Galvanised from a rebound of its retail bank and a decrease in its provisions for bad debts, BNP Paribas has reported net income of €2.9bn ($3.44bn) over the three-month period ending June.
In comparison, analysts had pointed to a €2.24bn net income, according to Refinitiv.
The largest French banking group said it benefited from a rebound in business activity, as economies relaxed some Covid-19 lockdown measures.
Lars Machenil, chief financial officer of BNP Paribas, said:
“There is a pickup in the economy, if you look at the volume of card transactions, of corporate transactions, of digital transactions, they are really up. And so that basically means that volumes are up, credits are up, commissions are up, and all that basically fuels that [performance.”
The domestic markets division saw revenues rising by almost 10% from a year ago. On the other hand, the investment banking unit reported almost a 10% fall in revenues.
The French lender justified the drop in investment banking revenues on the fact that its performance a year ago had been exceptionally high.
Acceleration of retail banking
In accordance with its commitments, the bank has also announced its intention to pay a dividend of €1.55 per share in September after the lifting of restrictions by the European Central Bank (ECB).
This supplement will be added to the dividend paid in May and will enable the group to reach the announced target of distributing 50% of its 2020 results.
The Domestic Markets branch, which includes retail banking in France, saw its revenues increase by 9.5% during the quarter, driven by the rebound in activity in France and by a good performance of specialized subsidiaries such as the company rental cars at Arval companies.
The increase in outstanding loans made it possible to compensate for an environment of interest rates that were still low and which cut into banks’ interest margins.
The NBI of the International Financial Services division, which focuses on consumer credit, asset management and insurance, fell 2% in the second quarter, on the back of the appreciation of the euro.
Performing in “the exceptional context”
However, it posted growth of 1.5% at constant exchange rates and perimeter, supported by the asset management activity.
In corporate and investment banking (CIB), activity fell by 9.9% due to an unfavourable basis of comparison, the group having been very active in corporate bond financing transactions in spring 2020 at the start of the health crisis.
“CIB recorded a very good level of performance after the exceptional context of the second quarter of 2020”, however underlined the bank, specifying that the revenues showed a growth of nearly 20% compared to the second quarter of 2019.
The decline in activity was noticeable compared to 2020 in investment banking and more particularly in the markets division, but certain activities rebounded significantly, particularly in the equity markets.