Thursday, July 28, 2016

BNP Paribas maintained its profit, but retail banking is struggling – Les Echos

The second quarter is rather satisfactory for BNP Paribas and contrast with its European competitors who have so far announced significant declines in their net profit in the image of Banco Santander or even in Germany Deutsche Bank and Commerzbank. First French bank to lead off the results of the sector, BNP Paribas has maintained its earnings at a high level in the second quarter, taking advantage of special items that enabled him to face a still difficult environment.

from April to June, net profit of the banking group increased marginally by 0.2% to € 2.6 billion, well above analysts’ expectations.

a performance that should not hide however the first French bank is not fully immune against the recurrent difficulties to the banking sector. Excluding items Indeed, net profit of PNB Paribas spring 4.8% decline, to 2.2 billion euros, according to a statement released Thursday.

sale of shares of Visa Europe

But it was notably supported by the positive impact of the sale of shares of Visa Europe, as part of its takeover by its former parent company Visa Inc., a transaction which allowed the French bank recorded a profit after tax of about 565 million euros.

Quoted in the statement, the CEO of BNP Paribas, Jean Bonnafé, ruled that his group had achieved a “good performance” in a “changing and complex” environment.

the product net banking income (GNP equivalent of revenue for the banking sector) increased by 2.2% to 11.3 billion euros, a level again exceeded expectations. It however appears decline (-0.5%) are taken into consideration when only the operating divisions, due to a negative currency effect (+ 0.7% at constant scope and exchange rates) due to the strengthening the euro.

in terms of solvency, BNP Paribas continues to show its strength with a capital ratio “hard” (ie the contributions of the shareholders and retained earnings reported to credits) increased by 0.10 percentage point. It reached 11.1% at the end of June, well above regulatory requirements.

Retail banking suffers more than finance and investment

in detail, revenues from domestic markets division, which includes in particular the retail banking activities in the euro zone fell 0.5%, penalized by the rate environment low which affects the interest margin. International financial services, including retail non-euro area banking, insurance and consumer credit are part, for their part suffered (-1.5%) due to the unfavorable exchange rate.

however, the financing and investment banking drove up net banking income of 1.4%, while it started from a high base of comparison, and in mainly due to the good performance of activities related to foreign exchange and bond issuance, after the financial storm of the beginning of the year

A cost of risk improvement

the French bank prides itself in addition to have set back its cost of risk, that is to say its provisions made to face the risk of default on loans granted, 12.4% to 791 million euros. This development is partly due to the improvement of the situation of its Italian subsidiary BNL, which has chosen to reposition itself on a less risky business customers, which lowers its revenue but also its cost of risk.

the return on equity stood at 9.7%, a level consistent with the objectives set by the group in its strategic plan 2014/2016. The roadmap also provides ongoing savings set at 3.3 billion euros, of which 3.1 billion have already been made.

Throughout the first half, net profit of BNP Paribas reached 4.4 billion euros, up 4.1%.

the first half in the red

If BNP Paribas maintained its second quarter results, on the whole semester, “net banking income totaled 3,252 million euros, down 2 7% compared to the first half of 2015 “, said the bank.

as for EBITDA, it amounted to 972 million euros, down 10, 1% compared to the same period of the previous year

Source: AFP, Reuters

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