French bank BNP Paribas surprised investors with a sharp rise in third-quarter net profit on Friday, sending its shares up more than 2.0 percent.
The bank has just been cleared as financially solid by eurozone-wide stress tests, but its nine-month performance is still suffering from the cost of a record US fine for breaking sanctions.
Net profit for the third quarter rose by 10.6 percent from the equivalent figure last year to 1.5 billion euros ($1.88 billion).
That was ahead of a figure of 1.4 billion expected by analysts polled by Dow Jones Newswires.
The price of shares in the bank was showing a gain of 2.55 percent to 49.7 euros in early trading, with France's CAC 40 index up by 1.48 percent.
But for the first nine months of the year, the bank reported a net loss of 1.1 billion euros.
This was a consequence of a record fine of $8.9 billion, equivalent to 18 months of profits, by US authorities at the end of June for breaching US embargoes on transactions with some countries, notably Iran.
The bank said in its results statement: "For the first nine months of the year, the group’s results include the impact of a total of 5,950million euros (5.95 billion) in one-off charges relating to the comprehensive settlement with the US authorities.
"Excluding the impact of all the one-off items, net income attributable to equity holders was 5,265 million euros."
This figure represented an increase of 12.4 percent from the equivalent outcome last year, the bank highlighted. In the third quarter, all divisions of the bank contributed to the improvement.
The bank also said that it had strengthened the ratio of core shareholder capital to loans, or risks, taken on, to 10.1 percent at the end of September from 10.0 percent in June.
Core shareholder funds comprise paid-up capital and that part of profits retained to boost the balance sheet.
- Strength after fine -
Referring to stress tests announced on Sunday by the European Central Bank which found that BNP Paribas was soundly financed along with most leading eurozone banks, BNP Paribas said:
"The results of the assessment conducted by the ECB and the EBA (European Banking Authority) thus confirm the group’s balance sheet solidity, the quality of its assets and the rigor of its risk management policy."
The bank said that the tests showed its ability "to withstand a severe stress scenario, based on extremely severe assumptions with respect to the evolutions of economic and market conditions."
Net banking income, a key figure for banks which measures the difference between operating income and costs, rose by 3.9 percent to 9.5 billion euros.
The bank said that a cost-saving and efficiency programme had generated recurrent savings of 1.5 billion euros in the first nine months of the year, accounting for almost the total target of 1.6 billion euros for the whole of 2014.
The bank hopes that by the end of 2016 this figure will rise to 2.8 billion euros.
The bank also said that at the end of the first nine months it was achieving a return on capital of 8.0 percent excluding exceptional items compared with its target for 2016 of at least 10.0 percent.
At stock brokers Aurel BGC, analysts said that the bank had published "solid" results and its figures for shareholder funds "show the strength of BNP after after the fine of nine billion dollars."