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Tag: BNP Paribas SA

  • China’s economy slows to 4.8% annual growth in July-September, hit by tariffs and slack demand

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    HONG KONG (AP) — China’s economy expanded at the slowest annual pace in a year in July-September, growing 4.8%, weighed down by trade tensions with the United States and slack domestic demand.

    The July-September data was the weakest pace of growth since the third quarter of 2024, and compares with a 5.2% pace of growth in the previous quarter, the government said in a report Monday.

    In January-September, the world’s second largest economy grew at a 5.2% annual pace. Despite U.S. President Donald Trump’s higher tariffs on imports from China, its exports have remained relatively strong as companies expanded sales to other world markets.

    China’s exports to the United States fell 27% in September from the year before, even though growth in its global exports hit a six-month high, climbing 8.3%.

    Exports of electric vehicles doubled in September from a year earlier, while domestic passenger car sales climbed 11.2% year-on-year in last month, down from a 15% rise in August, according to data released last week.

    Tensions between Beijing and Washington remain elevated, and it’s unclear if Trump and Chinese leader Xi Jinping will go ahead with a proposed meeting during a regional summit at the end of this month.

    Xi and other ruling Communist Party members are convening one of China’s most important political meetings for the year on Monday, where they will map out economic and social policy goals for the country for the next five years.

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    The economy slowed in the last quarter as the authorities moved to curb fierce price wars in sectors such as the auto industry due to excess capacity.

    China is also facing challenges including a prolonged property sector downturn which has been affecting consumption and demand.

    Data released Monday showed China’s residential property sales fell 7.6% by value in the January-September period from a year earlier. Industrial output rose 6.5% year-on-year last month, the fastest pace since June, but retail sales growth slowed to 3% from the year before.

    Ratings agency S&P estimates nationwide new home sales will fall by 8% in 2025 from the year before and by 6% to 7% in 2026.

    The World Bank expects China’s economy to grow at a 4.8% annual rate this year. The government’s official growth target is around 5%.

    Chinese shares rose Monday, with the Hang Seng in Hong Kong climbing 2.3% and the Shanghai Composite index up 0.5%.

    A National Bureau of Statistics spokesman said China has a “solid foundation” to achieve its full-year growth target, but cited external complications — including trade friction with the U.S. and other trading partners and protectionist policies in many countries — as reasons for the slowdown.

    China’s stronger economic growth in the first half of this year gives it “some buffer” to achieve the growth target, said Lynn Song, chief economist for Greater China at ING Bank.

    However, spending during China’s eight-day Golden Week national holiday in October was “mildly disappointing,” reflecting sluggish consumer confidence and demand, Morningstar analysts said in a note this month.

    Investments in factories, equipment and other “fixed assets” fell 0.5% in the last quarter, underscoring weakness in domestic demand. It also was reflected in prices, which have continued to fall both at the consumer and the wholesale level.

    There’s room for the government to do more, Song said.

    “(We) are looking to see if there will be further measures to support consumption and the property market, as the impact from previous policies begins to weaken,” Song said.

    Economists are also expecting a rate cut by China’s central bank by the end of the year, which could encourage more spending and investment.

    China’s economy is also likely to further slow in 2026, said Jacqueline Rong, chief China economist at BNP Paribas, as property investment in the country “looks (to) continue falling” and the AI boom, which helped lift China’s economy and fueled a stock market rally, is expected to moderate.

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  • France’s biggest lender says there are ‘too many’ European banks as UniCredit moves on Commerzbank

    France’s biggest lender says there are ‘too many’ European banks as UniCredit moves on Commerzbank

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    A sign on the exterior of a BNP Paribas SA bank branch in Paris, France, on Friday, Aug. 2, 2024.

    Bloomberg | Bloomberg | Getty Images

    France’s BNP Paribas on Thursday said there are simply too many European lenders for the region to be able to compete with rivals from the U.S. and Asia, calling for the creation of more homegrown heavyweight banking champions.

