LONDON, May 3 (Reuters Breakingviews) - Bank investors and analysts often like to say that BNP Paribas (BNPP.PA) is the closest Europe has to a JPMorgan (JPM.N), the goliath of U.S. banking that just bought First Republic Bank (FRC.N). The 70 billion euro French lender’s first-quarter results, released on Wednesday, only partially bear that out.
Corporate and wealth clients seem to perceive BNP as a relative safe haven in an otherwise dicey sector, which was rocked by the failures of Silicon Valley Bank and Credit Suisse (CSGN.S) in March. The Paris-based outfit led by veteran Jean-Laurent Bonnafé had just over 1 trillion euros of deposits at the end of March – about 0.7% less than it had three months earlier. Compare that with Deutsche Bank (DBKGn.DE), whose deposits fell by 4.7% over the same period. A person familiar with the matter told Breakingviews that BNP let yield-seeking money leave earlier in the quarter, only to see much of the departed deposits flow back again after the March chaos. That sounds a lot like what happened with Jamie Dimon’s bank, which sucked up U.S. money from rivals.
On the returns side, however, Bonnafé is no Dimon. JPMorgan will earn a 19% return on tangible equity this year, using Visible Alpha consensus data, which is good even for a U.S. bank. BNP will hit 11%, brokers reckon on average. Analysts also expect Bonnafé to miss a 12% 2025 target by about 1 percentage point. There’s no shame in losing to a bigger stateside rival on returns, but BNP also risks falling behind regional peers. Banco Santander (SAN.MC) is gunning for a 15% return in Europe by 2025, for example, while UniCredit (CRDI.MI) is targeting the same return this year, after stripping out excess capital. BNP, with a near 3 trillion euro balance sheet, is indeed the closest thing Europe has to goliath JPMorgan, but not when it comes to the number that matters the most to investors. (By Liam Proud)
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