Business diversification has proved to be a crucial asset for BNP Paribas over the past year. Relatively intact operations such as fixed income trading have provided vital props to its financial performance compared with local rivals that had made deeper cuts to those businesses pre-Covid. Post-pandemic the bank has become even more important as a financier to its western European clients. It has also moved earlier than other top-tier global banks to burnish its sustainability credentials.
However, corporate and institutional banking is not the only string to chief executive Jean-Laurent Bonnafé’s bow. For example, it is the top-ranking European Union-based bank in the western Europe section of Euromoney’s global private banking and wealth management survey. Total assets under management in wealth, asset management and insurance reached €1.2 trillion by the end of March 2021.
In its retail networks, the bank granted more than 120,000 state-guaranteed loans in 2020. It has also made progress in digital banking. The number of customers active on its mobile apps in its core western European markets reached 5.3 million in the first quarter of 2021, up almost a third year on year. Growth in client numbers has accelerated over the past year at Consorsbank, its German online bank with a focus on retail brokerage.
An awareness of capital and above all costs is vital. The French bank posted a 3.6% drop in costs in 2020 and it committed to keeping its cost base down, despite a jump in business volumes in the first part of 2021. On a pre-provision basis, it posted income growth of 6.2% in 2020, while its return on equity was also relatively resilient at 7.6%, rising to 10.6% in the first quarter.
BNP Paribas’ pre-tax profit suffered less severely in 2020 than more retail-focused rivals, reflecting the generally heavier impact of Covid-19 on smaller businesses. Overall, its asset quality has so far proven robust. And although the full damage from Covid is yet to be seen, an earlier shift towards higher quality borrowers in Italy – the riskiest western European country in which BNP Paribas has a large-scale retail banking operation – has only added to its confidence.