    Speaking to CNBC’s Charlotte Reed at the Bank of America Financials CEO Conference, BNP Paribas Chief Financial Officer Lars Machenil voiced his support for greater integration in Europe’s banking sector.

    His comments come as Italy’s UniCredit ups the ante on its apparent takeover attempt of Germany’s Commerzbank, while Spain’s BBVA continues to actively pursue its domestic rival, Banco Sabadell.

    “If I would ask you, how many banks are there in Europe, your right answer would be too many,” Machenil said.

    “If we are very fragmented in activity, therefore the competition is not the same thing as what you might see in other regions. So … you basically should get that consolidation and get that going,” he added.

    Milan-based UniCredit has ratcheted up the pressure on Frankfurt-based Commerzbank in recent weeks as it seeks to become the biggest investor in Germany’s second-largest lender with a 21% stake.

    UniCredit, which took a 9% stake in Commerzbank earlier this month, appears to have caught German authorities off guard with the potential multibillion-euro merger.

    German Chancellor Olaf Scholz, who has previously called for greater integration in Europe’s banking sector, is firmly opposed to the apparent takeover attempt. Scholz has reportedly described UniCredit’s move as an “unfriendly” and “hostile” attack.

    Germany’s position on UniCredit’s swoop has prompted some to accuse Berlin of favoring European banking integration only on its own terms.

    Domestic consolidation

    BNP Paribas’s Machenil said that while domestic consolidation would help to stabilize uncertainty in Europe’s banking environment, cross-border integration was “still a bit further away,” citing differing systems and products.

    Asked whether this meant he believed cross-border banking mergers in Europe appeared to something of a farfetched reality, Machenil replied: “It’s two different things.”

    “I think the ones which are in a nation, economically, they make sense, and they should, economically, happen,” he continued. “When you look at really cross border. So, a bank that is based in one country only and based in another country only, that economically doesn’t make sense because there are no synergies.”

    Earlier in the year, Spanish bank BBVA shocked markets when it launched an all-share takeover offer for domestic rival Banco Sabadell.

    The head of Banco Sabadell said earlier this month that it is highly unlikely BBVA will succeed with its multi-billion-euro hostile bid, Reuters reported. And yet, BBVA CEO Onur Genç told CNBC on Wednesday that the takeover was “moving according to plan.”

    Spanish authorities, which have the power to block any merger or acquisition of a bank, have voiced their opposition to BBVA’s hostile takeover bid, citing potentially harmful effects on the county’s financial system.

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  • 3 ways Wall Street’s largest banks are leveraging AI to increase profitability

    3 ways Wall Street’s largest banks are leveraging AI to increase profitability

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    Pedestrians walk along Wall Street near the New York Stock Exchange (NYSE) in New York, US, on Tuesday, Aug. 27, 2024.

    Bloomberg | Bloomberg | Getty Images

    Big banks are jumping headfirst into the AI race.

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  • Societe Generale’s investment bank limits first-quarter profit plunge

    Societe Generale’s investment bank limits first-quarter profit plunge

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    French bank Societe Generale reported second quarter results for 2023.

    Chesnot | Getty Images News | Getty Images

    French bank Societe Generale reported a smaller-than-expected 22% slide in first-quarter net income on Friday, as profits on equity derivative sales offset more weakness at its retail bank and in fixed-income trading.

    France’s third-biggest listed lender, whose CEO Slawomir Krupa is seeking to end several years of lackluster performance and trim costs, said group net income over the first three months of the year was 680 million euros ($729.30 million).

    This was down 22% from a year earlier but still beat the 463 million-euro average of 15 analyst estimates compiled by the company.

    Sales slipped 0.4% to 6.65 billion euros, above the 6.46 billion-euro analyst average estimate.

    Helped by euro zone interest rates remaining higher for longer than expected, many European banks have beaten expectations for the first-quarter, and some have raised profit targets for the year.

    French banks including SocGen have not benefited as much from the rise in rates because of the high cost of deposits in the country. Their shares have underperformed, although analysts expect the lenders to do better when rates fall.

