BNP Paribas profit beats forecasts despite FX hit

(Adds earnings details, analyst and CEO comments)

BNP Paribas SA’s (BNP.FR) second-quarter net profit and revenue beat expectations, supported by strong gains at its international financial-services division which offset weaker results at its investment-banking operations.

The better-than-expected results come despite another difficult quarter for the bank’s corporate and institutional banking unit, the performance of which dented the bank’s results in the first quarter and has lagged behind U.S. peers that have been reporting consensus-beating investment-banking revenues for the second quarter.

BNP’s net profit for the period was 2.39 billion euros ($2.80 billion) compared with EUR2.40 billion a year earlier, France’s largest listed bank by assets said Wednesday.

Revenue rose 2.5% on the year to EUR11.21 billion.

Analysts had expected the Paris-based bank to report a net profit of EUR2.07 billion for the period on revenue of EUR10.93 billion, according to a consensus forecast provided by FactSet.

The bank reported "good results" for the quarter, analysts at Jefferies said, with a "positive performance in markets and cost in retail."

"We expect the stock to outperform the sector," it said.

Revenue at BNP’s corporate and institutional banking business fell 6.8% on the year "due to a lackluster market context in Europe," BNP said. Fixed-income, currencies and commodities revenue plunged 17%, while equity revenue rose 12%.

The bank’s international financial-services division’s revenues, which includes wealth management, consumer finance and insurance, rose 8.7% from a year earlier.

The bank’s core tier 1 capital ratio–a key measure of capital strength-slipped to 11.5% in June from 11.6% in March.

The bank’s performance in the quarter was "solid," Chief Executive Jean-Laurent Bonnafe said in a statement.

"Revenues, driven by the specialized businesses, increased in the context of economic growth in Europe despite an unfavorable foreign-exchange effect and less favorable financial markets compared to the second quarter 2017," he said.

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