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France’s BNP posts profit rise as retail rebounds, provisions fall

Stock Markets20 minutes ago (Jul 30, 2021 02:50AM ET)

(C) Reuters. FILE PHOTO: A BNP Paribas logo is seen outside a bank office in Paris, France, August 6, 2018. REUTERS/Regis Duvignau

PARIS (Reuters) -France’s BNP Paribas (PA:BNPP) on Friday reported a 26.6% rise in second-quarter net income powered by a rebound in French retail banking activity and a fall in loan loss provisions to pre-pandemic levels.

The euro zone’s biggest listed lender posted a net profit of 2.91 billion euros as its cost of risk, reflecting provisions for bad loans, fell 43.8% to 813 million.

Revenue was up 0.9%, as a 9.5% rebound in retail banking offset a drop in corporate and investment banking revenue compared to a year ago when like its peers the French bank profited during a highly volatile period for markets.

“Deposits rose by 7.5% compared to the second quarter 2020, driven by the effects of the public health crisis on customer behaviour”, BNP Paribas said in a statement, adding loans were up by 4%.

The lender said pandemic-related lockdowns and curfews had accelerated a shift to online banking, with a 25.1% increase in daily connections to mobile apps.

In a note, analysts at Jefferies (NYSE:JEF) said BNP Paribas’ Q2 earnings were above expectations with a beat in French retail banking and costs well-controlled.

They also flagged a new guidance on provisions that are expected to be below 45 to 55 basis points this year. Provisions at BNP Paribas stood at 38 basis points in Q2, down from 65 basis points a year ago.

In its trading activity, revenue in equity was 2.6 times higher compared to the second quarter of 2020 – but earnings in fixed income, currencies and commodities were down 43%.

In corporate banking, where BNP Paribas has been making a push on advising clients on mergers, revenue was down 1.6%, lagging Wall Street rivals which were able to offset some of the trading pain with big fee gains on M&A and stock listing advisory work.

BNP Paribas said business volumes in financing raised for clients on credit, bond and equity markets was down 37%.

The lender said it will pay shareholders an additional dividend of 1.55 euro per share this year as the European Central Bank last week said it would lift restrictions on bank dividends.

BNP Paribas shares have gained 20.80% this year, underperforming a nearly 24% rise for the Stoxx Europe 600 Banks Index.

France’s BNP posts profit rise as retail rebounds, provisions fall

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