BNP Shares Rise After Disposals, Fixed Income Boost 1Q Results -- Update

Adds CEO comments, background, earnings details, analysts comments, share price

--BNP Paribas first-quarter net profit rose 22% to 1.92 billion euros.

--Fixed-income revenue jumped roughly 29%

--The sale of 14.3% of SBI Life boosted results

 
   By Pietro Lombardi 
 

Shares in BNP Paribas SA (BNP.FR) gain ground after first-quarter net profit rose 22%, boosted by capital gains on some disposals and an unexpected strong performance of its fixed-income business.

Net profit for the period was 1.92 billion euros ($2.15 billion) compared with EUR1.57 billion a year earlier. The sale of 14.3% of SBI Life Insurance Co. (540719.BY)--BNP's Indian joint venture with the State Bank of India--boosted the bottom line, France's largest listed bank by assets said Thursday.

Revenue increased 3.2% on year to EUR11.14 billion.

"These results showed better-than-expected CIB results (mainly in fixed income), resilient domestic market (excluding Italy), strong insurance that more than offset weaker BancWest and wealth management," Citi said.

BNP shares trade 1.8% higher at 0703 GMT.

"Revenues were up thanks to business growth in the operating divisions with in particular an upturn in client business at CIB," Chief Executive Jean-Laurent Bonnafe said, adding that the results are line with the bank's plan.

"Operating expenses were well contained and benefited from cost saving measures, generating a positive jaws effect," he said, referring to income growth exceeding expenses.

BNP's fixed-income revenue jumped roughly 29%, supported by a strong performance in rates and foreign-exchange transactions. Equity revenue, however, was down about 30%. Revenue at the corporate and institutional banking division was up 3.5%.

The unit "recorded this quarter an upturn in client activity despite a still lackluster market context at the beginning of the quarter," the bank said.

In February, BNP cut its 2020 revenue growth and profitability targets and vowed to increase cost savings as weak trading revenue hit its investment bank arm in the last quarter of 2018.

BNP increased its recurring cost savings target to EUR3.3 billion from 2020, up from a previous target of EUR2.7 billion. Of the additional EUR600 million, roughly EUR350 million will come from its corporate and institutional banking unit, it said.

The low interest-rate environment weighed on the bank's domestic-markets division, whose revenue declined slightly.

The bank's international financial-services unit, which includes wealth management, consumer finance and insurance, posted a 9.5% growth in revenue.

BNP's core Tier 1 capital ratio--a key measure of capital strength-- slipped to 11.7% in March from 11.8% at the end of December.

Write to Pietro Lombardi at [e-mail]

(END) Dow Jones Newswires

May 02, 2019 03:33 ET (07:33 GMT)

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