BNP Paribas net income grows as core business faces challenges

BNP Paribas shares were in the red on Thursday morning, after it reported third-quarter net income of €2.87bn, marking a 5.9% year-on-year increase, amid challenges in its core lending business and a mixed performance from investment banking.

The French banking giant’s revenue rose 2.7% to €11.94bn, supported by robust results in corporate and investment banking (CIB), which grew by 9%, and the insurance and asset management division, which saw a 4.9% increase.

However, its commercial and personal banking services (CPBS) unit faced a 2.6% revenue decline, largely due to weak used-car prices affecting Arval, BNP’s vehicle-leasing arm.

BNP’s equities trading rose 13% year-on-year, though it fell short of analyst expectations, with revenue from fixed income, currencies, and commodities (FICC) up 12%, slightly outperforming rivals like Deutsche Bank.

Chief executive Jean-Laurent Bonnafé was focussed on diversifying revenue by expanding asset management and investment banking operations, partly funded by capital from BNP’s recent sale of its US retail arm.

His strategy included acquiring AXA Investment Managers for €5.1bn to bolster BNP's presence in asset management, positioning it as a serious competitor to market leader Amundi.

Despite stable risk costs at 32 basis points, BNP’s capital buffer, at a CET1 ratio of 12.7%, came in below analyst expectations of 12.9%.

However, BNP confirmed its full-year targets, projecting a revenue increase of more than 2% over 2023 and a group net income exceeding €11.2bn.

The bank said it planned to update its medium-term outlook with the full-year results.

“These very good results were driven by the business performance of the operating divisions and demonstrate our group’s capacity to grow while continuing to manage risks and resources thoroughly,” said chief executive officer Jean-Laurent Bonnafé.

“The third quarter particularly illustrates CIB’s capacity to gain market shares and IPS’s strong business momentum, especially in insurance and asset management.”

Bonnafé said the company’s commercial and personal banking was “likely to gradually benefit” from the positive shift in the rate environment.

“On this basis, we confirm our 2024 trajectory and remain focused on continuing our long-term development, notably with the planned acquisition of AXA IM, which is a major initiative, repositioning IPS strategically within the group.”

At 1122 CET (1022 GMT), shares in BNP Paribas were down 5.65% in Paris at €61.80.

Reporting by Josh White for Sharecast.com.