International banking group BNP Paribas saw revenues rise by 3.9% in the second quarter of the year, reaching €12.27 billion. However, the group's Belgian operations saw a drop in income as savers and investors opted to put their money in state bonds.
The bank saw gross operating income rise by 3.4% to €5.094 billion in the second quarter, and reported a net income of €3.395 billion (slightly higher than the net income of €3.343 billion over the same period last year).
The French-headquartered bank noted that its corporate and institutional banking operations had an "excellent" second quarter, with revenues rising by 12.1% compared to the same period in 2023.
Investment and protection services at BNP Paribas also saw a "good performance" in the second quarter, with insurance revenues up 5.2% and asset management revenues rising by 9.8% compared to the second quarter of last year.
Meanwhile, its commercial, personal banking and services sector saw revenues fall by 0.3% compared to the second quarter of 2023.
Impact of state bonds
While BNP Paribas saw an uptick in revenues from banking fees and interest charges, it said there were certain "headwinds" in the second quarter which impacted revenues, including the issuing of government bonds in Belgium.
Through the state bond system, the Federal Government raises funds by offering to pay the investor a fixed interest rate (known as a coupon) during the life of the bond, as well as repaying the initial amount invested at the bond maturity date.
The most recent state bonds issued by the Belgian Government offered a net return of 2.24% (for one-year bonds) and a 1.96% return for an eight-year bond.
Retail investors were able to register for the state bonds between 24 May and 3 June of this year, and the Belgian Federal Debt Agency confirmed that the most recent bonds raised €482.5 million.
Looking specifically at its commercial and personal banking activities in Belgium, BNP Paribas said that deposits fell by 3.8% year-on-year in the second quarter, largely impacted by Belgian Government bonds issuance maturing in September 2024. Meanwhile, customer loans in Belgium rose by 2.1% in the second quarter.
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At the same time, net banking income fell by 3.4% to €972 million, and net interest revenues fell by 4%, also negatively impacted by Belgian Government bonds as well as tightening loan margins.
Gross operating income at the Belgian arm fell by 9.8% to €395 million in the second quarter. BNP Paribas noted a rise in operating expenses driven by inflation. However, it said this was partly offset by cost saving measures and the successful merging of Bpost bank with BNP Paribas.
