BNP Paribas reports rebound in client volumes equity derivatives

BNP Paribas has reported revenues for its corporate and institutional banking (CIB) division in the first nine months of the year, at €8.45 billion, were down by 6.9% compared to the same period last year, but by only 4% excluding the unfavourable foreign exchange effect and capital gains realised in the second quarter 2017 at corporate banking.

At €4.1 billion, global markets’ revenues were down by 9.6% compared to a ‘high base’ in the first nine months of 2017 given the lacklustre context for fixed income, currencies and commodities (FICC) in Europe, according to the bank. The revenues of FICC, at €2.2 billion, were down by 22.5% compared to nine-months 2017 which had recorded significant volumes, however, revenues of equity and prime services, at €1.9 billion, were up 12.7%, driven in particular by ‘a rebound in client volumes in equity derivatives and good development of prime brokerage’.

BNP Paribas sold 149,413 structured products worth an estimated €2.1 billion in Europe during the first nine months of 2018, making the bank the second most active provider by issuance, behind Vontobel (153,113 products), according to SRP data. The products were sold across 11 different jurisdictions including France, where the bank collected €926m from the sale of 115 structured products, which were distributed, among other, via Aprep Diffusion, Equitim, Gresham Banque, Groupama, Hedios Vie and Privalto.

In Belgium, BNPP launched 20 products worth approximately €115m, which were available via the distribution networks of BPost Bank (nine products), Deutsche Bank (five), Fortis (four) and Crelan (two). The bank was also active in Sweden and Italy, with 18 and 15 products respectively, while further products were seen in Finland (seven), Czech Republic (four), Ireland (three) and the UK (two).

In Germany, apart from 74 primary market products, the bank issued almost 60,000 listed certificates such as turbos, bonus and capped bonus certificates, which were available for trading at the exchanges of Frankfurt and Stuttgart.

Outside Europe, BNP Paribas was active in Japan where it collected US$565.4m from 42 products, Taiwan (US$461.47m from 129 products), and the USA (US$0.79m from six products).

For the first nine months of the year, revenues totalled €32.4 billion, down by 0.8% compared to the first nine months of 2017 which included the exceptional impact of €233m in capital gains from the sale of Shinhan and Euronext shares and €-186m euros in own credit adjustment (OCA) and own credit risk included in derivatives (DVA)

Insurance & wealth and asset management’s businesses continued their growth, according to the bank. Assets under management (AUM) reached €1,066 billion at September 30, 2018, up 2.4% compared to September 30, 2017). AUM were up by 1.5% compared to December 31, 2017 with very good asset inflows at wealth management in particular in Asia, France, Italy and the United States; asset outflows at asset management concentrated on a bond mandate following the in-sourcing by a client of its fund management, partly offset by asset inflows into money market funds; strong asset inflows in Insurance in particular in unit-linked policies, according to the bank.

BNP Paribas' wholesale medium/long term funding plan for 2018, at €28 billion, can be broken down into €13 billion of structured notes; €3 billion of secured funding allocated equally between covered bonds and securitisation; €10 billion of non-preferred senior debt; and €2 billion of AT1 and Tier 2 issuances. As at October 18, 2018, issuances achieved in 2018 stood at €30.3 billion, according to the bank.

‘BNP Paribas delivered this quarter a good level of income, at €2.1 billion,’ said Jean-Laurent Bonnafé (pictured), chief executive officer, commenting on the results. ‘Despite a still unfavourable market context in Europe, the revenues of the operating divisions increased slightly, driven by the specialised businesses.’

Click the link to view the BNP Paribas third quarter 2018 results and the presentation.