BNP Paribas exceeds expectations and publicizes dividend distribution in Could
LONDON – BNP Paribas surpassed analysts' expectations when it reported earnings on Friday as its CFO said the economy was "slowly picking up" with an eye to the future.
The French bank reported net income of € 1.59 billion ($ 1.90 billion) for the fourth quarter of 2020, beating analysts' expectations of € 1.2 billion, according to Refinitiv. This corresponds to a profit decrease of 15.9% compared to the previous three-month period.
The annual profit reached 7 billion euros, a decrease of 13.5% compared to December 2019. Analysts surveyed by Refinitiv had forecast a net profit of 6.5 billion euros for 2020.
The French lender also said its risk costs had increased as a result of the Covid pandemic and provided an additional € 1.4 billion in loan provisions.
"Revenues are stable compared to the previous year at 44 billion euros, costs have decreased by 1.1 billion euros. The gross operating profit, the difference between the two, has risen very sharply," said Lars Makeil, CFO of BNP Paribas CNBC's Charlotte Reed after the results were released.
Here are other highlights:
Sales in the fourth quarter amounted to 10.8 billion euros, a decrease of 4.5% compared to the previous year. In the financial year, sales of 44.2 billion euros were slightly below the figure for 2019. The overall operating result rose by 6.2% compared to the previous year. The CET 1 ratio – a measure of the solvency of banks – was 12.8% 70 basis points above the previous year's value.
The CIB (Corporate and Institutional Banking) division recorded a decrease in sales of 1.7% compared to the previous quarter, while the domestic markets achieved a sales increase of 2.8% in the same period.
Dividends in May
Although banks in the euro zone have dividend restrictions due to the severe economic crisis in the region, BNP Paribas will pay out a dividend of EUR 1.11 per share in May, which is 21% of 2020 net profit.
The French lender also said that 29% if its 2020 net income were invested in share buybacks once the European Central Bank lifts its current recommendation on dividends and share buybacks.
Machil said the bank was still following the recommendation of the ECB by announcing a dividend within certain parameters recommended by the central bank.
Going forward, the bank said the goal is to also distribute 50% of its net income by 2021.
"If we look at 2021, we assumed that there would be a gradual recovery," saidmachenil of the economic environment for that year.
"So there could be a few ups and downs before summer," he said, and reckons that the introduction of the Covid-19 vaccine in the second half of 2021 will lead to an economic improvement.
The bank's stock is down nearly $ 3%. since the beginning of the year.