French banking group reports 'a recovery in client volumes' in equity derivatives
There was good business development in the context of economic recovery in Europe but results recorded an unfavourable exchange rate effect as well as the impact of a lacklustre market context compared to the first quarter of last year, according to BNP Paribas Q1 2018 results.
At €10.7bn, the bank's revenues were down by 4.4% compared to the first quarter 2017 despite a solid performance in the equity and prime services business, which recorded €692m in revenues, up very by 19.4%, 'driven in particular by a recovery in client volumes in equity derivatives'.
Structured notes with €13bn where the main contributor to the French bank's €28bn wholesale medium/long term funding 2018 Programme which also saw €2bn of AT1 and Tier 2 issuances, €10bn of non-preferred senior, €3bn of secured funding allocated equally between covered bonds and securitisation. The bank reported that 53% of 2018 total funding plan has been completed.
BNP Paribas was the third most active distributor in Europe with a 5% market share and €5bn in sales during the first quarter of 2018. The French bank has marketed over 830 products across European jurisdictions including Italy (352 products), Germany/Austria (142 products), France (138), The Netherlands (67) and Belgium (66). Knockout (585) and reverse convertible were the most utilised payoff structures by BNP Paribas in Q1 2018 while snowball structures (180), protected trackers (178), and worst of option (136) were also a popular choice on the bank's product lineup. From an underlying perspective, the Eurostoxx 50 (131 products) dominated the bank's issuance across all European markets.
In the US market, BNP Paribas has sold 96 products worth US$232m in Q1 2018 mainly sold through its retail distribution outlet, Bank of the West; while in the Asia-Pacific region the French bank has brought to market 58 structures worth US$104m. In Asia-Pacific, BNP Paribas was also the fourth most active bond provider with a 3% market share and US$90m in sales.
Divisional breakdown
CIB operated in a lacklustre market environment in Europe compared to the first quarter of 2017 but 'continued to successfully develop its client base', according to the bank. Revenues, at €2.9bn, were down by 9.8% (of which 2.9 points came from the unfavourable foreign exchange effect) compared to high level in the first quarter 2017.
At €1.4bn, global markets' revenues were down by 14.6% compared to the first quarter 2017. The revenues of the fixed income, currencies and commodities (FICC), at €805m, were down by 31.4% compared to the first quarter 2017 whereas revenues in the equity and prime services business, at €692m, were up by 19.4%. The VaR, which measures market risks, was €25m.
The French bank also reported progress in its digital transformation with the rollout of the Symphony communication and workflow automation tool across the front office teams and 'good development' on its Smart Derivatives, Cortex and Centric digital platforms.
Securities Services' revenues, at €505m, rose by 5.7% compared to the first quarter 2017, 'as a result of the very good business drive and the positive effect of new mandates'. Assets under custody and under administration were thus up by 5.3% compared to 31 March 2017 and the number of transactions rose by 5.1% compared to the same quarter last year.
Corporate Banking's revenues, at €904m, were hit by an unfavourable foreign exchange effect (5.7 point impact) and were down by 8.8% compared to the first quarter 2017. However, the bank's insurance and wealth and asset management's businesses delivered a strong performance. Assets under management (AUM) reached €1bn euros as at 31 March 2018 (+0.9% as compared to 31 March 2017). The division's assets under management broke down as follows: asset management €424bn), wealth management (€362bn), insurance (€237bn) and real estate services (€28bn).
In Q1, the bank's wealth management announced the acquisition of ABN Amro's activities in Luxembourg (€5.6bn in private banking and €2.7bn in life insurance. The bank's US business, BancWest, reported a 9.01% sharp rise in current and savings accounts, while the bank's Private Banking assets under management (US$13.3bn as of 31 March 2018) were also up by 11.6% compared to 31 March 2017. BancWest also continued to expand its digital footprint with 8,000 accounts opened online, or and a push to the East aimed at offering 'cutting-edge wealth management products and services to business owners, high-net-worth individuals and families' from a New York office. Domestic markets reported a good business drive with deposits increasing by 6.6%.
Click in the link to read the BNP Paribas results report.
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