    SocGen’s investment banking division saw its earnings jump 26.4% to 690 million euros, beating forecasts, while revenues weakened 5.1% to 2.62 billion euros for the quarter.

    Equity derivatives sales, an area where SocGen has historically been strong, did well, the bank said, as did corporate financing services and its advisory business.

    Hedging policy

    This offset a 17% fall in sales from trading in fixed income and currencies, underperforming the average of Wall Street firms and French rival BNP Paribas. Deutsche Bank delivered a 7% rise in fixed income and currencies trading revenue.

    SocGen said it continued to suffer from a costly hedging policy aimed at protecting the bank against low rates but which backfired. It cost SocGen 300 million euros in the first quarter, on top of 1.6 billion euros in 2023.

    The bank no longer reports numbers for its French retail activities, more crucial to its earnings than for BNP Paribas, as a standalone business.

    SocGen said the transfer from sight deposits to regulated savings account with a fixed interest rate weighed on its results.

    According to a recent study by UBS, French deposits were the most expensive in Europe when rates were negative. But they increased in cost just as quickly as the European average when rates and inflation rose.

    SocGen stock price evolution has trailed peers over the last three years, with shares up 9%, compared with a rise of 26% for BNP and 13.5% for Credit Agricole. The basket of STOXX Europe 600 banks has risen by 55% over the period.

    Krupa, who took over just a year ago, disappointed investors last September by putting off a key profitability target by a year, amid stagnating sales, until 2026.

    He has pledged to revive shares by trimming costs and delivering on targets, while selling non-core assets and investing to deploy its online bank BoursoBank and its expanded car-leasing listed group Ayvens.

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  • Banks hit with $549 million in fines for use of Signal, WhatsApp to evade regulators’ reach

    Banks hit with $549 million in fines for use of Signal, WhatsApp to evade regulators’ reach

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    U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler, testifies before the Senate Banking, Housing and Urban Affairs Committee during an oversight hearing on Capitol Hill in Washington, September 15, 2022.

    Evelyn Hockstein | Reuters

    U.S. regulators on Tuesday announced a combined $549 million in penalties against Wells Fargo and a raft of smaller or non-U.S. firms that failed to maintain electronic records of employee communications.

    The Securities and Exchange Commission disclosed charges and $289 million in fines against 11 firms for “widespread and longstanding failures” in record-keeping, while the Commodity Futures Trading Commission also said it fined four banks a total of $260 million for failing to maintain records required by the agency.

    It was regulators’ latest effort to stamp out the pervasive use of secure messaging apps like Signal, Meta‘s WhatsApp or Apple‘s iMessage by Wall Street employees and managers. Starting in late 2021, the watchdogs secured settlements with bigger players including JPMorgan Chase, Goldman Sachs, Morgan Stanley and Citigroup. Fines related to the issue total more than $2 billion, according to the SEC and CFTC.

    “Today’s actions stem from our continuing sweep to ensure that regulated entities, including broker-dealers and investment advisers, comply with their recordkeeping requirements, which are essential for us to monitor and enforce compliance with the federal securities laws,” Sanjay Wadhwa, deputy director of enforcement at the SEC, said in the release.

    The firms admitted that from at least 2019, employees used side channels like WhatsApp to discuss company business, failing to preserve records “in violation of federal securities laws,” the SEC said Tuesday.

    Wells Fargo biggest offender

    Wells Fargo, the fourth-biggest U.S. bank by assets and a relatively small player on Wall Street, racked up the most fines on Tuesday, with $200 million in penalties.

    “We are pleased to resolve this matter,” said Wells Fargo spokeswoman Laurie Kight.

    French banks BNP Paribas and Societe Generale were fined $110 million each, while the Bank of Montreal was fined $60 million. The SEC also fined Japanese firms Mizuho Securities and SMBC Nikko Securities and boutique U.S. investment banks including Houlihan Lokey, Moelis and Wedbush Securities.

