BNP equities trading resilient as its fixed income trails rivals

Bloomberg

BNP Paribas SA’s resilience in equities helped offset declines at a key debt-trading business that under-performed Wall Street rivals.
The Paris-based bank benefited from “good volumes” in derivatives and providing brokerage services to hedge funds, driving equities revenue to a three-year high.
That contrasted with the FICC unit buying and selling bonds, currencies and commodities — its biggest trading business — where revenue fell for the fifth straight quarter and missed analyst estimates.
Chief Executive Officer Jean-Laurent Bonnafe’s plans to improve growth and profitability through 2020 depend on expansion at the corporate and institutional bank. The unit is growing in cash management and trading in Germany and other European markets. It’s also expanding in the US at a time when Deutsche Bank AG is cutting thousands of jobs, while at the same time confronting muted client demand and persistently low interest rates.
“Compared to a year ago the economic context is less favorable for the corporate and investment bank, particular in FICC and particularly in Europe,” CFO Lars Machenil said in a Bloomberg interview, referring to the bank’s fixed income, currencies and commodities business. “The market is more subdued.”
BNP rose as much as 2.3 percent in Paris trading to 56.94 euros, before paring gains to trade at 55.90 euros.
Leaving aside the investment bank, earnings surpassed expectations at BNP’s main consumer banking and personal finance divisions, including BancWest in the US and BNL in Italy. Group net income also topped estimates, spurred by lower provisions for bad loans. Revenue for the bank’s international financial services business gained almost 9 percent, boosted by rising loan demand.
The bank earlier said it plans to sell almost 20 million shares in First Hawaiian, raising about half a billion euros. Over time, the bank plans to sell all its holding in the lender, Chief
Operating Officer Philippe Bordenave said. Fixed-income revenue fell 17 percent in the second quarter to 729 million euros.
That trailed the combined 6.7 percent increase at the five largest US firms. Stock trading unexpectedly jumped 12 percent. Deutsche Bank reported declines in both fixed-income and equities trading.