Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BNP Paribas (BNPQF, Financial) reported a strong net income of EUR 2.9 billion for Q3 2024, marking a 5.9% increase year-on-year.
- The Corporate and Institutional Banking (CIB) division showed robust growth, with revenues up 9% year-on-year, driven by strong performances in global markets.
- The company achieved EUR 655 million in cost savings by the end of September 2024, with a target of EUR 1 billion for the full year, demonstrating effective cost management.
- BNP Paribas (BNPQF) maintained a strong financial structure with a common equity tier 1 ratio of 12.7%, well above regulatory requirements.
- The Insurance and Asset Management segments within the Investment and Protection Services (IPS) division performed well, with revenues up 4.9% driven by strong asset management and insurance growth.
Negative Points
- The Arval division faced challenges due to the normalization of used car prices, which is expected to continue impacting results until the end of 2025.
- The Belgian market experienced significant disruption, with intense competition on loans and deposits affecting margins.
- The Personal Finance segment showed negative growth, although the core perimeter was up slightly by 1.5% year-on-year.
- The French and Belgian banks faced headwinds from high short-term rates, impacting deposit volumes and margins.
- The company's exposure to the UK motor finance market, although limited, could still pose risks given recent market developments.
Q & A Highlights
Q: The market was disappointed with the Equities and Prime Services Division's performance. Is there higher seasonality than anticipated in Q3, and how should we view EPS post-restructuring?
A: Lars Machenil, CFO: In Q2, all stars aligned, leading to strong demand across domains. Our activity is mainly European-based, and the dynamics differ from those across the Atlantic. We are gaining market share in Europe, and the base should be viewed in terms of volumes in the zone.
Q: Can you elaborate on the dynamics of the French leader and the impact of the (inaudible) on the IPS division?
A: Jean-Laurent Bonnafe, CEO: The French Bank is more of a commercial, private banking type. The negative headwinds from deposit pressures will vanish next year, improving the situation. Regarding (inaudible), it's too early to comment on cost synergies as the deal is not yet closed.
Q: How does the recent UK motor finance development impact BNP, and what are the benefits of the Apollo partnership?
A: Lars Machenil, CFO: We have minimal exposure in the UK motor finance market. Regarding Apollo, private credit is a continuum with public financing, and we are active across the spectrum, teaming up with players like Apollo.
Q: Could you provide insights into the cost savings expected in Q4 and the update on the 2026 outlook?
A: Lars Machenil, CFO: We are on track to achieve the remaining EUR1 billion in savings for the year. Jean-Laurent Bonnafe, CEO: We will provide an update on the term plan, including the redeployment of Bank of the West proceeds, but not all details on (inaudible) will be available.
Q: Can you comment on the lack of organic capital generation this quarter and the timing of the eurozone retail banking revenue rebound?
A: Lars Machenil, CFO: The main factor was the originate-to-distribute delay, with other typical moving parts. The pivot in eurozone retail banking revenues will be evident in Q4, with headwinds tapering off.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
