BNP Paribas profit beats estimate as bad loan provisions dip

By Julien Ponthus

PARIS (Reuters) – French bank BNP Paribas reported better-than-expected profit in the second quarter, after bad loan provisions dipped despite the economic slowdown and as businesses remained buoyant, particularly in its investment banking division.

France’s biggest-listed lender said on Friday its net income rose 9.1% to 3.18 billion euros ($3.25 billion) year-on-year while an informal consensus circulating among analysts saw net income at only about 2.70 billion euros.

Across the group, revenue rose 8.5% to 12.78 billion euros and faster-than-operating expenses were up 7.6% at 7.72 billion euros.

The cost of risk, which reflects the money set aside for failing loans, stood at 789 million euros, about 100 million below average expectations, while the bank stressed its “prudent risk management” in a statement.

Activity grew across business lines, with the unit home to retail banking up 11.1% while investment banking also shone with a 10.6% rise.

BNP’s revenue in fixed-income, currency and commodities trading rose by 14.8% in the second quarter, while equity trading revenue gained 16.1%.

Shares of the French bank have underperformed European banks so far in 2022, losing about 26.5% of their value, against 22% for the sector’s index.

European banks this week offered flashes of surprisingly good news on profits, with investors on the lookout for signs that a weaker economy, surging inflation and the war in Ukraine could hit their outlook.

Deutsche Bank posted a better-than-expected 51% rise in second-quarter profit as investment banking revenues rose, while UBS posted a smaller-than-expected quarterly profit as turmoil in financial markets hurt its wealth management businesses.

($1 = 0.9790 euros)

(Reporting by Julien Ponthus and Matthieu Protard; Editing by Sudip Kar-Gupta and Sherry Jacob-Phillips)