France's two biggest banks have this week unveiled figures that suggest their underlying business is fundamentally sound, even as concerns grow about the potential impact the result of the French election could have on the sector in the country.
BNP Paribas says it delivered a good performance this quarter, demonstrating the strength of its integrated and diversified business model. CEO Jean-Laurent Bonnafé stated: “With €1.9 billion in net income, BNP Paribas delivered a very good performance this quarter. The revenues of the operating divisions were significantly higher thanks to good business growth. Costs were well under control and the cost of risk was down.”
The official figures show that revenues totalled €11,297m, up by 4.2% compared to the first quarter 2016.
The revenues of the operating divisions grew by 7.0%. They were down slightly by 0.3% at Domestic Markets due to the low interest rate environment, rose by 5.8% at International Financial Services and rebounded sharply by 20.0% at corporate and investment banking which had experienced a very challenging market environment in the first quarter 2016.
Pre-tax income thus came to €2,754m compared to €2,638m in the first quarter 2016 (+4.4%). It was up sharply by 25.1% for the operating divisions.
Balance sheet rock-solid
The CEO describes the Group’s balance sheet as rock-solid. The fully loaded Basel 3 common equity Tier 1 ratio was slightly higher than 11.6% as at 31 March 2017, up by 15 basis points compared to 31 December 2016, due primarily to the sale of 20.6% of First Hawaiian Bank (+10 bp). It takes into account a 50% dividend payout ratio.
The Basel 3 fully loaded leverage ratio, calculated on total Tier 1 capital, totalled 4.1% as at 31 March 2017. The Liquidity Coverage Ratio stood at 125% as at 31 March 2017.
The Group’s liquid and asset reserve immediately available totalled €345bn (€305bn as at 31 December 2016), which is equivalent to more than one year of room to manoeuvre in terms of wholesale funding.