Top French banking group BNP Paribas reported yesterday a third quarter net profit of €1.89bn, down 2.3% from a year earlier despite the economic upheaval caused by the pandemic.
After getting through the second quarter relatively unscathed, the bank said the three months to September saw a sharp rebound in the economy, although those gains may now be in jeopardy due to a resurgence in coronavirus cases and new restrictions.
Third quarter net banking income — a broad measure of profit — came in at €10.89bn, little changed from a year earlier and was up 2.1% on a constant exchange rate basis.
The bank said it increased bad loan provisions by nearly 50% to €1.2bn but this was still some 200mn euros less than in the second quarter.
BNP’s finance and investment arm saw revenues jump 17.4% but its international financial services unit — which groups consumer credit, insurance and retail banking — fell 7.2%.
For the nine months to September, BNP Paribas said net profit was down 13.4% from a year earlier at €5.48bn, in line with its forecast for a 15-20% drop in the full-year 2020.
Bayer
Bayer yesterday posted another huge loss due to steep impairment charges at its agrochemical division and increased legal costs over its glyphosate weed killer linked by plaintiffs to cases of cancer.
The German pharmaceuticals and chemicals giant made a third quarter net loss of €2.7bn ($3.2bn), compared with a profit of €1.04bn in the same quarter last year. The results were well down on analyst estimates for €798mn in profit, according to the FactSet financial information service.
Bayer’s €63bn acquisition of US agrochemical group Monsanto, completed in 2018, has exposed the Leverkusen-based company to multi-billion euro suits over its Roundup glyphosate weedkiller while it has also been hit hard by the coronavirus pandemic.
The company said it would take a non-cash impairment charge of 9.3bn euros due to “reduced growth expectations” on various assets in its agricultural business, as Covid-19 places “additional strain” on the unit, finance chief Wolfgang Nickl said in a statement.
Sales fell 13.5% to €8.5bn.
However, the quarterly result improves on the €9.5bn loss Bayer posted in the second quarter, which included provisions for more than $10bn (€8.5bn) in settlements for most lawsuits over Roundup announced in June.
Shortly afterwards, however, a California judge expressed major reservations about the settlement’s validity, forcing Bayer to back down on part of the agreement involving future cases.
Bayer said there were around 125,000 claims involving Roundup in June, but it will now “take more time” to address legal issues, and it increased provisions for them in the third quarter to $2.0 billion from $1.25bn previously.
“The company is continuing to work on a joint proposal to address potential future Roundup claims together with plaintiffs’ counsel,” it said, adding that it was “working in good faith” to address the issues raised by the court.
The agrochemical business was also impacted by the depreciation of the Brazilian real, which is “weighing heavily” on trading in the world’s second-largest agricultural market.
Despite the loss, Bayer confirmed its outlook for the full year “thanks to stringent cost management and the acceleration of our structural measures,” chief executive Werner Baumann said in the statement.
In October, Bayer said it would accelerate a cost-cutting programme that may lead it to slash jobs as it also tries to mitigate the impact of Covid-19.
The company expects to save €1.5bn by 2024, on top of the €2.6bn of annual savings it expects to make from 2022, Bayer said.
Bayer said in an earnings call that the company has 3,500 fewer workers than last year, and the transformation programme would be 60% complete at the end of the 2020.
Its pharmaceuticals division recovered in the quarter, Bayer said, helped by its blockbuster blood thinner Xarelto, although the drug’s patent expiry in 2024 poses a challenge for future earnings prospects.
Bayer said last week it would buy US-based biotech firm AskBio for as much as $4.0bn as it aims to get a foothold in the rapidly growing gene-therapy market.
Bayer’s share price is now down 43% for the year to date.
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