BNP Paribas surpassed expectations in Q3, with a 5.9% increase in net income to €2.8 billion, driven by corporate and investment banking. The bank confirmed its 2024 targets, reporting net banking income of €11.9 billion, up 2.7%. Key acquisitions, including Axa Investment Managers and HSBC’s German private banking, aim to enhance growth. Despite challenges in commercial banking, CEO Jean-Laurent Bonnafé anticipates improvements from a favorable interest-rate environment. The cost of risk showed a slight decline in provisions.
BNP Paribas Surpasses Expectations in Q3 with Robust Net Income Growth
In the third quarter, BNP Paribas demonstrated impressive financial resilience, with net income climbing 5.9% year-on-year to reach 2.8 billion euros. This performance was predominantly driven by the corporate and investment banking sectors, as the bank affirmed its targets for 2024.
CEO Jean-Laurent Bonnafé remarked that the results clearly reflect “the commercial performance of the operating divisions” in a recent statement.
The bank’s net banking income (NBI), a critical metric equivalent to sales in the banking industry, rose to 11.9 billion euros, signaling a 2.7% increase compared to the same quarter last year.
Corporate and investment banking saw impressive growth, with sales surging 9% to 4.2 billion euros, attributed to “market share gains.” Additionally, income from the investment, insurance, and savings segments experienced a nearly 5% increase to 1.5 billion euros, propelled by advancements in asset management and insurance offerings.
This quarter also featured significant strategic moves, including two acquisitions aimed at enhancing the division’s growth potential. Bonnafé highlighted the planned acquisition of Axa IM by Cardif and HSBC’s private banking operations in Germany as key components of this strategic shift.
The acquisitions will be funded, in part, by capital raised from BNP Paribas’s sale of Bank of the West earlier this year.
On August 1, Axa confirmed it had entered exclusive negotiations to sell Axa Investment Managers to BNP Paribas for 5.4 billion euros, alongside establishing a long-term partnership with the bank, marking an anticipated completion by mid-2025.
Furthermore, in mid-September, BNP Paribas announced plans to acquire HSBC’s asset management unit in Germany, aiming to significantly expand its asset management capabilities in the region, potentially more than doubling its assets under management to exceed 40 billion euros.
However, not all segments fared equally well; commercial banking divisions in France, Belgium, and Italy reported a 2.6% decline, bringing revenues down to 6.5 billion euros.
The branch’s performance was impacted by the normalization of used-vehicle prices affecting its car leasing subsidiary, Arval, as well as margin challenges in the Belgian market regarding deposits and loans.
The cost of risk, indicating the reserves set aside for potential loan defaults, showed a slight decrease from the previous quarter, amounting to 729 million euros. This figure reflects a combination of 217 million euros in write-backs on healthy assets and an allocation of 946 million euros toward acknowledging bad debts.