BNP Cuts 2020 Revenue, Profitability Targets -- Earnings Review

   By Pietro Lombardi 
 

BNP Paribas SA (BNP.FR) reported its fourth-quarter and full-year results and updated its 2020 targets on Wednesday. Here's what you need to know:

NET PROFIT: Net profit rose 1.1% on year to EUR1.44 billion ($1.64 billion) in the fourth quarter. This compares with analysts' expectations of a net profit of EUR1.45 billion, according to a consensus forecast provided by FactSet. Net profit for the year declined 3% to EUR7.53 billion.

REVENUE: Fourth-quarter revenue fell 3.5% to EUR10.16 billion. Analysts had expected revenue of EUR10.37 billion, according to the consensus.

WHAT WE WATCHED:

-STRATEGIC UPDATE: BNP cut its 2020 revenue growth and profitability targets and vowed to increase cost savings. It now sees revenue growth of 1.5% a year between 2016 and 2020, down from a previous guidance of 2.5%. It also lowered the guidance for 2020 return on equity--a key measure of profitability--to 9.5% from 10%. The bank increased its recurring cost-savings target to EUR3.3 billion from 2020, up from a previous target of EUR2.7 billion. Of the additional EUR600 million, roughly EUR350 million will come from its corporate and institutional banking unit.

-CORPORATE AND INSTITUTIONAL BANKING: The performance of its domestic markets and international financial-services divisions are in line with the bank's plan, it said. However, "the unfavorable environment requires to intensify the transformation" of the corporate and institutional banking unit, BNP said. The CIB unit's revenue fell 7.5% last year and 9.4% in the fourth quarter compared with a year earlier. Global markets revenue fell 40% in the quarter, with equity revenue down 70% on year while fixed-income, currencies and commodities revenue were down 15%.

-CAPITAL: BNP's core Tier 1 capital ratio--a key measure of capital strength--rose to 11.8% in December from 11.7% in September. It now targets a ratio of at least 12% in 2020, compared with a previous guidance of 12%.

Write to Pietro Lombardi at [e-mail]

(END) Dow Jones Newswires

February 06, 2019 05:20 ET (10:20 GMT)

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