BNP beats Q3 expectations and launches €900m share buyback

France’s biggest listed lender, BNP Paribas, posted a better-than-expected third-quarter profit on Friday, as lower provisions for pandemic-related loan losses and a sharp rise in equity trading offset a drop in revenue from insurance.

Like US and European rivals, BNP Paribas thrived on the economic rebound to release cash set aside for pandemic losses as unprecedented government support kept business afloat during the coronavirus outbreak.

The lender, which overtook British bank HSBC last year to become Europe’s largest bank by assets, also said it would launch a €900 million share buyback programme on Monday.

“BNP surprised with an unexpected €900 million share buyback, signalling the group’s intention to pay part of the unpaid full-year 2019 dividend,” analysts at JP Morgan said in a note, as banks had been ordered last year to retain capital during the epidemic.

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Shares in BNP Paribas were up 0.5 per cent on Friday, outpacing the Stoxx Europe 600 Banks index.

The bank said its cost of risk, reflecting provisions against bad loans, was down 43.3 per cent in the third quarter.

Chief operating officer Thierry Laborde, who is in charge of the retail banking business, told BFM Business radio the French economy was doing well, adding: “Demand is very strong.”

He added that the bank did not expect a major spiral in inflation as European nations battle with rising energy prices.

Rebound

Preliminary data from statistics agency Insee showed the euro zone’s number two economy grew a faster-than-expected 3 per cent in the third quarter, propelled by a pick-up in consumer spending and exports as it rebounds from the Covid-19 pandemic.

BNP Paribas reported a rise of 32.2 per cent in net income from a year ago to €2.50 billion, beating a mean forecast for €2.23 billion in a poll of analysts compiled by Refinitiv.

Revenue was up 4.7 per cent at €11.40 billion, above the €11.22 billion expected by analysts.

In its corporate and investment banking activities, the lender benefited from strong growth in equity trading activity with revenue up 79.3 per cent.

But revenue was down 28 per cent in fixed-income, currencies and commodities trading after a drop of 43 per cent in the second quarter.

“In a more lacklustre context, customer activity was lower on the rates and forex markets but remained strong on the commodities markets,” BNP Paribas said in a statement.

In its international financial services activities, which include asset and wealth management, international retail banking and insurance, revenue fell 3 per cent, reflecting a weaker contribution from its insurance business on lower capital gains, BNP Paribas said. – Reuters