2026 targets.
($1 = 0.8503 euros)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
28 minutes ago
- Reuters
Union Pacific nearing agreement to buy Norfolk Southern Bloomberg reports
July 26 (Reuters) - Union Pacific (UNP.N), opens new tab, the largest U.S. railroad operator, could reach an agreement to acquire rival Norfolk Southern (NSC.N), opens new tab as soon as early next week, Bloomberg News reported on Friday, citing people familiar with the matter. Union Pacific had said on Thursday it is in advanced talks to acquire its rival, signaling that a deal to form a $200 billion coast-to-coast rail company could be close - and potentially trigger further consolidation among remaining freight rail giants. Union Pacific declined to comment, while Norfolk Southern did not immediately respond to a Reuters request for comment. The combination, which would be the largest-ever buyout in the sector, would create the first modern West-to-East single-line freight railroad in the United States, significantly affecting how goods from grains to chemicals to autos move across the country. The fact that talks are advancing has surprised many in the rail industry and Wall Street as the U.S. freight rail system already functions as two regional duopolies by point of origin. The talks show how thinking around antitrust issues has shifted under President Donald Trump's administration, with his executive orders aimed at removing anti-competitive barriers and opening the door to potential megamergers in the industry. If completed, the deal would combine Union Pacific's dominant position in the western two-thirds of the U.S. with Norfolk Southern's 19,500-mile network spanning 22 eastern states. Union Pacific is valued at approximately $138 billion, according to LSEG data. The company has been grappling with sluggish automotive volumes and volatile coal shipments as power producers shift to natural gas, which is shipped by pipeline. Norfolk Southern, which is worth about $63 billion, is emerging from a turbulent period that included the ouster of its former CEO amid ethics investigations, a high-profile boardroom clash with activist investor Ancora, and a costly train derailment that set the company back about $1.4 billion.
Reuters
an hour ago
- Reuters
EU chief von der Leyen heads to Scotland for trade talks with Trump
BRUSSELS/EDINBURGH, July 26 (Reuters) - EU Commission President Ursula von der Leyen headed to Scotland on Saturday ahead of a meeting with U.S. President Donald Trump on Sunday afternoon, commission spokespeople said, as EU officials said the two sides were nearing a trade agreement. Trump, in Scotland for a few days of golfing and bilateral meetings, told reporters upon his arrival on Friday evening that he was looking forward to meeting with von der Leyen, calling her a "highly respected" leader. He repeated his view that there was a 50-50 chance that the U.S. and the 27-member European Union could reach a framework trade pact, adding that Brussels wanted to "make a deal very badly". If it happened, he said it would be the biggest trade agreement reached yet by his administration, surpassing the $550 billion accord agreed with Japan earlier this week. The White House has released no details about the planned meeting or the terms of the emerging agreement. The European Commission on Thursday said a negotiated trade solution with the United States was within reach, even as EU members voted to approve counter-tariffs on 93 billion euros ($109 billion) of U.S. goods in case the talks collapse. To get a deal, Trump said the EU would have to "buy down" that tariff rate, although he gave no specifics. EU diplomats say a possible deal between Washington and Brussels would likely include a broad 15% tariff on EU goods imported into the U.S., mirroring the U.S.-Japan deal, along with a 50% tariff on European steel and aluminum. The broad tariff rate would be half the 30% duties that Trump has threatened to slap on EU goods from August 1. It remains unclear if Washington will agree to exempt the EU from sectoral tariffs on automobiles, pharmaceuticals and other goods that have already been announced or are pending. Combining goods, services and investment, the EU and the United States are each other's largest trading partners by far. The American Chamber of Commerce in Brussels warned in March that any conflict jeopardized $9.5 trillion of business in the world's most important commercial relationship.
The National
2 hours ago
- The National
Elon Musk 'ordered Starlink shutdown' during Ukraine counterattack
The billionaire's command allegedly led to a communications blackout while Ukrainian forces attempted to retake the port city of Kherson in the south of the country in September 2022. The communication blackout, where staff at the American tech firm deactivated at least 100 Starlink terminals after being instructed to, reportedly caused the attack to fail, according to Reuters, which spoke with three people who were familiar with the demand. According to reports, the blackout caused Ukrainian soldiers to panic as drones surveilling Russian forces went dark, and long-range artillery units, reliant on Starlink to aim at their targets, struggled to hit them. READ MORE: 'He belongs in The Hague': Keir Starmer fiercely criticised over Gaza speech Although Ukrainian forces were able to reclaim Kherson, the incident was reported to have damaged the country's trust in the technology, along with shocking Starlink employees. One of the three people who were familiar with the instruction claimed it enabled Musk to take 'the outcome of a war into his own hands'. The Tesla-owner reportedly grew concerned that Ukrainian forces' advancements could provoke nuclear retaliation from Vladimir Putin. A spokesperson for SpaceX, the aerospace company that owns Starlink, told Reuters the reporting of the incident is 'inaccurate'. In March, Musk posted on his social media platform, X/Twitter: 'To be extremely clear, no matter how much I disagree with the Ukraine policy, Starlink will never turn off its terminals.' Starlink, which went live in 2019, is a satellite company that beams data across its network and is the world's largest satellite operator. It provides customers with internet access in remote and unreliable locations and has a network of around 8000 satellites in orbit. It has been a key tool in Ukraine's defence, as Musk has provided the country with more than 50,000 Starlink terminals during the war. The network has allowed Ukrainians to speak to relatives across the world, and President Zelensky uses the network to transmit broadcasts to the nation. It is also used by Ukrainian forces on the battlefield to communicate and is used to guide drones and long-range artillery units.
