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BNP Paribas beats analyst expectations, CFO says low rates will be 'main concern' for 2017

BNP Paribas beat analyst expectations on Wednesday as a surge in bond-trading helped improve the bank's bottom line.

Here are some of the highlights:

  • Revenue of 11.3 billion euros ($12.3 billion) versus expected 11.01 billion euros by Thomson Reuters analysts' consensus.
  • Net income up 4.4 percent to 1.89 billion euros ($2.06 billion) vs. Reuters analyst consensus of 1.6 billion euros.

France's biggest bank by assets became the first of its peers to report earnings for the first-quarter with its better-than-expected results following a stock market rally after the first round of the French presidential election.

The victory of pro-EU centrist candidate Emmanuel Macron in the first stage of the two-round process bolstered investor projections that the former economy minister would eventually defeat far-right political rival Marine Le Pen in the second run-off vote on Sunday.

'Tribute to all of our businesses'

"If you look at the first quarter, (this result) is relatively positive, now let's see if this strength continues," Lars Machenil, chief financial officer at BNP Paribas, told CNBC on Wednesday.

"If you look indeed at the bottom line, it is up 4.4 percent and if you would look at it excluding exceptional items, it's even up 13 percent and it is a tribute to all of our businesses," Machenil added.

Despite the better-than-forecast results, pretax profits for BNP's retail lenders in France, Belgium, Italy and Luxembourg fell 0.5 percent to around 705 million euros in the first quarter, impaired by stubbornly low-interest rates.

BNP Paribas' CFO reaffirmed his belief from the year previous that a low-interest rate environment in Europe would remain the "main concern" for the bank in 2017.

However, like many other European lenders, the bank has profited from a bond-trading boom and Machenil suggested the bank's first-quarter results - when looking at its domestic French market - did "bode well" for the year ahead.

BNP Paribas shares were trading under pressure shortly after Wednesday's European open. The French bank's shares are up by approximately 9 percent to date in 2017, roughly in line with similar gains on France's benchmark CAC 40.

BNP Paribas surpasses European rivals

In fact, BNP Paribas surpassed its European rivals by posting a 33.1 percent rise in its global markets division which, according to a Reuters report, compared to an average increase of 4 percent across rivals including Deutsche Bank, Barclays, Credit Suisse and UBS.

Lenders in the U.S. and Europe have all benefitted in the first three months of the year from a spike in markets-related revenue following U.S. rate hikes, improving economic sentiment in Europe and a gradual process in Britain's plans to leave the EU.

While BNP Paribas was the first French bank to report its results, Societe Generale is also scheduled to report before the May 7 presidential election run-off vote with Credit Agricole expected to release earnings on May 11.