BNP Paribas Doubles Profit Through Its Investment Banking Unit

BNP Paribas SA (EPA:BNP)’s third quarter profit more than doubled, helped by the higher revenues at the investment-banking unit. The net income for the quarter jumped to 1.32 billion euros ($1.7 billion) from 541 million euros a year earlier, which beats the 1.06 billion euro average estimate of eight analysts surveyed by Bloomberg.

BNP Paribas Doubles Profit Through Its Investment Banking Unit

France’s largest bank has achieved higher capital levels under the new Basel III rules, led by Chief Executive Officer Jean-Laurent Bonnafe. The bank’s core Tier 1 ratio under Basel III reached 9.5 percent at the end of September. The bank, which was severely affected by the recent liquidity crunch and losses on Greek sovereign debt, plans to serve clients in the US, and corporate and investment-banking clients in Asia.

“There is absolutely no plan to go further in deleveraging,” Bonnafe said.  “We are well positioned to redevelop and benefit from geographies or businesses that are growing,” he said in an interview with Bloomberg.

The Paris based company’s pretax profits at the corporate and investment-banking unit improved 7.3 percent to 732 million euros. The company’s revenue from equity and advisory operations jumped 51 percent, to 444 million euros.  Its Fixed-income revenue grew 38 percent, compared with 67 percent for Deutsche Bank AG (NYSE:DB) and a 20 percent rise for UBS (NYSE:UBS) and around 33 percent for U.S. rivals JPMorgan Chase & Co. (NYSE:JPM) and Morgan Stanley (NYSE:MS).

 “We saw quite a strong rebound” in capital-markets revenue, Bonnafe said. “We rely very much on the global trend of market businesses of course, but for the time being there is no reason to believe it’s going to be that different.”

The French firm took a 3.2 billion euros hit on Greek government debt in 2011, and since then has been working to streamline its sovereign debt holdings in most European countries. Standard & Poor’s last month revised its credit ratings for BNP Paribas SA (EPA:BNP) and for two other French lenders, citing ““these groups are more vulnerable to the impact of rising economic risks in the euro zone, particularly in France and countries in southern Europe”.

In September, after the agreement between European Central Bank and ECB President Mario Draghi on buying bonds from troubled euro nations, France’s largest banks have also received the much needed funding of 1 trillion euros in long-term loans.

 “The French real-estate market is very, very solid, I can tell you,” Bonnafe said. “Europe as a whole has been slowing down, so this is just the same for France.”

BNP Paribas SA (EPA:BNP)’s shares, with their biggest gain in three weeks, rose 4 percent to 40.69 in the early morning Paris trading. BNP Paribas has gained 34 percent this year in Paris trading.

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Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at