Commercial and investment banking: BNP earns high returns from stable businesses
The bank hasn’t pushed too hard into marquee investment banking businesses; Shareholders stand to benefit from a low cost-income ratio and high returns
|BNP Paribas’ CIB profit in 2010
Waiting to question Baudoin Prot, chief executive of BNP Paribas, on the bank’s 2010 earnings call in February, the analyst had clearly been getting frustrated, though not with the results themselves.
"You have gained market share in CIB during the crisis: it’s very important. No other European bank except Barclays did the same. However it’s buried on slide 36. It’s one of your major growth drivers, probably, going forward. You’re investing a lot of money but somehow you get the feeling it doesn’t get the priority it should have."
Prot assured the questioner of the importance of the commercial and investment bank that accounts for roughly one-third of the group’s capital and earnings. He could hardly do otherwise. The division earned a €5 billion profit in 2010 almost double what it earned in 2005.
It is the most efficient large investment bank in the business, with a cost-income ratio for 2010 of 54%. It has maintained this while investing in the US and Asia last year. Closer to its home base, having ranked third for 2008 and second in 2009, it finally hit the top spot as lead bookrunner of all euro-denominated DCM deals in 2010, ahead of Deutsche Bank, HSBC and Barclays Capital.