BNP Paribas Debt Trading Losing Run Extended in Quiet Market

(Bloomberg) -- The bond-trading gloom continues at BNP Paribas SA. France’s biggest lender joined Deutsche Bank AG in posting steep declines for fixed-income trading in the third quarter, complicating Chief Executive Officer Jean-Laurent Bonnafe’s plans to meet 2020 targets.

Key Insights

• The 15 percent drop in revenue from buying and selling bonds, currencies and commodities in the three months through September was in line with analysts’ estimates and similar to what happened at BNP’s German rival. But it extends that business’s losing streak into a sixth straight quarter.
• Including less-than-estimated revenue from equity trading, which rose just 4 percent, BNP’s global markets business posted its second-worst quarterly revenue since early 2016. The firm blamed a lackluster financial market environment in Europe.
• Analysts may focus on the quality of other numbers: while net income rose 4 percent to about 2.1 billion euros, slightly ahead of estimates, the bank said that excluding exceptional items it was little changed.
• More positively the bank’s core tier 1 ratio -- a key metric -- is edging closer to its target range after the sale of a stake in First Hawaiian bank.

Market Reaction

• European banking stocks are trading at depressed levels because of a mix of geopolitical risks, mounting worries about economic growth and low rates. BNP Paribas is no exception: its shares have lost almost a quarter of their this year.