BNP Paribas, France's biggest bank, beat analyst expectations with a rise in first quarter profit following its sale of property group Klepierre and increased sales in fixed-income trading revenue.
The March sale of its 28.7 percent stake in Klepierre to Simon Property Group added €1.8n to the bottom line and helped bolster BNP Paribas' capital for funding requirements as well as boost the bank's first quarter net income, which rose by 9.6 percent to €2.87bn from €2.62bn the previous year, and subsequently helped it beat analyst expectations of €2.6bn.
New CEO, Jean-Laurent Bonnafe also highlighted the group's increase in Tier 1 capital ratio, as well as a positive outlook for France.
The Paris-based bank also revealed that its end-March core Tier 1 capital ratio, a key measure of a bank's ability to withstand losses in the form of a cash cushion, had risen to 10.4 percent under a Basel 2.5 methodology from 9.6 percent in the previous quarter. Bonnafe reiterated that it will reach a 9 percent in common equity Tier 1 ration under Basel III capital standards by the end of the year, as the bank continues to pare down its balance and assets.
"Solvency is strengthened, the size of the balance sheet has been reduced and the target of a Basel III fully-loaded 9 percent solvency ratio by 1st January 2013 will make BNP Paribas one of the most strongly capitalised of the leading global banking services groups," said Bonnafe in a statement.
BNP Paribas has ploughed ahead with trimming back its balance sheet, by selling loan assets and sovereign debt and just recorded €142m of losses on sovereign bond sales in the first quarter this year. However, profit fell 22 percent to €2.04bn in the first quarter, which excluded one-time items, due to the bank having an €843m charge stemming from a rule that requires banks to book a loss if the price of their debt rises. It also recorded 142 million euros of losses on sovereign bond sales.
"Eighty percent of the deleveraging is done," said Bonnafe in an television interview with Reuters Insider. "We can close everything by the summer."
The Group's cost of risk, which was €945m or 55 basis points of outstanding customer loans, edged up only 2.8 percent compared to the first quarter 2011 and still remains low, "illustrating the
good risk controls," the bank said.
Bonnafe also added that he thought France would avoid a recession this year and that both the country's final presidential candidates, Nicholas Sarkozy and Francois Hollande were committed to tackling the public deficit.
BNP Paribas shares fell 0.4 percent in early Paris trading to change hands at 28.975.