BNP Paribas profits rise, retail industry rebounds, provisions fall Reuters

© Reuters. File photo: BNP Paribas logo outside the office of BNP Paribas on August 6, 2018. REUTERS/Regis Duvignau

Paris (Reuters)-French BNP Paribas (PA:) reported on Friday that net income in the second quarter increased by 26.6% due to the rebound in French retail banking activity and the reduction of loan loss reserves to pre-pandemic levels.

The largest listed bank in the Eurozone reported a net profit of 2.91 billion euros, as the risk cost reflecting the provision for bad debts fell by 43.8% to 813 million euros.

Revenue increased by 0.9% because the 9.5% rebound in retail banking business offset the year-on-year decline in corporate and investment banking revenue, when the French bank, like its peers, made profits during periods of high market volatility.

BNP Paribas said in a statement: “Due to the impact of the public health crisis on customer behavior, deposits increased by 7.5% compared to the second quarter of 2020”, adding that loans increased by 4%.

The bank said that lockdowns and curfews related to the pandemic have accelerated the transition to online banking, with daily connections to mobile apps increasing by 25.1%.

Jefferies (NYSE:) analysts said in a report that BNP Paribas’s second-quarter earnings were higher than expected, and French retail banking performed well and cost control.

They also proposed a new guideline on reserves expected to be less than 45 to 55 basis points this year. BNP Paribas’s provision for the second quarter was 38 basis points, down from 65 basis points a year ago.

In trading activities, stock income was 2.6 times that of the second quarter of 2020, but income from fixed income, currencies, and commodities fell by 43%.

In corporate banking, BNP Paribas has been working hard to provide clients with M&A advisory services, and its revenue fell by 1.6%, lagging behind Wall Street competitors, which were able to offset some of the transaction pains through the huge fees and benefits of M&A and stock listing advisory work .

BNP Paribas said that the volume of financing services raised for customers in the credit, bond and stock markets fell by 37%.

The bank said it will pay an additional dividend of 1.55 euros per share to shareholders this year because the European Central Bank said last week that it would remove restrictions on bank dividends.

BNP Paribas shares have risen by 20.80% this year, underperforming the bank index’s nearly 24% increase.

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