FINANCIALS: BNP Results 24-Jul: French Politics & Loan Losses

BNP (BNP: Baa1/A-/A+) reports 2Q24 on 24-Jul. French politics has dominated recent newsflow (and the equity performance) but spreads have broadly tracked the sector, even after the positive 1Q24 loan loss performance.

• Previous results (25-Apr) showed an at least in line performance, certainly better than the miss at 4Q23 stage. Commercial & personal banking did well, the IB slightly less so and there were no real guidance upgrades, in our view. Loan losses were better than expected.
• M&A and politics: BNP bought 20% of Ageas in Mar-24 and, perhaps more importantly, French President Macron has been making the case of European big bank mergers – we see BNP as more of a buyer, than seller, in this game. The French political situation made asset prices of the French banks move significantly during the period, but this appears a slightly more stable situation now, though a bank tax may be imminent. Outside of these, BNP’s exploring an asset mgmt JV with Axa, invested more in its payments JV with BPCE and the Paris Olympics start in a week.
• BNP’s spreads have broadly tracked €IG banks since the last results but have widened a couple of bps in the last week. The equity has underperformed (c.11%) but that’s actually less bad than it was a month ago after the French snap election call.
• Revenue estimates are up very marginally since last time, EPS is up 7% for this year as that loan loss performance was worked into models.

Results are due 0600 (London time) with a 1300 conf call at: https://edge.media-server.com/mmc/p/txkwjnp7/