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BNP Paribas: Trading bolsters the bank, but for how long?

After a year when credit markets propped up the financial performance of continental Europe’s biggest bank, concern remains about its credit risks.

Jean-Laurent Bonnafé
Jean-Laurent Bonnafe, chief executive officer of BNP Paribas

Thanks to its central bankers, the bond market has been one of the few sectors in Europe that has thrived under Covid-19. This has helped no continental European bank more than BNP Paribas.

Earnings in its corporate and institutional bank rose 14% in the first nine months of 2020. By contrast, its retail divisions suffered steep falls in earnings due to rising credit losses, leading the bank to pencil in a drop of pre-tax profit of between 15% and 20% in 2020.

The CIB has done particularly well on the markets side. Corporate banking has had a slightly harder time, as a spate of frauds in commodity trade finance precipitated the closure of that business in Switzerland.

However, cost cuts planned on the eve of the crisis have since mitigated the increase in expenses associated with growing business volumes across both divisions, leading to higher CIB profits.

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