BNP Paribas capitalises on equity derivatives rebound

BNP Paribas posted revenues of €11.8 billion in the first quarter of 2021 – an increase of 8.6% compared to Q1 2020.

In the operating divisions, revenues were up by seven percent, with corporate and institutional banking (CIB) reporting an increase of 24.3% from the prior year quarter.

CIB had a good start to the year, in both equity issuance and debt. The division saw strong activity in rates, forex and credit markets, with a ‘very good level’ in equity derivatives and prime services. The securities services business achieved a record level of transaction volumes. Equity and prime services’ revenues, at €697m, rose sharply, due to a record level of activity and a rebound effect of derivatives after the impact of extreme shocks and dividend restrictions in the first quarter 2020.

BNP Paribas issued 171 structured products worth an estimated US$930m on the primary market in the first quarter of 2021 (Q1 2020: US$2.5 billion from 525 products), according to SRP data.

In Europe, its busiest market was Italy, where it collected US$290m from 34 public offers in the quarter (Q1 2020: US$475m from 49 products). The structures, distributed via its subsidiary Banca Nazionale del Lavoro (BNL), were predominately reverse convertibles linked to single stocks or baskets, with the shares of Kering (six products), Adidas (four), and E.on (three), the most frequently used.

In its domestic market, the French bank sold an estimated US$110m from 32 products that were available via, among others, Hedios Vie, Privalto and Milleis. Other European markets were the bank was visible during the quarter where Belgium (US$64m from nine products), Finland (US$46m from 15 products), and Sweden (US$8m from eight products).

BNPP also issued some 78,641 open-ended turbo certificates (Q1 2020: 116,449 products), as well as 19,794 (capped) bonus- and discount certificates that were listed on the exchanges of Frankfurt and Stuttgart in Germany (Q1 2020: 32,235).

Outside of Europe, the highest activity (by issuance) was seen in Taiwan, where it sold 63 products worth an estimated US$225m to private banking clients of providers such as E.Sun Commercial Bank, Bank SinoPac and Fubon Securities.

In Japan, the bank achieved sales of US$210m from 11 products that were sold via local securities houses (Q1 2020: US$190m from eight products). They included M20240216 – the bank’s best-selling product in the quarter across all jurisdictions. The three-year registered note was distributed via Daiwa Securities and linked to the Nikkei and S&P 500. It sold US$61m during its subscription period.

BNPP raised more than €112 billion in financing for its clients on the syndicated loan, bond and equity markets, an increase of 21% compared to the first quarter of 2020. Loans outstanding rose by 0.2% compared to Q4 2020.

The group’s 2021 medium to long-term (MLT) wholesale funding programme of €36 billion includes a MLT regulatory issuance plan of approximately €17 billion, which can be broken down into €13 billion non-preferred senior debt (€9.3 billion already issued) and €4.5 billion capital instruments (€2.1 billion already issued).

The remaining part of the programme is to be completed in structured products and, to a lesser extent, with securitisation and local funding. Two thirds of the regulatory issuance plan, and over half of the overall wholesale programme were realised as of 21 April 2021.

The group’s immediately available liquidity reserve amounted to €454 billion, which is equivalent to over one year of ‘room to manoeuvre’ in terms of wholesale funding, according to BNPP.

As of the end of March 2021, outstanding volumes for issued debt securities stood at €67.9 billion (31 December 2020: €64 billion).

Click the link to read the full BNP Paribas results and presentation.