LONDON – BNP Paribas exceeded analysts’ expectations when it reported earnings on Friday, as the chief financial officer spoke of a “gradual recovery” for the economy looking to the future.
The French bank reported net income of 1.59 billion euros ($ 1.90 billion) for the fourth quarter of 2020, exceeding analysts’ expectations of 1.2 billion euros, according to Refinitiv. It marked a decrease in profit by 15.9% compared to the previous three months.
The annual profit reached 7 billion euros, down 13.5% compared to December 2019. Analysts surveyed by Refinitiv forecast a net income for 2020 of 6.5 billion euros.
The French creditor also said its risk had increased as a result of the Covid pandemic and allocated another € 1.4 billion in provisions for loan loss.
“Revenues are stable compared to the previous year, at 44 billion (euros), costs have decreased by 1.1 billion (euros). So gross operating income, the difference between the two, is growing in a very material way Lars Machenil, chief financial officer of BNP Paribas, told Charlotte Reed of CNBC after the results were published.
Here are some other highlights:
- Revenues reached 10.8 billion euros for the fourth quarter, down 4.5% from last year.
- For the fiscal year, revenues stood at 44.2 billion euros, marginally lower than in 2019.
- Gross operating income increased by 6.2% compared to the previous year.
- The CET 1 ratio – a measure of the bank’s solvency – stood at 12.8%, up 70 basis points from a year ago.
The CIB (Corporate and Institutional Banking) division registered a decrease of 1.7% compared to the previous quarter, while the internal markets registered an increase of 2.8% in the same period.
Dividends in May
Despite eurozone banks restricting dividends, given the severe economic crisis in the region, BNP Paribas will pay a dividend of 1.11 euros per share in May, equivalent to 21% of net income in 2020.
The French creditor also said that 29% if its net income in 2020 had been invested in share repurchases once the European Central Bank repealed its current recommendation on dividends and share repurchases.
Machenil said the bank was still following the ECB’s recommendation, announcing a dividend within certain parameters recommended by the central bank.
The bank further stated that the goal is to distribute 50% of its net income in 2021.
“When we look at 2021, what we assumed is that there will be a gradual rise,” Machenil said of the economic environment this year.
“So, before the summer, there may be a few more ups and downs,” he said, adding that the launch of the Covid-19 vaccine is expected to lead to economic improvement in the second half of 2021.
The bank ‘s shares fell by almost 3% year to date.