BNP Paribas revenue hit by weak fixed income trading
BNP Paribas third-quarter net profit beat forecasts on Thursday, up 2.4 percent from the same period a year earlier. But the French lender highlighted weak trading at its fixed income unit.
Net profit at France's largest bank by assets rose to 1.36 billion euros ($1.86 billion) versus 1.32 billion euros forecast by analysts in a Reuters poll.
(Read More: BNP Paribas profit falls, expands in Germany)
Revenue fell 4.2 percent however to 9.29 billion euros, falling short of estimates in a Reuters poll of 9.31 billion euros. The lender saw weakness in its fixed income unit, an issue highlighted by other banks like Goldman Sachs, as global interest rates tick higher and bond prices lower. This comes as the U.S. Federal Reserve looks to moderate its bond buying program which has so far suppressed yields.
Revenues from fixed Income, at 780 million euros, were down by 27.1 percent compared to the third quarter of 2012, it said.
"It was primarily the rate market business that was adversely affected by weak client activity, whilst the credit business had good performances. The business confirmed its leading positions in bond issues, ranking number two for all corporate bonds in euros and number 8 for all international issues," it said in a statement.
Jean-Laurent Bonnafe, CEO of BNP Paribas remained upbeat despite the dip, telling CNBC Thursday that the results showed a "resilience" in revenue for its operational divisions as the euro zone exits recession. He was also proud of the bank's ongoing containment of its costs and the decline of its cost of risk.
"The group continues to prepare the 2014-2016 business development plan that will be announced early in 2014," Bonnafe said in a press release.
The bank said its balance sheet was "rock solid" with its core tier one ratio - a Basel III banking regulation which is due to be phased in over the next few years standing at 10.8 percent in September.
"Based on our track record, we are confident that BNP Paribas will not need (more capital)," he told CNBC. He also welcomed the stress tests from the European Central Bank (ECB). Set to begin in November, this review is designed to analyze lenders' ability to withstand adverse economic conditions and will last 12 months. The region's 128 most important banks will undergo an assessment of their risky assets, the quality of their balance sheets, and the amount of capital they hold.
"Stress tests are a good thing," Bonnafe said. "(The) euro zone should get additional confidence from these tests."
(Read More: Barclays profit falls, cooperating in forex probe)
Shares in the bank rose by 2.2 percent as the trading session opened on Thursday. Citi analysts said the results were "solid" in a research note and expected low-single digit consensus upgrades for its earnings-per-share ratio - an indicator on whether its stock is attractive or not.
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