August 1, 2018 / 5:16 AM / in 10 months

Global business helps BNP Paribas weather investment bank weakness

PARIS (Reuters) - BNP Paribas (BNPP.PA), France’s largest listed bank, beat second-quarter profit forecasts on Wednesday as its global business offset a sharp fixed income trading fall and domestic weakness.

FILE PHOTO: A BNP Paribas logo is seen at a bank in Paris, France, April 6, 2018. REUTERS/Benoit Tessier

A surge in BNP’s international financial services business, including consumer lending, insurance and its U.S. bank BancWest, helped it recover from a weak first quarter when net profit plunged to 1.57 billion euros ($1.84 billion).

Although second quarter net profit fell 0.1 percent to 2.39 billion euros from 2.4 billion euros a year before, this was above a median profit of 2.07 billion euros from four analysts polled by consultancy Inquiry Financial for Reuters.

Group revenue rose 2.5 percent year-on-year to 11.21 billion euros, compared with a median forecast of around 10.9 billion euros, while revenue from corporate and investment banking fell 6.8 percent due to continuing weakness in fixed-income trading.

BNP Paribas shares were up 0.2 percent at 0728 GMT and some analysts said the results were reassuring.

“Strong numbers across the board, their results are reassuring more than anything else,” said Sam Dawson, a Monaco-based analyst at investment bank Wood & Company.

Last month major Wall Street banks such as Goldman Sachs (GS.N) and Morgan Stanley (MS.N) reported higher profits, although Deutsche Bank (DBKGn.DE) last week reported a drop in quarterly earnings.

BNP said the weakness in fixed-income trading was due to certain factors in the European market, such as persistently low interest rates. The corporate and investment banking division was also hit by a weaker dollar.

While low interest rates have hit parts of its investment banking business, they have conversely buoyed other businesses such as consumer lending and life insurance.

“Revenue driven by the specialized businesses increased in the context of economic growth in Europe, despite an unfavorable exchange effect and less favorable financial markets than in the second quarter of 2017,” BNP Paribas chief executive Jean-Laurent Bonnafe said in a statement.

Solid economic growth in the United States also lifted BancWest’s profits. Revenue from the U.S. bank rose 22 percent in U.S. dollar terms, or 12 percent when translated into euros.

The strong performance at the international financial services arm also mitigated weakness in BNP Paribas’ French retail bank, where revenues fell during the quarter.

Reporting by Inti Landauro; Editing by Sudip Kar-Gupta/Jan Harvey/Alexander Smith

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