BNP Paribas Group, a French bank and heavyweight in European asset finance and leasing, has beaten analysts expectations for its Q3 2020 net income, posting nearly €1.9bn, equivalent to 2.3% less than a year ago, financial observers were anticipating €1.5bn.
With corporate and investment banking acting as the driving force, revenues rose 17% and fixed-income trading revenue jumped 36%.
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Similar to Deutsche Bank, BNP saw a surge in market activities and the financing of large companies during the quarter.
Revenues from branch operations jumped by more than 17% over one year to €3.37bn, for a pre-tax profit of €955m (+ 14.6% over one year).
For the first nine months of 2020, the Group’s revenues were down by 2.8% compared to the first nine months of 2019, at €2.57m.
BNP Paribas
“BNP Paribas demonstrates its high resilience thanks to its financial solidity, its diversification, and the power of execution of its platforms,” chief executive Jean-Laurent Bonnafe said in a statement.
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By GlobalDataThe bank’s provisions for bad loans rose 47% year-on-year to €1.24bn.
Still, this was lower than in Q2, and lower than analysts had predicted.
The French international banking group is the world’s 8th largest bank by total assets and currently operates with a presence in 72 countries.
However, its €2.6trillion balance sheet is mostly exposed to Europe.
Dividends
BNP said the economic recovery was gradual in Q3 with momentum differing from one region or sector to another.
Like other European banks, BNP is struggling amidst low-interest rates, which cuts into income from lending.
In December, the European Central Bank is expected to revisit its recommendation for eurozone banks not to pay dividends, which BNP Paribas told shareholders it was willing to do for 2020.
Last week, French President Emmanuel Macron has announced a second national lockdown until at least the end of November.
Specialised businesses
Business activity performed well in its specialised businesses in various domestic markets, these include: Arval, Leasing Solutions, Personal Investors, Nickel and Luxembourg Retail Banking.
Arval & Leasing Solutions
Momentum was very positive at Arval, its vehicle leasing business, with financed fleet expanding by 7% compared to Q3 2019, orders rose by 7% compared to Q3 2019, and used car prices held up very well.
Leasing Solutions outstandings rose by 1.1% (at constant scope and exchange rate, excluding the internal transfer of a subsidiary) compared to Q3 2019, with production far higher in September 2020 than in September 2019 (+15%).
Revenues of the five businesses totalled €850m, a 5.2% increase compared to Q3 2019.
Operating expenses rose by 2.7% compared to Q3 2019, to €469m, driven by stronger activity and contained by cost-saving measures. The jaws effect was positive (2.5 points).
The cost of risk totalled €66m (€41m in Q3 2019).
