BNP Paribas Upbeat on Overall Outlook But Warns on Fixed-Income Slowdown -- Earnings Review

By Pietro Lombardi

BNP Paribas SA released its fourth-quarter results and outlook for this year on Friday. Here is what you need to know:

NET PROFIT: France's largest-listed bank by assets posted a 14% decline in fourth-quarter net profit to 1.59 billion euros ($1.90 billion), beating expectations of EUR1.21 billion, according to a consensus provided by FactSet.

REVENUE: Revenue declined 4.5% to EUR10.83 billion, compared with expectations of EUR10.88 billion.

WHAT WE WATCHED:

-GUIDANCE: The bank expects higher revenue and lower provisions, while operating costs should remain roughly stable. However, it warned that fixed-income revenue will probably decline. Fixed-income "is unlikely to experience the same magnitude of revenues that it generated in 2020 on the back of exceptionally intense client activity," it said. The outlook was "encouraging," Citi said.

-2020 TARGETS: For the full year, profits fell 13.5% to EUR7.07 billion, doing better than the bank expected. BNP had previously guided for a 15%-20% drop in 2020 profit compared with 2019. Revenue fell 0.7%.

-INVESTMENT BANK: The trading bonanza continued in the last three months of the year. Global markets revenue rose 12%, with fixed-income revenue up 22%. Fixed-income revenue rose almost 59% last year. Overall, the corporate and institutional banking division posted a 14% increase in revenue for the year.

-RETURNS TO SHAREHOLDERS: This year the bank plans to distribute 50% of net profit to shareholders. For 2020, it will propose a dividend of EUR1.11 a share, the maximum allowed under current ECB recommendations. "Capital remain very solid, and BNP Paribas indicated willingness to top up the announced 2020 dividend this with higher capital return after September, to reach a 50% payout for 2020 (via distribution of reserve or buyback) subject to regulator," Citi said. BNP's common equity tier one ratio--a key measure of capital strength--was 12.8% at the end of December, which is above the bank's 12% target. As such, BNP will review its shareholders remuneration policy in its 2025 strategic plan.

Write to Pietro Lombardi at [e-mail]; @pietrolombard10

(END) Dow Jones Newswires

February 05, 2021 05:05 ET (10:05 GMT)

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