BNP Paribas Wealth and Asset Management unit has registered a fall in its Q2 pre-tax income amid Covid-19 induced market turmoil. The group-wide performance was also dismal which was cushioned by a boost from fixed income trading.
Wealth management highlights
The division’s pre-tax income was €102m for the three-month-period ending 30 June 2020, a 42% decline from €177m a year ago.
Revenues of €678m in Q2 2020 were 15% lower than the previous year.
The bank said that the performance was affected by the “impact of the low-interest-rate environment on net interest income in Wealth Management, unfavourable market valuation effects on Asset Management revenues, and the very strong impact of the health crisis on the Real Estate business”.
Operating expenses dropped 5% to €601m, driven by fall in Real Estate Services costs and transformation measures mainly in Asset Management.
Insurance and Wealth and Asset Management’s assets under management were €1.08trn at the end of June 2020.
Assets under management broke down as follows: Asset Management (€456bn including €29bn from Real Estate Investment Management), Wealth Management (€377bn), and Insurance (€252bn).
Net asset inflows of €10.8bn were driven by Wealth Management, mainly from large clients in Europe and Asia.
Asset Management also recorded good inflows, revealed the bank in its earnings statement.
Corporate and Institutional Banking
The unit’s revenues increased 33% year-on-year to €4.12bn in Q2 2020.
Global Markets was the main growth driver with revenues surging 63%.
Fixed Income, Currencies and Commodities (FICC) revenues increased sharply to €2.01bn in Q2 2020 from €793m a year earlier. Growth was strong across primary and credit markets, rates, forex as well as emerging markets.
Revenues in Corporate Banking and Securities Services increased 15% and 4%, respectively.
Key metrics at the group
At a group level, the banking group registered a pre-tax income of €3.13bn in Q2 2020, down7% from €3.38bn in Q2 2019.
Net income attributable to equity holders at the group dropped 7% to €2.3bn from €2.47bn over the period.
The lender set aside €1.45bn in Q2 as loan loss provisions, compared with €621m last year.
However, the group’s revenues increased 4% to €11.67bn from €11.22bn.
The CET 1 ratio, a key measure of strength, increased to 12.4% from 11.9% a year ago.