May 2, 2019 / 5:20 AM / in 6 months

BNP Paribas first-quarter net profit beats forecasts thanks to market upturn

PARIS (Reuters) - BNP Paribas’ first quarter net profit rose from last year and beat expectations, with earnings at France’s largest listed bank buoyed by a recovery at its corporate and finance arm thanks to a more favorable market environment.

A BNP Paribas logo is seen outside a bank office in Nantes, France, February 5, 2019. REUTERS/Stephane Mahe

Net profits rose 22 percent from the same period in 2018 to 1.92 billion euros ($2.15 billion). Analysts polled by Infront Data for Reuters expected a net profit of 1.71 billion euros.

Overall revenues rose 3.2 percent to 11.14 billion euros, above analysts’ forecasts for revenues of 10.65 billion.

The upturn at its corporate and investment banking arm, mainly thanks to more favorable market conditions in the last part of the quarter, allowed BNP Paribas to recover from the hit it took in late 2018 from a brutal and general market meltdown.

As returns on traditional retail banking have plummeted in recent years because of rock-bottom interest rates, banks such as BNP Paribas have come to depend more on corporate and investment banking, which is vulnerable to swings in financial markets.

After plunging to 650 million euros in the fourth quarter 2018, the bank’s revenue from its corporate and investment banking arm, which includes global markets activities, rose to 1.52 billion euros in the first quarter of this year.

“Corporate and institutional banking recorded this quarter an upturn in client activity despite a still lackluster market context at the beginning of the quarter,” the bank said in a statement.

Clients had also returned in the last month of the quarter, added BNP Paribas.

BNP Paribas’ results are one of the stronger set of first quarter earnings published so far by the world’s major banks.

Credit Suisse, Citigroup and JP Morgan last month posted higher first quarter profits, but Goldman Sachs’ profits fell.

BNP Paribas also booked an 838 million euro capital gain on the sale of a stake in Indian insurer SBI Life.

The French bank added it expected an ongoing cost-cutting plan to have a positive impact on its bottom line of results in coming quarters, as savings would outpace other costs.

Until the first quarter, costs surpassed savings, but in the first quarter, costs linked to changes in BNP Paribas’ business and savings almost evened out.

In the remaining quarters of this year, savings will outpace costs and in 2020, BNP Paribas expects to book 3.3 billion worth of savings and no costs linked to transforming its business.

($1 = 0.8923 euros)

Reporting by Inti Landauro; Editing by Sudip Kar-Gupta

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