By Maya Nikolaeva PARIS (Reuters) - BNP Paribas, France's No. 1 bank, said third-quarter net income rose 11 percent from a year ago as gains in fixed income trading and in international retail offset a lackluster economic environment in its core European markets.
The third-quarter results mark a return to profit for the bank which posted its first net loss since the 2008 financial crisis in the previous quarter, the result of a $8.9 billion fine from U.S. authorities for breaking U.S. sanctions against Sudan, Cuba and Iran over a 10-year period up to 2012.
BNP reported net profit of 1.5 billion euros ($1.9 billion), compared with 1.36 billion a year earlier. Analysts expected earnings of 1.576 billion, on average, according to Thomson Reuters I/B/E/S.
Revenue rose 3.9 percent to 9.54 billion euros from 9.18 billion in the third quarter of 2013. Revenues in the investment banking business - a business line closely watched by the market following BNP's settlement with the U.S. authorities - grew by 2.9 percent in the third quarter, signaling the affair did not affect relationships between BNP and its clients.
"CIB activities have been doing well, particularly fixed income...in rates and in forex," BNP Paribas Chief Financial Officer Lars Machenil said in an interview with Reuters Insider to present the results.
Under the terms of the settlement with the U.S. authorities, BNP will have to clear all its dollar transactions in New York, under supervision. Any oil and gas related business landing there throughout 2015 will be forwarded to a correspondent bank for clearing.
Machenil said that operational solutions were being worked out in order to reach a deal with banks.
BOLT-ON ACQUISITIONS
Like its domestic rival Societe Generale and other European banks, BNP is targeting new growth avenues after years of shoring up its balance sheet due to tougher rules on risk taking after the financial crisis.
This year the bank agreed to buy German online investment broker DAB in a $354 million deal with Unicredit and Poland's Bank BGZ in a 4.5 billion zlotys ($1.39 billion) deal with Rabobank.
Asked if BNP was working on a bid for Italy's Monte dei Paschi, which revealed the biggest outstanding capital deficit following Europe-wide banking stress tests, needing to raise 2.1 billion euros, Lars Machenil said:
"It's speculation. If you look at what we do in our plan, we are looking for bolt-on acquisitions ... If we find that, as a bolt-on and at a reasonable price, that's what we have to do, that is part of the industrial plan".
By bolt-on acquisitions, Machenil said he meant those that can "bring BNP an improved market share, intimacy with clients, and product knowledge."
BNP said its balance sheet was "rock solid", reporting a core Tier 1 capital ratio under tougher Basel III rules of 10.1 percent, taking into account the European central bank's asset quality review results.
(Editing by Andrew Callus)