PARIS • BNP Paribas, France's biggest bank, reported a 17 per cent decline in quarterly net profit, in line with expectations, as a weaker US dollar and sluggish fixed income trading impacted investment banking revenues.
First-quarter net income fell to €1.57 billion (S$2.5 billion), in line with analysts' estimates of €1.55 billion, according to a Reuters poll of five analysts.
Revenues fell 4.4 per cent to €10.8 billion, compared with €11.04 billion expected by analysts. Revenues at its corporate and institutional bank were also down 9.8 per cent. "Even if the market context was lacklustre in Europe compared with the first quarter 2017, the results are in line with the trajectory of the 2020 plan and the achievement of its targets," said chief executive Jean-Laurent Bonnafe.
A pick-up in volatility in the middle of the first quarter resulted in a wait-and-see attitude by clients who traded rates and foreign exchange in Europe less actively in contrast to equity trading that performed well in the US.
Revenue from equity and prime services at BNP Paribas rose 19.4 per cent, but fixed income activities declined 31.4 per cent. BNP Paribas also blamed the drop in profits on an unfavourable foreign exchange effect and a high comparative base in the first quarter of 2017, when a significant level of corporate banking fees were booked.
BNP Paribas' rival Societe Generale yesterday also reported a 13.4 per cent fall in revenue at its investment bank.
BNP Paribas is aiming to become more profitable while also saving money to invest heavily in digital infrastructure on both investment banking and retail banking fronts.
It sees the international financial services division - a unit that includes consumer finance, retail banking in emerging markets and the United States, as well as insurance and wealth management - as its growth engine. That division saw a 3.8 per cent rise in quarterly revenue.
This helped outweigh weakness in BNP Paribas' home French market, where revenues declined 1.6 per cent, due partly to pressures on its loan businesses.