Oct 28 (Reuters) – BNP Paribas (BNPP.PA), posted a forecast-beating rise in third-quarter profit on Wednesday, aided by its investment bankers, as the lender announced a €1.3 billion ($1.45 billion) share buyback and played down the impact of soaring government bond yields.
France’s BNP said quarterly net income climbed 14% to €3.46 billion, beating the €3.23 billion average forecast of analysts polled by the bank.Revenue at the euro zone’s biggest bank by assets rose year-on-year to €13.76 billion, slightly above expectations.
BNP is reporting alongside a flurry of European banks this week including Deutsche Bank (DBKGn.DE), UBS (UBSG.S), and Santander (SAN.MC), with investors watching closely to see if lenders can sustain recent record profits.
HSBC on Tuesday sent a chill through the sector after it disappointed with its revenue growth, sending its shares down nearly 7%.
French banks face further challenges, with soaring euro zone sovereign bond yields – especially in France amid concerns about the country’s fiscal position – reviving worries about lenders’ exposure to government debt.
BNP said its exposure to French sovereign bonds was limited, roughly at €19 billion at end-September and that France accounted for under 10% of its pre-tax income last year.EQUITY TRADING JUMPS
The French lender’s results were helped for a second consecutive quarter by a record jump in equity and prime services revenue. The 50% rise year-on-year surpassed the average 37% gain in equities trading across the top five US players, according to a Reuters calculation from company statements.
Overall sales at BNP’s corporate and institutional banking unit, which long-time CEO Jean-Laurent Bonnafe has made critical to its success, rose by 17% year-on-year.
Fixed-income, currencies and commodities trading revenue was flat, reflecting an industry wide weak quarter for fixed income.
BNP’s retail business saw income rise by 4%, boosted by higher interest rates.
The bank said it would launch a €1.3 billion share buyback in November after it met its Common Equity Tier 1 (CET1) capital ratio, a key measure of financial strength, at end-June, ahead of schedule.RBC analysts said before the results they expected BNP to bring forward a buyback totalling €1.2 billion euros “to express confidence in its outlook”.
($1 = 0.8961 euros)
Reporting by Mateusz Rabiega; Editing by Tommy Reggiori Wilkes
