BNP Paribas, the euro zone’s biggest lender, posted a higher than expected net profit in the third quarter, with thriving trading revenue helping to offset rising costs and markdowns on some leverage financing deals.
Net income for the three months to end September rose by 10.3 per cent from a year earlier to €2.76 billion, compared with an average of €2.36 billion expected in a Refinitiv poll of analysts. Revenue at the bank, which has a 630-staff presence in Ireland, rose 8 per cent to €12.3 billion.
The increase was driven by a better than expected performance in France, Turkey and Poland. Profits were also lifted by a 14.7 per cent rise in global markets revenue, with market volatility boosting trading in commodity derivatives, rates, foreign exchange and emerging markets.
The equity and prime services, an area in which BNP has been expanding, also posted a small revenue rise, helping to counter a decline in deal-making and share sales.
BNP said it now expects rising interest rates to add €2 billion to its revenue by 2025. Its shares were up 2.3 per cent by lunchtime in Paris trading.
Torrid markets and higher rates also had some negative effects however. BNP said investment banking revenue had been hit by markdowns of unsold positions in leveraged finance, as big lenders have been forced to hold debt on their books for longer than they would have liked, and incur losses on some financing packages.
Operating expenses rose 6 per cent from a year earlier, due to the impact of restructuring and IT costs, while a 34 per cent jump in the cost of risk – money set aside for failing loans – was due to a one-off €200 million charge in Poland, where a moratorium has allowed borrowers to suspend some mortgage payments.
BNP joins rivals such as HSBC, Deutsche Bank and UniCredit reporting overall strong results for the quarter, helped by higher borrowing costs as central banks seek to fight inflation. – Reuters
