BNP Paribas’ equities traders boost quarterly profits

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BNP Paribas’ revenues from equities trading surged in the second quarter, as volatility surrounding elections in Europe and an interest rate cut by the European Central Bank drove client demand.

The equities boom surpassed even a bounce seen across Wall Street, with the French bank’s trading revenues in this area increasing by 57.5 per cent versus the April-to-June period a year ago.

Overall, BNP Paribas’ net profit in the period rose 1.6 per cent to €3.4bn, a record for a second quarter and surpassing estimates by Refinitiv and those compiled by the bank.

The improved earnings come after investor jitters surrounding a French legislative election ending in July that battered banks’ share price, including that of BNP Paribas. Seen as a proxy for the economy, its stock sank more than 10 per cent in the days after President Emmanuel Macron dismissed parliament on June 9, when his centrist party was trounced by the far-right in European elections.

The shares have largely recovered, despite the legislative vote delivering a hung parliament, but are up only 3.3 per cent this year compared with a 21 per cent jump for the Stoxx 600 European bank index. Spain’s Santander is now nipping at BNP’s heels as the Eurozone’s biggest bank by market value.

The volatility, which extended to the European parliamentary election and speculation around ECB moves, had its perks, however, at a time when BNP, traditionally a strong debt bank, is capitalising on several years of investment in its equities division.

This has included building up a prime brokerage business — a unit that serves hedge funds — by taking over teams and clients from Deutsche Bank as it retreated and, on a lesser scale, Credit Suisse’s former clients.

Elsewhere in BNP Paribas’ corporate and investment bank, earnings from global banking or advising on debt underwriting and deals were solid, up just over 5 per cent, though the combined fee revenue at the top five US investment banks rose by 40 per cent.

BNP is cutting €1bn of costs this year across its businesses, and is still restructuring a personal finance unit that it said should post better results by year end.

Across Europe, the months ahead will be testing as banks adjust to a world of interest rate cuts after a period of rapid rises, although that could also help growth.

BNP Paribas finance chief Lars Machenil said he was cautiously optimistic, adding: “I see this optimism that there are green shoots on the horizon, with inflation tapering off, and the ECB is moving on rates.”

The bank maintained its full-year targets for 2024, including that of growing net profit for the year compared with 2023.