Reliability Pays for BNP Paribas Investors -- Heard on the Street

France's biggest bank is polishing its reputation as one of Europe's most reliable. BNP Paribas said first-quarter profit was up 4% Wednesday, driven partly by the best recovery in investment banking and securities trading revenue seen among European banks so far.

BNP Paribas almost doubled pretax profit in its corporate and investment banking arm despite higher costs as better revenue meant more money for banker bonuses. Its domestic retail and international retail and commercial businesses also saw decent revenue growth with more limited cost increases.

Other big European, Swiss and British banks have reported a good revenue recovery in their investment bank and markets businesses in their local currencies. However, the strengthening dollar over the past year has meant their numbers looked less impressive in dollar terms.

BNP Paribas now leads the European pack with 15% revenue growth across its investment banking businesses compared with the first quarter of 2016 in dollar terms ahead of Credit Suisse at slightly more than 10%. BNP Paribas' bond, rates and currencies trading revenue recovery was in line with the Swiss bank, but it did better in other areas. In equities trading and hedge-fund services, it is the only European bank so far to have achieved strong growth. It also outgrew U.S. rivals here.

This is promising because the bank has pledged to grow revenue and take market share in investment banking to hit higher return targets in this business under its strategic plan set out in February.

Its promise of group level returns on equity of 10% isn't spectacular but does look likely to be met. With France's next president looking likely to be less disruptive than feared last month as well, BNP Paribas' share price rebound should eliminate more of its 14% discount to forward book value.

Write to Paul J. Davies at paul.davies@wsj.com

(END) Dow Jones Newswires

May 03, 2017 08:04 ET (12:04 GMT)