Toxic writedowns fall at BNP Paribas

BNP Paribas, France’s largest bank, was boosted by the lowest level of toxic debt writedowns for two years as it revealed a 31 per cent jump in net income yesterday.

In a set of results described by one analyst as a “mixture”, BNP Paribas reported a 54 per cent year-on-year drop in provisions for bad loans to €1bn (£830m). The number, BNP Paribas’ lowest since before Lehman Brothers collapsed in October 2008, contributed to a consensus-beating €2.1bn net gain in the second quarter on revenues of €11.2bn.

“The key message is we are clearly past the worst of the credit cycle,” said Jean Sassus, an analyst at Raymond James. “We are heading toward a decline in provisions.”

BNP Paribas’ main retail operations all showed major improvement on 2009. Revenues at the bank’s domestic branch network were up 5.9 per cent to €1.7bn, with pre-tax income up 16.5 per cent to €469m. Net income in Belgium and Luxembourg was €156m compared with a €26m loss last year. In the US, BancWest was €153m in the black after a €62m loss in 2009.

Investment banking revenues were down 30.3 per cent after last year’s strong showing to €2.7bn. Fixed income sales held up well but BNP Paribas’ risk-averse culture led to a 50 per cent drop in equities and advisory turnover to €268m.

Pierre Flabbée at Kepler Equities said: “What we have seen is a mixture of rapidly improving trends in some areas and more normal declines in others.” Shares in BNP Paribas closed 5.3 per cent up at €55.49 yesterday.