BNP Paribas, one of the Eurozone’s biggest banks, beat forecasts on Thursday with a smaller-than-expected earnings drop in the second quarter and stole a march on arch-rival Societe Generale by hitting capital targets early.
Both BNP and SocGen have sold assets, slashed headcount and cut dividends to bolster their balance sheets and soothe investors after a flare-up in the euro debt crisis last year.
BNP is seen as well ahead in the race, however, revealing this morning it had hit a Tier 1 capital ratio of 8.9 per cent under tougher Basel III methodology at end-June – six months ahead of schedule. It said its deleveraging was 90 per cent complete.
“We are very confident for the second part of the year,” said BNP chief executive Jean-Laurent Bonnafe. “This quite positive positioning will allow the group to concentrate on mid-term issues.”
BNP, which has more than half its credit-risk exposure in the crisis-hit Eurozone, saw second-quarter net income fall 13.2 per cent to €1.85bn (£1.46bn). This beat the average of analyst estimates of €1.74bn in a poll.
Revenue dropped 8 per cent to €10.10bn, broadly in line with the poll average of €10.13 billion.
BNP’s corporate and investment bank bore the scars of cost cuts and volatile markets, with pre-tax profits sinking 40 per cent and revenue down by a quarter. Retail banking, a division that has proven a lucrative counterweight to market turmoil, saw pre-tax earnings slip by a milder 2 pe rcent.
Asked whether BNP was embroiled in the Libor rate-fixing scandal, Bonnafe said the bank was “absolutely not” involved. He said regulators would have to change the way