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A revival in investment banking helped BNP Paribas to lift its profits by more than 15 per cent in the fourth quarter, as France’s largest lender said it was launching a plan to boost the profitability of its domestic business.
Revenues in corporate and institutional banking increased 20 per cent compared with the same period in 2023 to €4.5bn, led by the bank’s traders, who posted a 32 per cent increase.
The results echo those last month from BNP’s Wall Street rivals, where a trading frenzy around the US elections, the return of dealmaking and market volatility drove surging revenues across investment banks.
At BNP, performance across the group was better than expected. Revenues increased by just shy of 11 per cent to €12.1bn, while net income rose 15.7 per cent to €2.3bn.
Investment banking offset lacklustre growth in BNP’s commercial and retail operations in 2024, though the division rebounded in the final quarter, recording growth of 4.7 per cent.
Although revenues at its French operations rose in the fourth quarter as the bank reaped higher fees and deposits stabilised, chief executive Jean-Laurent Bonnafé said that the bank was “launching a new strategic plan” for that part of the business — subject to consultation with its works councils — with the aim of increasing the profitability of commercial and personal banking in France to the level of the wider group.
Growth at BNP is expected to be boosted by the integration of Axa Investment Managers, which it acquired from the French insurer last year in a €5bn deal. Including the Axa IM business, BNP said it would target an average growth rate for revenues of more than 5 per cent for 2024-2026; without it the figure would be about 4 per cent.
The Paris-listed lender lost its crown as the Eurozone’s largest listed bank to Santander this year. Despite a strong performance in recent years, it has been hit by political turmoil in its home market.
Its share price has yet to recover to its level in early June, before President Emmanuel Macron’s gambit to call snap parliamentary elections hit French bank shares. Ongoing political uncertainty over the French government’s budget has also hit confidence in the banking sector.
The bank’s commercial operations have been affected by government bonds that competed with its savings products in Belgium, as well as the high interest rate the bank must pay on popular French savings accounts, known as Livret A.
However, French banks are set to benefit from a government decision in January to lower the Livret A rate, which could push up profits in retail banking.
Return on tangible equity, a closely watched measure of profitability, reached 10.9 per cent, ahead of estimates. The bank reiterated its guidance to lift the measure to 12 per cent by 2026.
The bank also recorded a higher than expected common equity tier one ratio of 12.9 per cent. The bank’s shares fell in October after its CET1 ratio, a measure of its financial resilience, came in lower than anticipated by analysts.
