© Reuters. FILE PHOTO: Staff are seen at Barclays financial institution places of work within the Canary Wharf monetary district in London
By Lawrence White, Matthieu Protard and Iain Withers
LONDON/PARIS (Reuters) – Barclays (LON:) and BNP Paribas (OTC:) reported bumper first-quarter earnings on Friday, as an equities buying and selling increase offset a stoop in demand for mounted earnings merchandise, displaying the worth of getting a broad-based banking enterprise.
The topsy-turvy buying and selling outcomes for 2 of Europe’s greatest remaining funding banks highlighted how risky markets amid the worldwide pandemic brought on seesawing demand for various asset lessons.
Barclays’ January-March revenue greater than doubled to 2.4 billion kilos from 923 million kilos a 12 months in the past, whereas its French rival mentioned web revenue rose 37.9% to 1.77 billion euros($2.14 billion), each beating analyst forecasts.
However a comparatively sluggish efficiency by their historically sturdy mounted earnings buying and selling companies lagged rivals, together with Deutsche Financial institution (DE:), JP Morgan and Goldman Sachs (NYSE:).
BNP Paribas shares fell 1%, whereas Barclays shares fell 5% as analysts famous its rising prices, which the financial institution mentioned was partly on account of paying merchants extra for his or her sturdy efficiency.
Each Barclays and BNP benefited from decrease than anticipated fees for dangerous loans, as authorities help measures of their home economies helped to defer the financial ache from the COVID-19 pandemic.
Barclays took an impairment cost of simply 55 million kilos in contrast with 2.1 billion kilos in the identical interval a 12 months in the past, whereas BNP Paribas mentioned its related measure fell 37% to 896 million euros.
Barclays’ method contrasted nonetheless with bullish strikes by rivals similar to HSBC and Lloyds (LON:) to launch huge chunks of provisions put aside for potential soured loans.
European banks have usually been extra cautious on provisioning for dangerous loans than U.S. friends similar to JPMorgan (NYSE:), which earlier this month launched greater than $5 billion.
The bumper equities performances from the 2 banks partly made up for skinny returns from mounted earnings, currencies and commodities (FICC), the place consumer demand slumped.
Barclays reported a 35% decline in FICC earnings, whereas at BNP Paribas it fell 16% as rate of interest and international exchange-related merchandise specifically fell out of favour.
“We’d have preferred to do higher than we did on FICC, we take a prudent method to threat,” Barclays CEO Jes Staley advised reporters.
Rival banks which have already revealed first-quarter earnings appeared to dodge the mounted earnings decline, with Deutsche Financial institution’s fixed-income and forex gross sales income rising 34% whereas Goldman Sachs reported a 31% rise in such buying and selling.
For Barclays and BNP Paribas, the equities buying and selling increase coincided with a flood of company listings in Europe. The turnaround in equities was well timed for BNP Paribas specifically, after earnings within the first quarter a 12 months in the past have been worn out by losses associated to dividend-linked derivatives as European firms suspended payouts.
The itemizing bonanza bolstered Barclays’ banking advisory enterprise inside its funding financial institution, as earnings rose 35% to 859 million kilos from charges for advising on fairness fundraisings.
The commonly sturdy efficiency prior to now few years from Barclays’ funding financial institution has vindicated Staley’s backing of the enterprise, throughout a interval when activist shareholder Ed Bramson urged him to chop it again.
($1 = 0.7175 kilos)
($1 = 0.8256 euros)
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