BNP Paribas' corporate and investment banking (CIB) business outperformed its main competitors in the second quarter of 2020.
Higher net banking income
Despite the health crisis and the two months of confinement, BNP Paribas' net banking income rose by 4% to 11.7 billion euros, and its operating expenses fell by 1.3%, resulting in a sharp rise in gross operating income.
These encouraging figures are largely due to the excellent results of its investment bank. This enabled BNP Paribas to achieve half of its total performance, bringing in 1.6 billion euros.
While the results of the Group's other two divisions, "Domestic markets" and "International Financial Services", fell by 21.8% and 33.4% year-on-year, those of the investment bank (the "Corporate and institutional banking" division) rose by 50%.
BNP Paribas' main competitors are not doing so well. Spain's Santander Group posted losses of 11.1 billion euros in Q2, while Germany's Deutsche Bank barely limited the damage, with a loss of 77 million euros.
An unstable economic context
Despite BNP Paribas' good results, the context is particularly changing, and the impact of the health crisis is still very much with us.
As a result, the cost of risk rose by 826 million euros year-on-year. This figure includes both unproven risks, provisioned for prudence (329 million euros), and proven payment incidents (497 million euros). Some specialists believe that it would be necessary to support companies' equity capital by creating new schemes, to avoid payment incidents that put both companies and banks in difficulty.
Another sign that the Covid-19 epidemic is having a significant impact is that earnings from retail banking activities fell by 25.2% in Belgium, 28.8% in Italy and 43.4% in France.
As a result, the BNP Paribas Group remains cautious and estimates that its net income will nevertheless be down by 15-20% for 2020.