BNP's strong first quarter profit sets pace for rivals

City A.M. Reporter
BNP Paribas, France’s biggest listed bank, beat first-quarter forecasts yesterday, driven by strong retail growth and resilient investment banking that bolstered investor confidence and set a high bar for rivals.

BNP’s quarterly net income rose 14.6 per cent to €2.62bn (£2.36bn), compared with a a consensus forecast for €2.25bn. Revenue grew 1.3 per cent to €11.7bn, also higher than expected.

Retail banking was buoyed by loan growth across western Europe and appetite for mortgages in France.

Provisions against loan losses tumbled almost a third across the group, helping BNP’s investment bank profit better resist a 14.5 per cent drop in capital markets revenue.

European peers including Barclays, Credit Suisse and UBS saw investment banking profit fall 15 to 30 per cent in the first-quarter. BNP’s unit reported a five per cent fall in pre-tax earnings.

BNP, which is relying on its own profit power to meet incoming Basel III capital rules, should see significantly lower provisions for 2011 compared with 2010, chief executive Baudouin Prot said.

The group’s core Tier 1 capital ratio, a key measure of financial strength, was 9.5 per cent at the end of March, from 8.3 per cent a year ago.