PARIS Profit at BNP Paribas (BNPP.PA) rose by more than forecast in the first quarter, driven by fixed income and equities trading and raising expectations of a similar performance by rivals such as Societe Generale (SOGN.PA).
France's biggest bank said on Wednesday first-quarter net income rose to 1.89 billion euros ($2.1 billion), beating the average profit estimate of 1.6 billion in a Reuters poll and lifting its shares by 0.5 percent, while SocGen rose 1.3 percent and Credit Agricole (CAGR.PA) 0.9 percent.
"There was a good performance in the investment banking division and a positive surprise regarding their risk provisions," Benoit de Broissia of Keren Finance, which owns BNP stock, said. The results augured well for those of SocGen, which are due on Thursday, he added.
Results from France's two biggest banks by market capitalization come just before the May 7 French presidential runoff vote, where centrist Emmanuel Macron is facing far-right rival Marine Le Pen who has vowed to take France out of the euro and European Union if elected.
French bank stocks rallied after the first round of the election bolstered investor and opinion poll projections that Macron, seen as a business-friendly candidate, would win, with BNP Paribas shares up around six percent since then.
BNP Paribas shares are up by around 10 percent so far in 2017, in line with similar gains on the STOXX Europe 600 Banking index .SX7P and on France's benchmark CAC-40 .FCHI.
BNP Paribas outperformed its European rivals in reporting a 33.1 percent revenue rise in its global markets division that includes debt and equities trading, compared to a 4 percent increase on average at peers such as Deutsche Bank (DBKGn.DE), Credit Suisse (CSGN.S), Barclays (BARC.L) and UBS (UBSG.S), according to Reuters calculations.
BNP Paribas cited a "significant pick-up in client business compared to a very challenging market environment" a year ago.
"The CIB (corporate and institutional bank) rebounded strongly from a low base in the first quarter of last year," BNP Paribas chief executive Jean-Laurent Bonnafé said.
U.S. and European investment banks have benefited from a jump in markets-related revenue following U.S. rate hikes, as well as from signs of a European economic recovery and some progress in Britain's plans to leave the EU.
Fixed income, currency and commodities trading revenue at BNP Paribas rose 32 percent to 1.17 billion euros, compared to a 24 percent rise across the big five U.S. banks, according to IFR calculations.
BNP Paribas also outpaced European and U.S. rivals in equities trading, which rose 36 percent, while its international financial services division was another big contributor, with pre-tax income rising 16 percent to 1.2 billion euros.
(Additional reporting by Sudip Kar-Gupta; editing by Muralikumar Anantharaman and Alexander Smith)