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* Barclays Q1 profit up 160%, BNPP up 38%
* Equities spike offsets fixed income decline
* Banks benefit from lower bad loan charges
* Barclays shares fall 5% on cost concerns
By Lawrence White, Matthieu Protard and Iain Withers
LONDON/PARIS, April 30 (Reuters) - Barclays and BNP
Paribas reported bumper first-quarter profits on
Friday, as an equities trading boom offset a slump in demand for
fixed income products, showing the value of having a broad-based
banking business.
The topsy-turvy trading results for two of Europe's biggest
remaining investment banks highlighted how volatile markets amid
the global pandemic caused seesawing demand for different asset
classes.
Barclays' January-March profit more than doubled to 2.4
billion pounds from 923 million pounds a year ago, while its
French rival said net profit rose 37.9% to 1.77 billion
euros($2.14 billion), both beating analyst forecasts.
But a relatively sluggish performance by their traditionally
strong fixed income trading businesses lagged rivals, including
Deutsche Bank, JP Morgan and Goldman Sachs
.
BNP Paribas shares fell 1%, while Barclays shares fell 5% as
analysts noted its rising costs, which the bank said was partly
due to paying traders more for their strong performance.
Both Barclays and BNP benefited from lower than expected
charges for bad loans, as government support measures in their
domestic economies helped to defer the economic pain from the
COVID-19 pandemic.
Barclays took an impairment charge of just 55 million pounds
compared with 2.1 billion pounds in the same period a year ago,
while BNP Paribas said its similar measure fell 37% to 896
million euros.
Barclays' approach contrasted however with bullish moves by
rivals such as HSBC and Lloyds to release big
chunks of provisions set aside for potential soured loans.
European banks have generally been more cautious on
provisioning for bad loans than U.S. peers such as JPMorgan,
which earlier this month released more than $5 billion.
FICC THIN
The bumper equities performances from the two banks partly
made up for thin returns from fixed income, currencies and
commodities (FICC), where client demand slumped.
Barclays reported a 35% decline in FICC income, while at BNP
Paribas it fell 16% as interest rate and foreign
exchange-related products in particular fell out of favour.
"We would have liked to do better than we did on FICC, we
take a prudent approach to risk," Barclays CEO Jes Staley told
reporters.
Rival banks which have already published first-quarter
earnings seemed to dodge the fixed income decline, with Deutsche
Bank's fixed-income and currency sales revenue
increasing 34% while Goldman Sachs reported a 31% rise in
such trading.
For Barclays and BNP Paribas, the equities trading boom
coincided with a flood of corporate listings in Europe. The
turnaround in equities was timely for BNP Paribas in particular,
after earnings in the first quarter a year ago were wiped out by
losses related to dividend-linked derivatives as European
companies suspended payouts.
The listing bonanza bolstered Barclays' banking advisory
business within its investment bank, as income rose 35% to 859
million pounds from fees for advising on equity fundraisings.
The generally strong performance in the past few years from
Barclays' investment bank has vindicated Staley's backing of the
business, during a period when activist shareholder Ed Bramson
urged him to cut it back.
($1 = 0.7175 pounds)
($1 = 0.8256 euros)
(Reporting By Lawrence White and Iain Withers in London and
Matthiue Protard in Paris, additional reporting by Marc Angrand
in Paris, editing by Anna Irrera, Rachel Armstrong and Jane
Merriman)
