Structured products boost BNPP revenues

BNP Paribas has posted revenues of €11.4 billion in the third quarter of 2021, up by 4.7% year-on-year, and by 4.6% compared to Q3 2019.

The group reported strong revenues in corporate and institutional banking (CIB), including growth in all three of its businesses: global markets, corporate banking and security services.

Global markets’ revenues, at €1.7 billion, increased by 1.2% compared to the high third quarter of 2020 base and sharply by 33.3% compared to the third quarter of 2019. This was mainly driven by encouraging customer activity on the equity markets, with sustained activity in equity derivatives – in particular in structured products – and growth in prime brokerage.

In a more lacklustre context, customer activity was lower on the rates and forex markets but remained strong on the commodities markets.

In Europe, the bank led by chief executive officer Jean-Laurent Bonnafé (pictured) issued 273 structured products targeted at the primary market in Q3 2021, a 35% increase from the prior year quarter (Q3 2020: 202 products).

In its domestic market France, BNPP collected approximately €1 billion from 118 publicly offered structured products between 1 July and 30 September 2021, significantly up compared to €354m (from 72 products) in the same period last year.

The products were available via 11 different distribution channels including Privalto, Nexo Capital, i-Kapital, MMA Assurances and Hedios Vie.

Almost 70% of the newly issued French products were tied to a single index, of which the S&P Euro 50 Equal Weight 50 Point Decrement Index (16 products), Solactive France 20 Equal Weight NTR 5% AR Index (11), and Eurostoxx 50 (10), were the most frequently used.

Italy was another European market where the French bank was highly active during the quarter, issuing 81 products worth an estimated €431m (Q3 2020: 378m from 48 products).

The Italian products were distributed via Banca Generali, BNL Private Banking, Deutsche Bank, and UBS, among others. BNPP issuance in Italy was predominately linked to share baskets (41 products) or single shares (32), with a further seven structures linked to indices. The best-selling product was a capped lock-in certificate on the share of Eni, which sold €16.5m during its subscription period.

Other European markets were the bank was active during Q3 included Poland (€63m from 11 products), Belgium (€21m from six products), and Finland (€8m from six products). In Germany, as well as distributing 35 products on the primary market (€35m), BNPP also issued large numbers of listed certificates in the quarter – including some 74,131 turbos and 15,364 flow products (bonus, capped bonus and discount certificates), compared to 69,075 and 22,530, respectively, in Q3 2020.

In Asia, the bank was the manufacturing company behind 61 products in Q3.

Taiwan, with 35 registered notes (US$130m) targeted at private banking clients, was an active market for BNP while in Japan it collaborated with local securities companies for the launch of 26 structured products with combined sales of US$300m in the quarter (Q3 2020: US$428m from 24 products).

In South Africa, the bank collaborated with Sip Nordic and Causeway Securities, for the launch of six products and one product, respectively.

The group has a medium to long-term (MLT) wholesale funding programme of €36 billion. The 2021 medium/long term regulatory plan of €17 billion comprises of €13 billion non preferred senior debt and €4.5 billion capital instruments. The second part of the programme of approximately €19 billion is being done in structured products and, to a lesser extent, with securitisation and local funding.

BNPP’s immediately available liquidity reserves totalled €478 billion, which is equivalent to more than one year of ‘room to manoeuvre’ in terms of wholesale funding, according to the bank.

As of 30 September 2021, assets under management, at €1,218 billion (4.5% higher than at end-December), were split as follows: asset management (€531 billion), wealth management (€411 billion), and insurance (€256 billion).

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