BNP Paribas shares dip despite beating Q2 estimates

French banking group reports net income of €2.3bn

French banking group BNP Paribas has posted strong second quarter profits and increased its provisions for loan losses due to the Covid-19 crisis.

According to Refinitiv data, analysts had expected the bank to report a net income of €1.48bn for the three months to the end of June. In reality, this figure came in at €2.3bn ($2.7bn, £2bn).

While this figure reflected a 6.8 per cent year-on-year fall, it demonstrated BNP Paribas’ relative resilience within the context of the coronavirus pandemic.

Emphasising this attribute, CEO Jean-Laurent Bonnafé stated: “Our diversified banking model has proven its effectiveness in supporting clients and the economy in front of an unprecedented health crisis.”

Indeed, the bank’s total revenues were actually 4 per cent higher than the same period of 2019 at €11.7bn, while its operating expenses fell by 1.3 per cent to €7.3bn.

BNP Paribas observed that volumes rose despite record-low interest rates, while its corporate and institutional banking arm (CIB) had a strong performance “in all client segments.”

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Its CET 1 ratio, which reflects a bank’s capital strength and resilience, rose from 11.9 per cent in Q2 2019, to 12.4 per cent in 2020.

Like all leading financial institutions, the French banking group increased its loan loss provisions in case of upcoming defaults as a result of the coronavirus crisis. BNP Paribas added a further €329m in provisions, on top of the €502m set aside earlier in the year.

Despite beating analyst estimates, the bank traded down 0.52 per cent towards Friday’s close, standing at €34.20. In the year-to-date BNP Paribas shares have fallen more than 35 per cent.

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