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France’s BNP Paribas beats earnings forecasts on bumper trading revenue
Global Banking & Finance Review®
Company
By Matthieu Protard
PARIS (Reuters) – French bank BNP Paribas posted a better than expected 19% rise in net income in the first quarter as trading boomed and reaffirmed its medium-term profitability targets, sending its shares higher.
France’s biggest listed lender said on Tuesday that net profit reached 2.11 billion euros ($2.22 billion) as trading revenues surged and it slashed charges for bad debt, though costs were higher than market forecasts.
“BNP Paribas had a massive earnings beat, driven in particular by strong revenues”, analysts at Jefferies said in a note. “The revenue beat is largely thanks to markets”, they added.
Shares rose 2.4% in early trading, having lost nearly 20% since the start of the year on concerns about the economic spillover effects from the conflict in Ukraine, including the shock to commodities prices. Shares were up 41% in 2021.
BNP’s revenue in fixed-income, currency and commodities trading rose by 47.9% in the first quarter, while equity trading revenue soared 60.9%.
The bank also reaffirmed plans to return 60% of net income to investors through 2025 compared to 50% previously. It has targeted a return on tangible equity — a key measure of profitability — of more than 11% by 2025, up from 10% last year.
It stuck to the target despite booking a 159 million euro impairment on its 60% stake in Ukrainian lender Ukrsibbank, which has 5,000 staff and 230 branches across the country.
($1 = 0.9520 euros)
(Reporting by Matthieu Protard; Editing by John O’Donnell and Jamie Freed)
Net income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue. It is a key indicator of a company's profitability.
Trading revenues are the income generated from buying and selling financial instruments such as stocks, bonds, and commodities. This income can fluctuate based on market conditions.
A stake in a bank refers to the ownership interest that an individual or entity has in the bank, usually represented by shares. It indicates the proportion of the bank owned.
Return on tangible equity (ROTE) is a financial metric that measures a company's profitability by comparing net income to its tangible equity. It reflects how effectively a company uses its equity to generate profits.
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