BNP Paribas Profit Lifted by Investment Bank

By Noemie Bisserbe 

        PARIS--French bank BNP Paribas SA posted Thursday a jump in first-quarter net profit, lifted by a strong investment banking business, a weaker euro and a long-awaited pickup in loan demand in Europe.
        BNP Paribas, France's largest listed bank by assets, said net profit rose 18% to EUR1.65 billion ($1.83 billion) in the three months through March, above analysts' expectations of EUR1.32 billion, according to a poll by The Wall Street Journal.
        The bank's earnings reflect the strong performance of investment banks in Europe and in the U.S., helped by volatile markets and a revival in corporate loan demand, despite waves of new regulations.
        Trading banks such as BNP Paribas, J.P. Morgan Chase & Co. and Deutsche Bank AG received a boost this quarter after the Swiss National Bank scrapped a cap on the franc, the European Central Bank announced its quantitative easing program and the U.S. Federal Reserve took steps to tighten monetary policy.
        Pretax profit at BNP Paribas' investment bank nearly doubled to EUR1.13 billion, while its retail banking business in the eurozone posted a pretax profit of EUR849 million, up 17%, mostly on the performance of its Belgian unit.
        In Italy, where BNP Paribas owns local lender BNL, pretax profit in the first quarter stood at EUR17 million compared with a EUR9 million loss a year ago, as the country struggles to emerge from a prolonged recession.
        BNP Paribas' French retail business, however, posted a 3% decline in pretax profit to EUR424 million.
        The Paris-based lender paid EUR245 million into the European Union's resolution fund, which was set up this year to ensure enough funding is available for lenders if they need to restructure or be wound down, and is designed to shield taxpayers from footing the bill for bank failures.
        Total revenue rose 12% to EUR11.07 billion, lifted in part by the acquisition last year of Bank Gospodarki Zywnosciowej SA in Poland and the purchase of an additional stake in consumer finance business LaSer Group.
        BNP Paribas said it still targets a return on equity of at least 10% by 2016.
        The bank's core tier-one ratio, which measures the amount of its top quality capital such as equity and retained earnings against risk-weighted assets, was stable at 10.3% as of March 31.
        BNP Paribas's leverage ratio, which consists of its equity as a percentage of their total assets, was however down at 3.4% on March 31, compared with 3.6% on Dec. 31, sending shares lower.
        "Investors expect regulators to be more demanding with big banks in Europe," says Nomura analyst Jon Peace.
        Rival German lender Deutsche Bank AG said earlier this month it targeted a 5% leverage ratio, well-above the 3% minimum threshold set by European regulators.
        BNP Paribas is the first big French bank to report first-quarter earnings. Societe Generale SA and Credit Agricole SA publish their results on May 6.
        Write to Noemie Bisserbe at noemie.bisserbe@wsj.com
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        (END) Dow Jones Newswires

        April 30, 2015 05:17 ET (09:17 GMT)

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