BNP Paribas had a pleasant surprise for investors as it revealed a stellar earnings report, for the third quarter of this year. The French bank’s net income was up to €1.886 billion ($2.06 billion), far above the €1.62 billion analysts were expecting (according to a poll carried out by FactSet). The number was particularly impressive, as the bank had to pay an accounting charge of €202 million in connection to its debt. The figure is a 3.3 percent increase on what it was this time last year. More good news was on the way, as it revealed that its total revenues were also up year-on-year, by 2.4 percent, to €10.589 billion. The earnings boost was courtesy of its fixed income unit, which had a 41.3 percent increase year-on-year. The result of this was a 13 percent increase in revenue from its corporate and investment banking divisions, to €2.91 billion.
The better than expected revenue from bonds has been an industry-wide theme, with Wall Street banks and a fellow European bank, Barclays, reporting stellar performance as well. In his statement, Chief Executive Officer Jean-Laurent Bonnafé said “Thanks to its integrated and diversified business model serving its customers, it reported good growth in the revenues of the operating divisions despite the low interest rate environment. The cost of risk was significantly lower.” The low interest rates in Europe affected business in the EU zone however, with revenue from its retail banks in France, Belgium, Italy and Luxembourg holding steady at €3.92 billion. This bad news was then offset by reports from its international banking divisions (including retail banks outside the EU) of a 4 percent increase in revenue to €3.95 billion. The French economy and European banks in general are in need of another win, as other major French banks are expected to release their earnings the first week of November.