LONDON – BNP Paribas beat analyst expectations while reporting earnings on Friday, as its CFO spoke of a “gradual pick” to keep the economy moving.
The French bank reported net income of 1.59 billion euros ($ 1.90 billion) for the fourth quarter of 2020 for the fourth quarter of 1.2 billion euros, according to Refinitiv. It reported a 15.9% drop in profit over the previous three-month period.
Annual profit reached 7 billion euros, down 13.5% from December 2019. Analysts polled by Refinitive had estimated net income of 6.5 billion euros in 2020.
The French lender also said that its risk costs had risen as a result of the Kovid epidemic, and set aside another 1.4 billion euros in loan deficit provisions.
“Revenue is stagnant compared to 44 billion (euro) years ago, with cost reduction of 1.1 billion (euro). So gross operating income, the difference between the two, is in a very physical way,” Lars BNP Paribas’s CFO Machenill told CNBC’s Charlett Reid after the results were published.
Here are other attractions:
- Revenue for the fourth quarter came in at 10.8 billion euros, a 4.5% drop from a year earlier.
- For the fiscal year, revenue was slightly lower at Euro 44.2 billion compared to 2019.
- Gross operating income increased by 6.2% over the previous year.
- The CET 1 ratio – a measure of bank solvency – stood at 12.8%, up 70 basis points from a year earlier.
The CIB (Corporate and Institutional Banking) division saw a decline of 1.7% in revenue from the previous quarter, while domestic markets delivered a 2.8% increase in revenue over the same period.
Dividend in may
BNP Paribas will pay a dividend of 1.11 euros per share in May, equivalent to 21% of its 2020 net income, despite a ban on dividends given the severe economic crisis in the region of euro area banks.
The French lender also said that 29% if its net income would be invested in share buybacks in 2020 if the European Central Bank repeats its current recommendation on dividends and shares buybacks.
McNeil said that the bank is following the ECB’s recommendation by declaring dividends within certain parameters advised by the central bank.
The bank further stated that its objective was also to distribute 50% of its 2021 net income.
Machenill said of the economic climate this year, “When we look at the year 2021 we have assumed that there will be gradual pickup.”
“There may still be slight fluctuations before summer,” he said, adding that he expects the Kovid-19 vaccine rollout to lead to economic recovery in the second half of 2021.
Bank stock is down about 3% Since the beginning of the year.