    Bank of Montreal has “made significant enhancements to our compliance procedures in recent years” and is pleased to have the matter behind it, said spokesman Jeff Roman.

    The other banks penalized Tuesday declined to comment.

    Apart from the fines, banks were ordered to “cease and desist” from future violations and hire consultants to review bank policies, the SEC said.

    On Wall Street, company records of emails and other communications via official channels are often automatically generated to adhere to requirements that clients are treated fairly. But after some of the industry’s biggest scandals of the past decade hinged on incriminating messages preserved in chatrooms, workers often leaned on side channels to conduct business.

    A widespread practice

    Encrypted messages sent on third-party platforms like Signal make it impossible for banks to record and retain logs of interactions. At Wells Fargo and other banks, the practice was pervasive and happening at all levels; even the managers responsible for enforcing the rules were guilty of the practice, regulators said Tuesday.

    An analysis of 13 Wells Fargo employees, for instance, found that all had violated the bank’s communications policies by using text messages to communicate with co-workers and market participants. They used the side channels to communicate with more than 100 other employees, including senior supervisors, over thousands of messages, according to the CFTC complaint.

    “Employees’ use of unapproved communication methods was not hidden within the firm,” the CFTC said. “To the contrary, certain supervisors—the very people responsible for supervising employees to prevent this misconduct—routinely communicated using unapproved methods on their personal devices.”

    — CNBC’s Jim Forkin contributed to this report

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  • Bank of England’s next move divides economists as data paints a mixed picture

    Bank of England’s next move divides economists as data paints a mixed picture

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    Andrew Bailey, Governor of the Bank of England, attends the Bank of England Monetary Policy Report Press Conference, at the Bank of England, London, Britain, February 2, 2023. 

    Pool | Reuters

    LONDON — Market expectations are split over the Bank of England’s next monetary policy move on Wednesday, as policymakers near a tipping point in their fight against inflation.

    As of Tuesday morning, the market was pricing around a 62% chance that the Monetary Policy Committee will opt for a 25 basis point hike to interest rates and take the main Bank rate to 5.25%, according to Refinitiv data.

    The other 38% of market participants expect a second consecutive 50 basis point hike, after the central bank surprised markets with a bumper increase in June. U.K. inflation looks to be abating, but is still running considerably hotter than in other advanced economies and well above the Bank’s 2% target.

    Headline consumer price inflation slid to 7.9% in June from 8.7% in May, while core inflation — which excludes volatile energy, food, alcohol and tobacco prices — stayed sticky at an annualized 6.9%, but retreated from the 31-year high of 7.1% of May.

    Data from the British Retail Consortium on Tuesday also showed annual shop price inflation cooled from 8.4% in June to 7.6% in July, and fell for the first time in two years in month-on-month terms, indicating that the country may be through the worst of its prolonged cost-of-living crisis.

    The British economy has proven surprisingly resilient, despite a run of 13 consecutive rate hikes from the Bank of England. The U.K. GDP flatlined in the three months to the end of May, but Britain is no longer projected to fall into recession.

    Goldman Sachs noted over the weekend that the MPC will be watching three indicators of inflationary persistence to determine how much additional monetary policy tightening is needed — slack in the labor market, wage growth and services inflation.

    “Following a very strong April labour market report in the run-up to the June meeting, jobs activity softened notably in May. Wage growth, however, has remained very firm with private sector regular pay rising further to 7.7%,” Goldman’s European economists James Moberly, Ibrahim Quadri and Jari Stehn highlighted.

    “While core inflation surprised to the downside in June, services inflation momentum remains strong. BoE officials have provided little guidance on how they assess the incoming data since the June meeting.”

    Given the limited read on how the MPC has received the latest two months of economic data, Goldman said this week’s meeting is a “close call,” but that the 25 basis point move is more likely than another half-point hike. The Wall Street giant expects an 8-1 split vote, with the one dissenting opinion in favor of keeping rates unchanged.

