(Updates with CEO comments, details)
PARIS, Feb 13 (Reuters) - French investment bank Natixis reported an unexpected rise in quarterly net profit as a one-off gain linked to the U.S. tax reform and stronger revenue growth in asset management helped offset a widespread trading slowdown.
It struck a positive note on the investment banking business at the start of the year, saying that current market volatility helps boost client activity and that it “will not end this week”.
“Volatility is a factor that creates uncertainty for clients and makes them want to cover risks,” chief executive Laurent Mignon told journalists during a call.
“We see a level of activity since the beginning of the year that should be positively impacted by this”.
Natixis, majority owned by retail banking group BPCE, said fourth-quarter net income rose 5 percent to 518 million euros ($640.35 million). Analysts had expected a 22 percent fall in profits to 386 million euros, according to a Reuters poll.
“The 4Q17 tax rate notably benefited from a 100 million euros positive impact from the U.S. tax reforms (write-down of deferred tax liabilities),” the bank said in a statement.
Natixis derives 35 to 40 percent of its pre-tax profit from the United States and its CEO said that the recent tax reform encouraged the bank to continue to develop in the U.S. dollar zone.
Natixis is betting on insurance, asset management and the payments business to achieve higher returns, and plans to focus its investment banking activities on industries including energy and natural resources, aviation, infrastructure and real estate.
Its revenues fell 1 percent in the fourth quarter to 2.51 billion euros, while revenue from asset and wealth management grew 22 percent to 899 million euros helped by higher margins in Europe and North America.
Non-banking activities, such as asset management, insurance and payments will account for 49 percent of overall revenue in 2020 compared to 44 percent in 2017, as the bank continues its shift to operations that are less prone to tougher rules on risk-taking.
Mignon added that market volatility that brings a downside correction for prices of assets could be a negative factor for passive asset management. However, high volatility on the back of uncertain market direction could prove beneficial for active management.
$1 = 0.8089 euros Reporting by Maya Nikolaeva and Matthieu Protard; Editing by Sudip Kar-Gupta and Adrian Croft