Mathieu Roseman
PARIS (Reuters) – BNP Paribas (OTC:) reported a fall in first-quarter profit and revenue on Thursday but beat analysts’ forecasts as lower costs and strong performance in its corporate banking business offset flat or falling earnings elsewhere.
The eurozone’s largest bank said group net profit in the first three months of the year fell 2.2% from a year earlier to 3.10 billion euros ($3.31 billion), beating the 2.4 billion euro average based on based on estimates from 19 analysts compiled by the company.
Revenue for the period was 12.5 billion euros, down 0.4% but also above analysts’ average estimate of 12.2 billion euros. The cost of risk (money set aside for non-performing loans) was 640 million euros, below the 819 million euros expected by analysts.
The French lender, which disappointed investors in February by delaying a key profitability target, struck an upbeat tone for 2024, reiterating its target for full-year profit of more than 11.2 billion euros.
He also set a new target for group revenue, saying he expected it to exceed 2023 sales of 46.9 billion euros by more than 2% and that the impact of earlier cost cuts would begin in the second quarter.
However, in most of the bank’s divisions, revenue remained unchanged or fell.
Revenue from commercial and personal banking rose 1% to 4.2 billion euros – above analysts’ estimates – but net interest margins in the French business fell sharply, BNPP said.
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Investors are keeping a close eye on banks’ net interest earnings to see whether the incentive from rising interest rates that helped banks’ profitability – and their stock prices – soar is beginning to wear off.
Revenue from BNPP’s corporate and investment banking business fell by 4%.
Its global banking revenues rose 6.1%, boosted by increased capital markets activities such as helping companies issue bonds.
But the decline in BNPP’s fixed income, currencies and commodities (FICC) trading business, which saw revenues fall 20% in the first quarter, was far worse than at large Wall Street firms, where trading revenues fell by about 3% on average. as market volatility has eased, according to Jeffries.
($1 = 0.9359 euros)