BNP Paribas shares sink as quarterly returns underwhelm investors

Investing.comOct 31, 2024 12:32 PM

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Investing.com -- Shares in BNP Paribas (EPA:BNPP) slumped in European trading on Thursday after investors were underwhelmed by the results from the investment banking division of the Eurozone's largest lender.

Driven by an uptick in trading activity, group net income over the three months ended in September grew by 7.8% compared to the year-ago period to 2.87 billion euros, roughly in line with company-compiled forecasts of 2.86 billion.

Sales, meanwhile, increased as expected on a reported basis to 11.9 billion euros. The company said it had also set aside 729 million euros for bad loans, compared to projections of 859 million euros.

BNP has been looking to its investment bank to help counterbalance weaker sales at its retail sales, and has been seeking acquisitions -- including a deal for AXA's asset management arm and a stake in insurance group Ageas (LON:0Q99) -- to bolster its performance. Sales at its equity and prime services unit moved up by 13% year-on-year and its fixed income, currencies and commodities division added 12%. Global corporate financing and advisory services expanded by around 6% as well.

However, sales from its commercial and consumer finance segment slumped by 2.6% due in part to weaker used car prices hitting its vehicle-leasing business.

Net interest income edged up by 1.7% as BNP faced mortgage rate regulations and fixed savings accounts in France that have largely left it unable to reap the benefits of higher interest rates like other firms in the banking sector.

Even still, BNP backed its full-year guidance for revenue growth of over 2% versus the prior year and group net income of more than 11.2 billion euros.

"We expect the focus on the domestic macro outlook, [corporate and institutional banking unit] momentum, retail income, the strategic implications of recent Ageas and Axa Investment Management announcements, and outlook for capital build, reduced on a pro-forma basis by deals and expected Basel 3.1 headwinds, to be the focus today," analysts at UBS said in a note to clients.

(Reuters contributed reporting.)

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