by Maya Nikolaeva and Matthieu Protard
PARIS (hooly-news.com) – BNP Paribas signs the largest increase in the CAC 40 on Tuesday after maintaining its net profit forecast for 2020 and reporting results above expectations in the third quarter thanks to the confirmed rebound in its market activities.
As Europe faces a new wave of coronavirus contaminations, raising fears for the economic recovery, the leading bank in the euro zone by market capitalization still forecasts a 15% to 20% contraction in its net income for the whole year.
During an online conference with analysts, Lars Machenil, the general manager of the bank indicated that the nature of the new confinement in France, which notably keeps schools open unlike the first, made it possible to maintain this forecast.
Over the first nine months of the year, BNP Paribas’ net profit was down 13.4%.
It fell in the third quarter by 2.3% to 1.89 billion euros, where analysts on average expected a profit of 1.57 billion euros, according to IBES data from Refinitiv.
On the stock market, the market welcomes the group’s quarterly results. The share climbed 5.03% to 32.69 euros around 3:25 p.m. and in its wake brought its competitors Société Générale (+ 4.59%) and Crédit Agricole SA (+ 4.7%).
At the same time, the European banking index takes 3.38% and the CAC 40 1.95%.
INCREASE IN COST OF RISK LESS HIGH
Jefferies analysts point out that the French bank exceeded expectations in the third quarter on both revenues and costs and provisions for credit risk.
Like its American competitors, BNP Paribas took advantage between July and September of the resumption of market activities where revenues rose by more than 30%.
On rates, foreign exchange and commodities, revenues grew 36%. They increased by more than 20% in equity trading where the bank says it has recorded “strong activity” in derivatives.
Due to the risk of non-repayment of loans linked to the economic consequences of the health crisis, the banking establishment increased its provisions by 47%, but at a lower level than expected by analysts.
“The recovery in economic activity is gradual in the third quarter and shows different dynamics depending on geographic areas and sectors,” noted BNP Paribas in a statement.
While the European Central Bank is due to review in December its recommendation on the payment of dividends from banks in the euro zone, suspended due to the health crisis, BNP Paribas has indicated that it has strengthened its financial solvency.
At the end of September, its “CET 1” solvency ratio reached 12.6%, up 20 basis points compared to June 30.
The rating agency Moody’s further emphasizes that the bank’s liquidity situation remains “very high”.
(Edited by Blandine Hénault and Jean-Michel Bélot)