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BNP Paribas' brilliant FICC traders had a bad quarter

BNP Paribas’ fourth quarter and full year results came out today, and the bank is pretty chuffed. Distributable net income increased by double digits, EPS increased by double digits, and overall revenue increased (by single digits, mind you).

Sadly for them, that has little to do with the bank’s usually formidable mighty Fixed Income, Currencies, and Commodities (FICC) traders. Quarterly revenues on those trading desks were down a solemn 32% in Q4 compared to last year, contributing to an overall 11% decrease in FICC trading revenues year-on-year.

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The bank blamed that on “more normalized activity” in rates, foreign exchange, and especially commodities compared to a strong 2022. However, credit traders can breathe a sigh of relief – the bank called their performance “very good”.

If the credit traders were very good, BNP's equities traders look excellent. The bank's equities and prime revenues were up 69% in Q4 of 2023 compared to 2022, mostly due to "very good" activity in equity derivatives and prime brokerage. They were flat on the year as a whole, however.

BNP's bankers had a fair quarter. Their revenues were up by 4.1% in Q4 for 2023 compared to 2022, mostly on account of strong capital markets performance in the Americas and transaction banking performance in EMEA. The year as a whole was even better, with a 14.5% increase, for much the same reasons.

BNP aspires for its Corporate & Institutional Banking (CIB) to be "the first European corporate and investment bank among global tier one players.” It didn't do badly compared to, for instance, Goldman Sachs - which saw bigger drops in its FICC revenue for the year, as well as falling M&A revenue. 

BNP Paribas bankers & traders felt pretty optimistic in our bonus & job market expectations report at the tail end of last year, all things considered – they expected, on average, a 10% increase in their bonuses. That optimism might be misplaced, however. 

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AUTHORZeno Toulon

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