The French lender reported net income of 1.3 billion euros ($ 1.42 billion) for the first three months of the year, down 33% from 1.9 billion euros there. a year ago, according to results released Tuesday.
“The first quarter started very well, then towards the end, it was impacted by the Covid-19, in particular around three aspects which affected the result,” Lars Machenil, chief financial officer of BNP Paribas, told CNBC.
“The first is, of course, an increase in the cost of risk. So we increased our risk costs to half a billion dollars, and then there are two one-off events on the front line, ”he told Charlotte Reed of CNBC. .
The bank has set aside € 502 million for possible loan losses following the ongoing pandemic. It also recorded a loss of $ 184 million in revenue due to new dividend restrictions and a € 384 million drop in market valuation.
Other key measures from the last quarter include:
- Turnover stood at 10.9 billion euros compared to 11.1 billion a year ago;
- Operating expenses amounted to 8.2 billion euros compared to 8.5 billion euros a year earlier;
- The CET 1 ratio fell to 11% compared to 11.7% a year ago.
Revenues from its international financial services unit fell more than 5% from a year ago, as the recent drop in stock valuations had an impact on the value of its assets under management.
Recent market volatility has also affected the bank’s equity and basic services business. Turnover fell to -87 million euros from 488 million euros a year ago.
In its domestic market, France, retail trade revenues were down 4.4% from a year ago. BNP Paribas managed to keep almost 90% of its branches open in March despite the health crisis.
“The recovery will be gradual,” Machenil told CNBC, suggesting that the economy was unlikely to return to pre-virus levels before the end of the year.
“In our scenario, the return to a level of GDP as it was in 2019 will not be reached before 2022,” he said, referring to his internal market.
BNP Paribas expects its net profit to decrease by 15 to 20% for 2020 compared to 2019, given the current economic crisis and provided that there are no new developments in this context.