    The UK consumer is worried, prudent, but not under stress, Barclays CEO says

    “The overall dataset, while firm, is more mixed going into the August meeting than it was in the run-up to the June meeting, when data on the labour market, wage growth, and services inflation had all been surprising to the upside,” the economists said.

    “Furthermore, this week’s developments — including the weak flash PMI, non-committal messaging from the Fed and ECB, and receding market pricing for the August meeting — would support the case for a 25bp increase.”

    Both the U.S. Federal Reserve and the European Central Bank implemented quarter-point hikes last week and struck cautious tones. They highlighted that inflation is heading in the right direction but retains a hawkish tilt as it remains above target.

    MPC happy to ‘front-load’ tightening

    The initial PMI (purchasing managers’ index) readings for July indicated that the slowing economic momentum in the second quarter had continued into the third — especially in the services sector, where the Bank of England’s aggressive rate hikes finally appear to squeeze demand.

    Consumer confidence also fell sharply in July, and the latest figures put unemployment at 4% — above the Bank of England’s May forecast — with vacancies continuing to decline.

    The labor market remains very tight despite some loosening, and observers still marginally favor another big hike on Thursday.

    Barclays believes a half-point increase is in the cards, as wages and core inflation stay high, meaning more “resolute action” is a chance for the beleaguered MPC to “enhance credibility.”

    “We expect an 8-1 vote split (for +50bp vs hold), unchanged forward guidance, and for the forecasts to explicitly incorporate greater inflationary persistence,” Barclays economists Abbas Khan, Mariano Cena and Silvia Ardagna concluded in a research note Friday.

    This was echoed by BNP Paribas European economists Matthew Swannell and Paul Hollingsworth, who said that the MPC will be willing to “front-load” tightening, based on Governor Andrew Bailey’s comments at the Sintra central bank conference.

    UK still at risk of harder landing than other major economies, strategist says

    “If we were really of the view that we were going to do 25 and then we were really sort of baked in for another 25 based on the evidence we’d seen, it would be better to do the 50,” Bailey justified the jumbo hike of June.

    “Even allowing for the inflation surprise, the data we have seen since June’s meeting clearly support the MPC delivering more than 25bp of further tightening, in our view,” Swannell and Hollingsworth said.

    Looking beyond this week’s meeting, Goldman Sachs said the meaningful progress in rebalancing labor market supply and demand so far was not yet sufficient for this to be the last increase in the Bank’s base rate, since further demand cooling and a sustainable return to the 2% headline inflation target are a long way off.

    “That said, this assessment is subject to significant uncertainty depending, in particular, on the growth outlook, the outlook for labour supply, and the formation of inflation expectations,” Goldman economists added.

    The lender therefore expects further 25 basis point increments to an eventual peak rate of 5.75%, or until the MPC sees signs of a meaningful slowdown in spot wage and services inflation.

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  • CNBC Daily Open: Deutsche Bank is not Credit Suisse

    CNBC Daily Open: Deutsche Bank is not Credit Suisse

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    A Deutsche Bank AG branch in the financial district of Frankfurt, Germany, on Friday, May 6, 2022.

    Alex Kraus | Bloomberg | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    Deutsche Bank is the latest bank to suffer a panic-driven sell-off. But analysts said it’s an irrational move by markets.

    What you need to know today

    • U.S. markets edged higher Friday, shrugging off renewed fears of the banking crisis spreading in Europe. But Europe’s Stoxx 600 closed 1.4% lower, weighed down by a 3.8% drop in banks. Deutsche Bank aside, Societe Generale lost 6.13%, Barclays tumbled 4.21% and BNP Paribas dropped 5.27%.
    • International Monetary Fund chief Kristalina Georgieva said recent bank collapses have increased risks to financial stability. But China’s economic rebound may boost the world economy, Georgieva added. Every 1 percentage point increase in China’s GDP adds 0.3 percentage point in the GDP of other Asian economies, according to IMF estimates.
    • PRO Several important economic data points will be released this week: personal consumption expenditures, consumer sentiment and home sales. But concerns about the banking system will likely dominate markets and cause continued volatility.

