BNP Paribas Falls, HSBC Gains, Novartis Down

On this episode of Stock Movers:
- BNP Paribas said its trading unit suffered a hit from souring debt in 3Q, with loan-loss provisions rising to €905 million.
- HSBC has raised its profit outlook for the year despite a decline in earnings, after taking a $1.1 billion hit over Bernie Madoff's fraud case more than a decade ago
- Novartis stocks declined as core operating profit climbed 6% in 3Q, the slowest quarterly growth in almost two years as sales of two of the company’s top sellers, the heart medicine Entresto and Cosentyx for autoimmune conditions, barely grew.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news, The.

Speaker 2 (00:08):
Stock Movers Report, your roundup of companies making moves in
the stock market, harnessing the power of Bloomberg Data.

Speaker 3 (00:16):
Let's take a look at some stocks on the move
today in Europe. I'm Stephen Carroll with Lizzie Burton, and
we're joined by Bloomberg reporter Chloe Mela for more. Chloe,
good morning. Let's start with BNP. Pariba then shares down
two point six percent of the moment. Another item being
added to jeanre Bonafe, the CEO's growing list of challenges.

Speaker 4 (00:33):
It seems, yeah, absolutely quite tough morning for the CEO.
So BNP said that his trading unit had suffered a
hit from souring debt in the third quarter, which actually
overshadowed what was otherwise really strong equities trading in that period.
So loarn loss provisions rose to a nine hundred million
euros and that included one hundred and ninety million at

(00:54):
the Global Markets unit to account for a specific credit situation.
So BNP actually didn't clarify what exactly, but the CFO
has suggested it wasn't linked to the collapse of Tricolor
or First Brands.

Speaker 5 (01:05):
In the US. This is obviously another setback for the company.

Speaker 4 (01:09):
Last week, the shares plunged because the court ruling had
linked BNP to human rights abuses Insterdam two decades ago,
and that opens the door to potentially billions in settlements
for the bank. There's also the challenge of political instability
in France and concerns about the health of the French economy,
so all of that is also raising some worries about
the impact on the domestic business, which the CEO is

(01:31):
trying to revamp. So the stock as a result of
all of this challenges, is currently the worst performer of
all the large European banks and that is going to
probably going to continue after this added this added setback
for this year.

Speaker 1 (01:44):
And speaking of the bank earnings and credit as well,
the top read story for HSBC on the terminal at
the moment is that it's reviewing its ties to hedge
funds with credit fears on the rise. But lots of
different lines out of HSBC this morning and the shares up.

Speaker 5 (01:57):
Yeah, the shares are actually up. It is quite quite
an interesting.

Speaker 4 (02:00):
Sorry, so it actually raised its profitability outlook, which is
probably why the shares up, but that it was despite
a falling profit in the third quarter because of quite
a big provision, so it had to set aside one
point one billion dollars to cover litigation by investors who
lost money in the matter of fraud case which is
dating back years and years now. But so it seems
that despite quite kind of a mixed bag investors, we

(02:21):
are really focusing on that raised outlook and they continue
to put their trust in the CEO, Jodoladeri, which has
overseen kind of the biggest revamp but at least a
decade with thousands of drop cuts, loads of senior executives leaving,
and also a major bet on Hong Kong. So despite
this rise in shares, some analysts are still noting some
concerns and analysts at RBC said that the bank is

(02:43):
facing falling rates, muted loan growth, elevated impairments in the
commercial real estate market, and the medal of litigation. So
those are there's quite a long list of headwinds and
that makes it difficult at the moment to see the
wood from the trees, is.

Speaker 5 (02:56):
What the analysts said. So shares are up, but there
are some concerns underneath.

Speaker 3 (02:59):
It, okay, and to Novartis shares down over three percent
in Switzerland after their third quarter results.

Speaker 5 (03:05):
What's going on.

Speaker 4 (03:06):
We reported the slowest profit growth in almost two years
for this quarter, and that's because some of its top
sellers are facing growing generic competition over the US, which
is its key market, it's biggest market. That's going to
be a major challenge for Nevada's going forward. We're already
starting to see this feed through into earning. So as
a result of that, Nevatis is trying to find new

(03:27):
treatments to mitigate that threat, both by developing its own
but then also through a big acquisition. So just a
few days ago, in announced a deal that was worth
twelve billion dollars for Avidity Biosciences, which was the biggest
deal in over a decade for the company, and that
will give it access to potentially new blockbusts to drugs.
So that will provide some relief in the long term,
but until then, the earnings will be reflecting that generic competition,

(03:50):
and the CEO is actually expecting.

Speaker 5 (03:52):
The full blow to hit in the fourth quarters.

Speaker 4 (03:55):
We've not even seen the worst yet, so there'll probably
be some weakness there until the wind turns.

Speaker 2 (03:59):
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