(Boursier.com) — BNP Paribas rose timidly by 0.5% to 56.35 euros this Monday after falling at the end of last week in the wake of results lower than expectations in the fourth quarter. The bank was particularly penalized by a series of exceptional charges and a weakening of activities linked to consumer credit and commercial real estate.
Over the last three months of 2023, the financial institution saw its net income, group share, fall by 50% to 1.07 billion euros, compared to a consensus of €2 billion, for net banking income up slightly from 0. 1% to 10.9 billion euros (11.45 billion euros consensus).
CIB’s revenues fell by 2.6% to €3.74 billion (€3.82 billion expected) and those of Global Markets were down by 5.5% at constant scope and exchange rates in line with more normalized client activity. . Revenues from equity trading and prime brokerage services jumped 69% to €658 million while those from fixed income, currencies and commodities trading fell 32%.
Provisions rose 39% to €972 million as the lender had to set aside money to cover risks from non-performing loans. Finally, the Common Equity Tier 1 ratio stands at 13.2%, compared to the consensus of 13.3%.
Provisions in question
The difference in BNP’s results with forecasts is partly explained by the constitution of a provision of 645 ME to cover “net charges for risk on financial instruments”, half of this amount corresponding to a long-standing dispute involving on mortgage loans in Poland.
Despite everything, the bank intends to pamper its shareholders: The Board of Directors will therefore propose to the General Meeting of May 14, 2024 to pay a dividend of 4.60 euros, paid in cash, i.e. a distribution of 50% of the distributable result of 2023. The return to the shareholder will be increased to 60% of the distributable result of 2023 with the planned launch of a share buyback program of 1.05 billion euros in 2024.
Building on its diversified model, BNP Paribas should continue to grow faster than its underlying economy and gain market share, thus offsetting the now more marked deterioration of the economic environment compared to the reference economic scenario… Nevertheless, various decisions by public authorities (compulsory reserves of the ECB, Belgian banking tax, bonds issued by the Belgian State) marked 2023. Taken together, they have the effect of bringing the ROTE back to 2025 within the range of 11.5% to 12%, compared to a previous target of around 12%. The group has also reduced its objective for the average annual growth rate of group net profit over the period 2022-2025 to around 8%, compared to more than 9% previously…
Among the latest broker opinions, RBC Capital remains at ‘outperform’ on BNP Paribas but with an adjusted price target of 82 to 77 euros. SG also remains a buy on BNP Paribas but reduces its target from 74 to 72 euros.