The euro zone's biggest bank, led by company veteran Jean-Laurent Bonnafe, has made its investment banking division a key driver of its growth plan and sees markets activities expand annually by more than 7.5% on average over the 2021-2025 period.
The French bank reported a 20% fall in revenue from fixed income, currencies and commodities (FICC) trading, significantly underperforming rivals on Wall Street, where trading revenue declined by about 3% on average amid less volatile markets.
In contrast, Deutsche Bank (DBKGn.DE), which also reported quarterly results on Thursday, produced a 7% increase in fixed income and currencies trading revenue.
BNPP said it was more exposed to the Europe, Middle-East and Africa region, where it made 60% of its FICC sales in 2023, and where the fall in activity was much more acute than in the United States.
"Investors may nitpick the CIB (investment bank unit) performance with another FICC miss and 20% year-on-year decline in the FICC revenue base," Jefferies said in a note, adding that BNPP showed good cost control.
Most analysts were impressed by BNP Paribas' control on costs, which fell at a faster pace in the first quarter than revenues, driving earnings.
JPMorgan said the bank had showed a "solid start of the year for revenue" while Citi said the bank's operating profit showed "progress on cost savings."
BNPP said group net income fell by 2.2% to 3.10 billion euros ($3.31 billion), beating the 2.4 billion expected on average by 19 analysts polled by the company.
Overall revenue fell 0.4% to 12.5 billion euros but topped the 12.2 billion expected by analysts.
Provisions for underperforming loans stood at 640 million, below the 819 million euros expected by analysts.
BNPP's shares were edging up by 0.5% at 0825 GMT, valuing the group around 78 billion euros.
It also gave a new target for group revenue, saying it expected it to exceed its 2023 distributable sales of 46.9 billion euros by more than 2%, and that the effects of cost cutting flagged previously would begin from the second quarter.
However, revenue was flat or falling in most of the bank's businesses in the first quarter.
FRENCH RETAIL MARKET
Commercial and Personal Banking revenue rose 1% to 4.2 billion euros - above analyst estimates - but the net interest margins in its French business dropped sharply, BNPP said.
In France, its net interest income, the difference between what lenders earn on loans and pay out for deposits, fell by 8% in the first quarter as the cost of inflation hedging instruments offset a rise in net interest income, the bank said.
The French retail market, which is typically less profitable than in other European countries because of rules on mortgage and savings accounts, has proven difficult for BNPP.
The bank announced the abrupt departure last month of the head of that business, Marguerite Berard, who was seen by some industry sources as a potential successor to Bonnafe.
BNPP's corporate and investment banking business revenue fell 4%.
Its global banking revenue rose 6.1% thanks to a jump in capital markets activities such as helping companies issue bonds.
($1 = 0.9359 euros)
