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BNP Paribas beats expectations, pronounces dividend payout in Might

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People walk past BNP Paribas, a french international banking group.

ANGELA WEISS | AFP | Getty Images

LONDON — BNP Paribas beat analyst expectations when it reported earnings Friday, as its CFO spoke of a “gradual pickup” for the economy looking ahead.

The French bank reported net income of 1.59 billion euros ($ 1.90 billion) for the fourth quarter of 2020, beating analyst expectations of 1.2 billion euros, according to Refinitiv. It marked a 15.9% drop in profit from the previous three-month period.

Annual profit reached 7 billion euros, down 13.5% from December 2019. Analysts polled by Refinitiv had forecast net income for 2020 of 6.5 billion euros.

The French lender also said its cost of risk had increased as a result of the Covid pandemic, and set aside a further 1.4 billion euros in loan loss provisions.

“The revenues are stable compared to the year before at 44 billion (euros), the costs are down by 1.1 billion (euros). So the gross operating income, the difference between the two, is up in a very material way,” Lars Machenil, CFO of BNP Paribas, told CNBC’s Charlotte Reed after the results were published.

Here are other highlights:

  • Revenues came in at 10.8 billion euros for the fourth quarter, a drop of 4.5% from a year ago.
  • For the fiscal year, revenues stood at 44.2 billion euros, marginally lower than in 2019.
  • Gross operating income rose by 6.2% from the previous year.
  • CET 1 ratio — a measure of bank solvency — stood at 12.8%, up by 70 basis points from a year ago.

The CIB (Corporate and Institutional Banking) division saw a 1.7% drop in revenues from the previous quarter, whereas domestic markets delivered a 2.8% increase in revenues over the same period.

Dividends in May

Despite euro zone banks having restrictions on dividends given the severe economic crisis in the region, BNP Paribas will pay out a dividend of 1.11 euros per share in May, equivalent to 21% of its 2020 net income.

The French lender also said that 29% if its 2020 net income would be invested in share buybacks once the European Central Bank repeals its current recommendation on dividends and share buybacks.

Machenil said the bank is nonetheless following the ECB’s recommendation by announcing a dividend within certain parameters advised by the central bank.

Going forward the bank said the aim was to distribute 50% of its 2021 net income as well.

“When we look at the year 2021 what we have assumed is that there will be a gradual pickup,” Machenil said about the economic environment this year.

“So before the summer, there can still be a bit of ups and downs,” he said, adding that he expects the Covid-19 vaccine rollout will lead to an economic improvement in the second half of 2021.

The bank’s stock is down almost 3% since the start of the year.

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Steven Gregory