Friday 28 October 2016 3:41 pm

Bond trading boost for BNP Paribas after posting impressive third quarter returns

BNP Paribas' (BNPP) share price was flat after announcing "strong" third quarter results that were boosted by investors keen to snaffle up bonds.

Net profits were €1.9bn, up 3.3 per cent and around €200m ahead of consensus expectations.

"Fixed Income was the main driver of the quarter delivering a very good performance in all business activities as compared with a lacklustre quarter last year in rates and forex," said BNPP boss Jean-Laurent Bonnafe.

Bonnafe added that BNPP was in first place when it came to euro denominated bond issuances and seventh place for bonds issued in other currencies.

(Share prices re-based to 100 on 1 January 2016)

Lorraine Quoirez, an analyst at UBS said that net profits were 15 per cent ahead of expectations for the third quarter and added: "This is a solid set of result."

Analysts at S&P drew similar conclusions: "Overall, the performance continues to highlight the effectiveness of BNP's integrated and diversified business model, good cost control and prudent risk management, in our opinion."

BNPP, which was slapped with an $8bn fine by the United States in 2014 for breaching sanctions, differs from both local and international competitors in that it is not facing further major investigations by the US authorities.

This is a key driver as to why, unlike its local competitors, its share price has marginally gained ground in the year to date.

BNPP raised its common equity tier one ratio – effectively a measure by which a bank can absorb any future losses – by 0.3 per cent. On the face of it this may not appear a lot, it is a good indication to investors in the bank that it is moving in the right direction.