BNP Paribas Beats as Fixed-Income Traders Offset Equities Slump
Revenue from trading debt securities and currencies jumped 27% from a year earlier, BNP Paribas said in a statement Thursday, beating estimates as well as Wall Street. Equities income declined 15%, a stark contrast with double-digit gains at the biggest US firms.
The figures reflect a market that whipsawed when the tariff announcements in April caused violent swings in stocks and the dollar. Chief Executive Officer Jean-Laurent Bonnafe, who built up the trading business and propelled the asset management unit into the top ranks with the purchase of Axa SA's investment arm, said the outlook for the remainder of the year is nonetheless 'encouraging,' with net income now expected to exceed €12.2 billion ($14.4 billion).
It's the first time BNP Paribas, which also confirmed its targets for 2026, provided a number for the year. Analysts previously expected a profit around €12 billion for the full year. Net income in the second quarter fell 4%, less than expected, reflecting a higher tax rate.
Shares of the lender have gained 33% this year, in line with an index for European banks.
After revamping the trading and asset management units and winning a new term in May, Bonnafe is now focusing on boosting profitability at the large domestic retail network. France's biggest lender plans to close around 80 branches this year and another 120 next, Bloomberg reported previously.
The bank last year named Isabelle Loc to run the business, which has long struggled to boost earnings amid headwinds such as local regulations and costly interest rate hedges.
Revenue at the commercial and personal banking unit that includes that business rose about 5% from a year earlier, while income from specialized businesses, such as car leasing, fell 7%. That reflected the impact of softer used car prices that should start to fade next quarter.
Investment and protection services reported 4.4% higher revenue and an 11% increase in operating profit. The unit includes the asset management business that Bonnafe is expanding with his €5.1 billion Axa deal, which recently closed.
The acquisition was the CEO's largest so far, creating one of Europe's top asset managers with more than €1.5 trillion in assets under management. But a plan to use a regulatory quirk known as Danish Compromise to make the deal financially more attractive has run into opposition from the European Central Bank.
More stories like this are available on bloomberg.com
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