BNP Paribas share price slips to key support as bank earnings start

BNP Paribas (ETR: BNP) share price tumbled to the lowest level since August 8th as American banking giants started publishing their Q3 financial results. The stock tumbled to a low of €57.45, lower than the year-to-date high of €62.76. In all, it has jumped by more than 30% from the lowest level this year.

The biggest driver for US and European bank stocks like BNP Paribas is the start of the earnings season. While BNP is a French bank, investors use American earnings as a barometer of its performance.

Citigroup published strong results as its revenue jumped to $20.14 billion in Q3. Similarly, JP Morgan, the biggest bank in the US, said that its revenue soared to $40.6 billion while its profit jumped to $13.5 billion. Wells Fargo also published strong results as its revenue jumped to over $20 billion.

The key denominator for these results is interest rates. They both noted that higher interest rates had helped them boost their earnings. Rates in the US and other developed countries have soared to the highest level in more than two decades.

These results mean that BNP Paribas will likely publish strong results on October 26th. Like its American counterparts, BNP Paribas benefits from higher rates in Europe, where it does most of its business.

The most recent results showed that its net income rose by 16.4% as its revenue rose by 3.3%. Its distributable net income jumped to €.26 billion. As a result, the company launched the second €2.5 billion share buyback program.

I believe that BNP Paribas is a good investment for income investors. It is a safe bank with a dividend yield of 6.7%. Also, it will continue benefiting as rates remain high for a while. 

The daily chart shows that the BNP Paribas share price has been in an uptrend in the past few months. Along the way, the stock has formed an ascending channel shown in black. It dropped to the lower side of the channel as US banks started their earnings season.

The stock also moved slightly below the 50-day moving average while the Relative Strength Index (RSI) dropped below the neutral point of 50. Therefore, the outlook for the stock is neutral with a bullish bias. It will likely bounce back and retest the upper side of the channel at €62.71. This view will be invalidated if it moves below the lower side of the channel.

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