BNP Paribas Reports Smaller-Than-Expected Drop in Profit

By Noemie Bisserbe and Pietro Lombardi

PARIS--French bank BNP Paribas SA (BNP.FR) posted a smaller-than-expected drop in third-quarter net profit, helped by a strong performance in investment banking.

The Paris-based lender, France's largest listed bank by assets, said Thursday that net profit fell 9% to 1.9 billion euros ($2.1 billion). Analysts polled by FactSet expected a EUR1.8 billion net profit. A year earlier, the bank reported a profit of EUR2.1 billion, boosted by the sale of a stake in First Hawaiian Inc. (FHB).

Revenue grew 5% to EUR10.9 billion, above analysts' expectations of EUR10.7 billion.

The French bank benefited from a surge in fixed income revenue and from the relative retreat of some of its European rivals like troubled German lender Deutsche Bank AG (DBK.XE), notably in trade finance. New cost cuts at its investment bank also helped boost profits.

The corporate and institutional banking division posted a 14% increase in net profit to EUR834 million. Fixed-income revenue jumped 35% to EUR915 million. Equities and prime services revenue was, however, down 15% at EUR384 million.

Still, like many other lenders, BNP Paribas warned the European Central Bank's move to push interest rates deeper into negative territory will have an impact.

"The new monetary policy measures occurred at the end of the quarter and they will produce their full effect only in 2020," the bank said in a statement.

BNP Paribas cut its 2020 earnings targets in February and said it would cut costs by an additional EUR600 million. The bank is now targeting about EUR3.3 billion of expense reductions by 2020. It is about halfway through the cost plan.

BNP Paribas has stopped short of embarking on major restructuring plans like cross-town rival Societe Generale SA (GLE.FR) or Deutsche Bank. Instead, BNP Paribas has sought to continue to win new clients in the U.S., the U.K. and Germany.

BNP Paribas's core Tier 1 capital ratio--a key measure of capital strength--was 12% at the end of September, from 11.9% in June.

Write to Noemie Bisserbe at [e-mail] and Pietro Lombardi at [e-mail]

(END) Dow Jones Newswires

October 31, 2019 06:37 ET (10:37 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.