BNP Paribas Profit Up as Loan Provisions Drop -- Update

By Noemie Bisserbe 

PARIS--French bank BNP Paribas SA reported a jump in first-quarter net profit on Tuesday despite difficult markets, as lower provisions against bad retail loans and a debt valuation adjustment helped offset sharply lower investment banking revenue.

The Paris-based lender, France's largest listed bank by assets, said net profit rose 10% to EUR1.81 billion ($2.08 billion) in the three months ended March 31, from EUR1.65 billion a year ago. Revenue declined by 2% to EUR10.84 billion from EUR11.07 billion in the same quarter last year.

The bank booked a EUR365 million gain in the first quarter because of an accounting rule that permits lenders to post paper profit when the value of their own credit declines.

BNP Paribas's results highlight a pickup this year in the eurozone economy, as the region finally regains output levels last seen before the global financial crisis. But as with other big lenders in Europe and the U.S., its investment banking business was hurt by sharp declines in securities trading revenue as clients pulled back in volatile markets amid concerns about energy prices and low interest rates.

BNP Paribas's retail banks in France, Italy, Belgium and Luxembourg posted total pretax profit of EUR690 million, up 4% from EUR666 million in the same quarter last year.

The bank's international financial services division--which includes retail banks outside the eurozone, wealth management, consumer finance and insurance--also reported a 7% increase in pretax profit to EUR1.05 billion.

BNP Paribas's corporate and investment bank, however, posted a 55% drop in pretax profit to EUR403 million in the first quarter, from EUR885 million a year earlier.

The bank's fixed income business posted a 13% drop in first-quarter revenue to EUR890 million, while revenue from equity trading fell by 41% to EUR428 million.

Higher earnings this quarter helped lift its core tier one ratio, which measures its top quality capital such as equity and retained earnings against risk-weighted assets, to 11% in March, up from 10.9% in December.

Its leverage ratio, another gauge of a bank's financial strength that measures capital held against total assets, stood at 4% in March, above the minimum 3% set by regulators for 2018.

BNP Paribas is the first major French bank to report first-quarter earnings. Société Générale SA and Crédit Agricole SA publish their results on May 4 and May 12 respectively.

Write to Noemie Bisserbe at [e-mail]

(END) Dow Jones Newswires

May 03, 2016 01:25 ET (05:25 GMT)

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