* Net profit of €2.31bn in Q4, +44.9% (consensus: €2.03bn)
* Annual net profit of €9.488 billion
* Average earnings growth target of more than 7% by 2025
* Stock falls, costs higher than estimated in Q4
(With press conference, share price, analyst commentary)
by Matthieu Protard
PARIS, Feb 8 (Reuters) – BNP Paribas BNPP.PA raised its profitability targets and promised to increase the distribution of cash to its shareholders on Tuesday but its results for the end of 2021 disappointed some investors, the costs having exceeded their estimates, resulting in a decline in its share price.
The new strategic plan for 2025 targets average annual growth of more than 3.5% in revenues and average annual growth in net banking income of nearly 3% for financing and investment banking activities (corporate and investment banking, CIB).
It also plans to increase the cash distributed to shareholders “by increasing the distribution rate to 60%, with a minimum cash distribution rate of 50%”, specifies the group in a press release.
Return on tangible equity (ROTE), a key indicator of banks’ ability to generate profits, is expected to be over 11% in four years from 10% in 2021.
The prospect of a rise in interest rates, favorable to the improvement of credit margins, has already led several European banks to raise their forecasts: Nordea
NDAFI.HE is now aiming for a ROTE of more than 13% in 2025.
BNP Paribas shares lost 1.31% to 64.83 euros at 12:05 p.m. while the CAC 40 .FCHI index rose by 0.45%. The title thus reduced its growth since the start of the year to 6.5% after a jump of 41% in 2021.
“The results for the fourth quarter of 2021 were in line with the consensus at the level of profit before tax but lower by 11% for profit before provisions, due in particular to a variance of 4% at the cost level”, explains Jefferies in a note.
The banking sector as a whole is currently having to deal with rising costs, due among other things to the need to improve remuneration to avoid the departure of certain employees, to the tightening of regulatory requirements and to investments in the digitization of its activities. .
THE DISPOSAL OF BANK OF THE WEST WILL FINANCE GROWTH
Over the last three months of 2021, BNP Paribas made a net profit of 2.31 billion euros, up 44.9% year on year, while financial analysts estimated it on average at 2.03 billion. according to Refinitiv data.
The cost of risk, at 510 million euros in October-December, fell by 68% compared to the corresponding period of 2020. Net banking income (NBI) increased at the same time by 3.7% to 11.23 billion euros.
Over the whole of 2021, BNP Paribas’ net banking income increased by 4.4% to 46.235 billion euros, the cost of risk was reduced by 48.8%, to 2.925 billion and net income increased by 34.3% to 9.488 billion. Compared to 2019, the last full year before the pandemic, NBI was up 3.7% and net profit 16.1%.
In the CIB division, revenues fell 1.5% in the fourth quarter, with among other things a 24.7% drop in those of the fixed rates, currencies and commodities (FICC) activities.
BNP Paribas plans to distribute 50% of 2021 profits to its shareholders in the form of dividends, or 3.67 euros per share. Including the 900 million euro share buyback plan carried out in November-December, the payout rate would thus reach 60%.
The group announced on December 20 that it had reached an agreement to sell Bank of the West to the Canadian BMO BMO.TO for around 16.3 billion dollars, or around 14.5 billion euros.
nL8N2T5153
Seven billion euros from this sale will be used to finance the group’s growth in the coming years, which could lead to targeted acquisitions, explained the general manager, Jean-Laurent Bonnafé, during a press conference without defining precisely the potential targets.
“There is no predetermined choice, there is a potential that will have to be mobilized over time,” he said.
(Report Matthieu Protard, French version Jean-Michel Bélot and Marc Angrand, edited by Jean Terzian and Blandine Hénault)