‘Strong Momentum’ In Domestic Markets Helps BNP Paribas Beat Quarterly Performance Expectations

BNP Paribas’ net profit for the fourth quarter of 2021 exceeded forecasts by analysts, thanks to strong activity in domestic markets, the lender said.

For the quarter, the bank’s net income attributable to shareholders was 2.31 billion euros ($2.63 billion). According to Refinitiv statistics, this was higher than the 2.05 billion euros projected by analysts.

The French lender also surprised on the upside with its yearly figure, with net income of 9.49 billion euros, which was higher than the predicted amount of 8.92 billion euros.

“For the whole of 2021, Domestic Markets’ results were up very sharply, driven by increased activity,” the bank said in a statement.

During the fourth quarter, the lender reported revenues of 11.2 billion euros which was 1.5 per cent lower than for the previous quarter but was 3.7 per cent more compared to the same quarter a year ago. The bank also reported a 7 per cent rise year on year in its operating expenses for the quarter, reaching 7.93 billion euros. The CET 1 ratio of the bank — which is a measure of the level of solvency of the bank— was at 12.9 per cent.  

Due to a “limited number of new defaults,” loan-loss provisions of the lender declined from 1.6 billion euros for the fourth quarter a year ago to 510 million euros in the fourth quarter of 2021. Due to the epidemic, lenders increased their loan provisions in 2020.

BNP Paribas also stated that by 2025, it expects to achieve a return on tangible equity (a measure of investor return) of more than 11 per cent. This is lower than several other European lenders’ goals.

“We followed the buoyant economy,” bank CFO Lars Machenil said about the latest set of results.

“And we were basically delivering performance on all of those axes. So if you look at revenues, they’re up 4.4 per cent versus 2020 and roughly the same thing versus 2019.”

Markets are pondering the likelihood of increased interest rates in Europe when the latest earnings report is released. This might help many European bankers’ profit margins, which have long grumbled about the low-interest rate environment.

“If there would now be interest rates picking up to reflect a step up in the economy, well, we will be there to accompany that and take the benefits from it,” Machenil said.

He also sounded upbeat about the bank’s prospects in the next quarters, claiming that the coronavirus pandemic was under control and that Europe’s economy was on track to develop at a healthy rate.

BNP Paribas’ stock has increased by over 46% in the last year.

(Adapted from CNBC.com)

Categories: Economy & Finance, Strategy, Sustainability

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