The French bank BNP Paribas beat expectations of the market for its fourth quarter with the company’s CFO talking of a “gradual pickup” for the economy in the near future.
For the fourth quarter of 2020 ended December 31, net income of 1.59 billion euros ($ 1.90 billion) was reported by the bank which beat estimates of analysts of 1.2 billion euros, according to Refinitiv. That profit number of the bank however was a 15.9 per cent drop compared to the same figure in the previous quarter.
There was also a 13.5 per cent year on year drop in the bank’s annual profit at 7 billion euros. A net income of 1.59 billion euros ($ 1.90 billion) for the entire of 2020 was predicted by analysts polled by Refinitiv.
The ongoing Covid-19 pandemic had enhanced its cost of risk for the entire year since its first outbreak in China in December of 2019, the French lender also said as it also announced setting aside of an additional amount of 1.4 billion euros as provisions for loan losses.
“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, said.
For the fourth quarter the company’s revenue saw a 4.5 per cent year on year drop in revenues at 10.8 billion euros while the revenue for the entire fiscal 2020 was at 44.2 billion euros which was slightly lower than the previous year of 2019. The bank however reported a 6.2 per cent year on year rise in its gross operating income. The CET 1 ratio which is number that measures the solvency of a bank was at 12.8 per cent which was higher by 70 basis points compared to a year ago.
There was a 1.7 per cent quarter on quarter drop in revenues for the CIB (Corporate and Institutional Banking) division of the bank while a 2.8 per cent quarter on quarter growth in domestic market revenues was reported by the company.
BNP Paribas abboubce3d payment of dividends of 1.11 euros per share in May, which will be equivalent to 21 per cent of its 2020 net income even though there is an embargo on euro zone banks on paying dividends when there is a severe economic crisis in the region.
Once the current recommendation on dividends and share buybacks is repealed by the European Central Bank, the French bank will invest about 29 per cent of its net income of 2020 for share buybacks.
The bank announced a dividend within certain parameters advised by the central bank which meant that it followed the ECB’s recommendation, Machenil said.
About 50 per cent of its net income from 2021 would also be distributed among the shareholders of the bank, BNP Paribas said.
“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.
(Adapted from CNBC.com)