BNP Paribas gets a boost from the strong dollar
BNP Paribas (Euronext Paris: BNP-FR) reported better-than-expected profit on Friday, as the strong dollar gave the French bank's earnings a boost.
Net profit came in at 2.55 billion euros ($2.79 billion) for the second quarter, versus a loss of 4.21 billion euros in the same quarter last year. This was substantially higher than the 1.81 billion euros forecast by analysts polled by Reuters.
Lars Machenil, chief financial officer of the bank, told CNBC that the second quarter was "very strong."
"We ended with basically double-digit growth on the top line and on the bottom line. On the top line, it was up 16 percent...and the bottom line up 14 percent," he told CNBC.
Revenue for the bank in the second three months of the year was 11.08 billion euros, above analyst forecasts of 10.58 billion euros.
The bank said the appreciation of the dollar against the euro had contributed to the strong results. Over the past three months, the dollar has risen 2.4 percent against the euro, and over the year to date it's gained 9.5 percent against the single currency.
Revenue in the French retail banking division declined by two percent in the second quarter, however, which Machenil attributed to the continuing low interest rate environment.
"If you are in a low interest rate environment, you have to constantly adapt yourself to it. That means you have to do things like repricing to reflect these low interest rates and at the same time you have to follow your clients' needs, and of course, (pursue) ever-continued cost-reduction and low cost of risk," he said.
Highlights in the retail banking side of the business were the personal finance and international retail banking, he added.
"This strong second quarter adds to the first strong quarter. When you look at the first six months, we basically have a return-on-equity of 10.1 percent," he said.
In the second quarter, the cost of risk increased by 5.6 percent from the same period last year, which Machenil attributed to the acquisitions the bank had made.
Despite a volatile quarter for the euro zone - with Greece teetering on the edge of the single currency bloc - the CFO said he saw "green shoots" in the region, and was confident about the global economic outlook.
"What we do see is that we have green shoots, we will see if they materialize further going forward. And for the rest we are very focused on executing our industrial plan, as you can see from the results," Machenil added.
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