PARIS (Reuters) - BNP Paribas (>> BNP Paribas) is planning more cost savings in its upcoming 2017-2020 strategy announcement to offset the squeeze on revenue from low interest rates, and may consider raising the proportion of earnings it pays out in dividends.
The French bank stole a march on domestic rivals in the third quarter as a bond trading boom that has helped Britain's Barclays (>> Barclays PLC) and some U.S. banks played to its strengths and helped it offset the impact of low interest rates on retail banking to beat profit forecasts.
Chief Operating Officer Philippe Bordenave said in an analyst call on Friday the bank's corporate and institutional bank was winning market share in Europe and the United States, and maintained it in Asia.
BNP, which said it ranked No. 1 in euro bond issuance and No. 9 for all international bonds, said it had seen a pick-up in fixed income, currencies and commodity (FICC) in Europe and the Americas after a lacklustre start to the year.
It also said it had embarked on cutting costs in all regions in its corporate and institutional banking business, as part of a plan announced earlier this year.
The bank struggled to boost retail banking revenues in some markets, especially in France and Italy, with record low interest rates hampering banks' ability to profit from lending and a drop in financial fees stemming from weak equity markets.
Bordenave said the bank's new 2017-2020 strategic plan to be presented early next year would announce more cost savings.
"We are acting, the only thing is that we prefer to be relatively low key and to achieve (cost savings) step by step without making much noise," he said, adding the bank was also working at increasing fees.
Its shares recouped earlier losses during the call with Bordenave and were up 0.3 percent at 1339 GMT. They have gained 2.8 percent so far this year, while French rivals Societe Generale, Credit Agricole and Natixis are all down year-to-date.
BNP, which was fined $8 billion by the United States in 2014 for sanctions busting, has escaped major uncertainties since, unlike SocGen, which faces a pending sanctions probe in the United States, and Credit Agricole, which is undergoing a major structural overhaul this year. Both banks are due to report their results over the next two weeks.
Net income at BNP rose 3.3 percent to 1.89 billion euros (£1.70 billion), beating the average of analyst estimates of 1.72 billion euros in a Reuters poll.
BNP also raised its common equity tier 1 ratio (CET 1) - a key measure of a lender's ability to absorb losses - by 30 basis points in the third quarter to 11.4 percent, as it sought to reassure investors concerned about rising capital requirements for banks.
It said it may raise its dividend payout ratio for 2017-2020 from the 45 percent targeted for 2016, but that the decision would depend on regulation.
Banks' dividend policies are under pressure from a wave of reforms by financial regulators aimed at preventing another financial crisis due to uncertainty over how much extra capital they might need to set aside.
(Editing by Alexander Smith and Mark Potter)
By Maya Nikolaeva and Julien Ponthus