    The bottom line

    Now that central banks worldwide have made their interest rate decisions, markets are turning their attention back to the banking sector. In today’s heightened atmosphere, however, prudence can quickly — and arbitrarily — tip over into paranoia.

    Deutsche Bank appears to be the latest victim of the market’s panic. On Friday, after the price of its credit default swaps rose to its highest since 2018, investors sparked a sell-off in the German bank.

    The move is mostly irrational, according to analysts. Deutsche Bank is not another Credit Suisse in two key aspects.

    First, have a look at their fourth-quarter reports. Deutsche Bank reported a 1.8-billion-euro ($1.98 billion) net profit, giving it an annual net income for 2022 of 5 billion euros. By contrast, Credit Suisse had a fourth-quarter loss of 1.4 billion Swiss francs ($1.51 billion), bringing it to a full-year loss of 7.3 billion Swiss francs. The difference between the two European banks couldn’t be starker.

    Second, Deutsche Bank’s liquidity coverage ratio was 142% at the end of 2022, meaning the bank had more than enough liquid assets to cover a sudden outflow of cash for 30 days. On the other hand, Credit Suisse disclosed it had to use “liquidity buffers” in 2022 as the Swiss bank fell below regulatory requirements of liquidity.

    Research firm Autonomous, a subsidiary of AllianceBernstein, was so confident in Deutsche Bank that it issued a research note stating: “We have no concerns about Deutsche’s viability or asset marks. To be crystal clear — Deutsche is NOT the next Credit Suisse.”

    While the Deutsche Bank episode reverberated through Europe markets, U.S. investors seemed less concerned. In fact, the SPDR S&P Regional Banking ETF gained 3.03% on Friday. Major indexes also rose — not just for the day, but the week. The Dow Jones Industrial Average inched up 0.41%, giving it a 0.4% week-over-week gain. The S&P 500 rose 0.56%, contributing to a 1.4% weekly increase. The Nasdaq Composite added 0.3% to finish the week 1.6% higher.

    It’s an impressive showing given market volatility. Unfortunately, there’s no promise of stability this week. The personal consumption expenditure price index — the inflation reading most important to the Fed — will come out Friday, and it’s “going to be sticky,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. But the banking crisis will continue gripping markets so tightly that they might not care about inflation as much — for better or worse.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • French bank BNP Paribas reports bumper profit for 2022, boosts stock purchase plan

    French bank BNP Paribas reports bumper profit for 2022, boosts stock purchase plan

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    BNP Paribas reported Q4 2022 and full year earnings.

    Miguel Medina | Afp | Getty Images

    BNP Paribas reported Tuesday a 7% rise in net income for 2022 and revised up its profit targets.

    The French bank said net profit attributable to shareholders came in at 2.2 billion euros ($2.36 billion) for the fourth quarter, taking its full-year profit figure for 2022 to 10.2 billion euros. Analysts had expected a figure of 2.36 billion euros for the quarter and 10.9 billion euros for the year, according to Refinitiv.

    Here are other highlights from the results:

    • Annual revenues rose to 50.4 billion euros versus 46.2 billion euros a year ago;
    • Operating expenses rose 8.3% from a year ago to 33.7 billion;
    • CET 1 ratio, a measure of bank solvency, stood at 12.3% versus 12.1% in the previous quarter.

    Shares of the French bank are down about 7% over the last year.

    Share buyback and outlook

    “On the strength of this performance and with additional growth potential stemming from the redeployment of capital released by the sale of Bank of the West, combined with the positive impact of the rise in interest rates in 2022, the Group reaffirms the importance and relevance of the pillars of its Growth, Technology & Sustainability 2025 strategic plan and is revising upward its ambitions,” the bank said in a statement.

    The French lender said it now aims to grow its net income by more than 9% between 2022 and 2025.

    It said it will execute share buybacks each year — particularly in 2023, when its share buyback program will total 5 billion euros. It is planning to pay out a dividend of 3.90 euros.

    This is a breaking news story and is being updated.

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