(BFM Bourse) – The biggest bank in the eurozone has unveiled quarterly net profit above expectations and a record annual profit, but its net banking income has grown less than expected, and its growth objectives for 2025 are disappointing investors .
Severe, the market? The reception reserved for the quarterly (and annual) results of the largest tricolor bank may suggest this, the BNP Paribas title having dropped more than 4% at the opening despite the (expected) publication of the largest net profit in its history. (in euros), to nearly 9.5 billion euros – up 34.3% year-on-year and 16.1% compared to the pre-pandemic level of 2019. The net income group share on the last three months of the year stood at 2.31 billion euros (+44.9% over one year), a figure above the consensus of analysts polled by Reuters of 2.03 billion euros.
The cost of risk, at 510 million euros in October-December, fell by 68% compared to the corresponding period of 2020. Over the year as a whole, the cost of risk (which reflects provisions for receivables doubtful) amounted to 2.92 billion euros (-48.8% over one year), “at 34 basis points (i.e. 0.34%, editor’s note) of outstanding customer loans” specifies the group , which adds that this cost of risk is “at a low level due in particular to a limited number of default entries”.
Net banking income (NBI), the equivalent of turnover for a banking establishment, rose at the same time by 3.7% to 11.23 billion euros in the last quarter, below market expectations (11.37 billion). NBI thus increased by only 4.4% over the year to 46.235 billion euros (+3.7% compared to 2019).
“In-depth digitization” of the group
“BNP Paribas is performing very well in 2021,” said Jean-Laurent Bonnafé, the group’s Chief Executive Officer. According to him, this demonstrates the group’s long-term commitment alongside their customers “in all phases of the economic cycle”. “With enhanced profitability in 2021 and a ROTE (return on tangible equity, notably excluding goodwill, editor’s note) of 10%, the group’s results are also the result of our long-term strategy and our transformation. “he continues, pointing to the “digitalization in depth” of the group.
The group also took advantage of its annual results to announce its strategic plan for the 2022-2025 period, called “Growth, Technology & Sustainability 2025”, and recalls that “despite an unfavorable environment, multiple headwinds and the shock linked to the health crisis”, it has reached or exceeded this year the main objectives set under the 2017-2020 plan, with a lag of only one year. Among these, a CET1 ratio (hard core equity, Ed) of 12.9%; a return on equity of 10% and a payout ratio of 60% in 2021″ welcomes the bank.
BNP Paribas plans to distribute 50% of 2021 profits to its shareholders in the form of dividends, i.e. 3.67 euros per share (+38% over one year), a payment which “will bring the total distribution rate for the year 2021 at 60%, taking into account the share buyback program of 900 million euros, executed between November 1, 2021 and December 6, 2021, which is equivalent to a distribution of 10% of the 2021 result.
For the 2022-2025 period and “on the basis of prudent macroeconomic assumptions”, the group’s objective is an average growth in its net banking income of more than 3.5% per year, with positive jaws effects. (corresponding to faster growth in income than in management fees, editor’s note) by more than 2 points on average”. period to bring the ROTE to more than 11% while maintaining a CET1 ratio target of 12% by 2025. These targets are therefore deemed prudent by the market, although the stock benefits from the rebound in the CAC (+1% towards 10:45 a.m.) to reduce its losses (-1.4%).
Quentin Soubranne – ©2022 BFM Bourse
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