BNP Paribas's first-quarter sales beat market expectations as trading business at the euro zone's biggest bank outperformed most of its peers, while it started to reap the benefits from rising interest rates.
BNP's quarterly profit more than doubled in the first quarter from a year earlier, bolstered by gains from its much-anticipated sale of its US retail division.
This allowed the bank to beef up its capital and liquidity buffers, at a time when European lenders strive to restore confidence in a sector battered by turmoil.
Revenue of just over €12 billion in the period exceeded the company's compiled consensus of €11.7 billion as net interest income ticked higher in the usually difficult French retail market, the bank said today.
Analysts at Deutsche Bank called BNP's quarterly report "solid".
"These results prove the resilience and diversification of BNP and should be received well by the market in our view," they said before market open.
Royal Bank of Canada analysts said the results pointed to a strong performance at BNP's trading arm and good cost control.
In securities trading, revenue edged down 1.8% but still performed better than some peers including Deutsche Bank, which saw fixed-income trading decline by 17% in the first quarter.
At US bank Goldman Sachs, first-quarter sales from fixed income, currency and commodities (FICC) trading, usually a bright spot, plunged 17% to $3.93 billion, while equity trading revenue sank 7% to $3.02 billion.
BNP's FICC trading over the period was up 9%.
The sale of Bank of the West, which closed in February, yielded about €2.95 billion in capital gains, the French lender said, helping BNP Paribas shore up its CET 1 ratio - a key measure of financial strength - to 13.6%, up from 12.3% in the previous quarter.
The first quarter net income amounted to €4.44 billion, in line with expectations, and up from €1.84 billion a year earlier.
The group's liquidity ratio was also up by 10 percentage points over the same period, to 139%, while the cost of risk - money put aside for failing loans - stood lower than expected at €642m.
BNP's first-quarter sales were up by 1.4% from a year earlier to €12.03 billion, driven by its investment bank and its commercial and retail branch.
The group's global markets division, which bolstered BNP's results in 2022, saw its sales edge down by 1.8%, in spite of continued growth in FICC trading (fixed income, commodities, currencies).
BNP's commercial and retail banking's sales in France grew faster than expenses in the first quarter, driven by the rise in interest rates charged on mortgages following tighter monetary policy.
French banks usually lag behind their German and Italian peers because of stringent regulations that cap the rates at which lenders provide mortgages, which are mostly on a fixed rate basis.
BNP's operating expenses also jumped 23% in the first quarter from the previous quarter, notably propelled by a nearly €900m contribution to the Single Resolution Fund, an industry-funded safety net.
Restructuring costs worth €236m at BNP Paribas' consumer finance division, where it is cutting 921 positions through voluntary departures and internal mobility, also weighed on expenses.
BNP Paribas said it was on track to deliver "strong growth" in 2023 distributable earnings per share.
It confirmed its 2025 targets, including a return on tangible equity (ROTE) of around 12% by 2025 and an average annual growth in net income of more than 9% between 2022 and 2025.
Its €5 billion share buyback programme will proceed as planned, it said.
The first tranche of €2.5 billion was approved in March, a sign analysts deemed reassuring as it took place shortly after the collapse of Credit Suisse.
