BNP Paribas is one of the major banks not only in France but around the world as well. This French bank has a rich history. Interestingly, the world’s one of the largest banks reported earnings. It is worth mentioning that, BNP Paribas surpassed expectations.
Importantly, the bank reported a net income of 1.59 billion euros ($1.90 billion) for the fourth quarter of 2020. This result exceeded analyst expectations of 1.2 billion euros. Interestingly, it marked a 15.9% drop in profit from the previous three-month period.
People should take into account that, annual profit reached 7 billion euros, down 13.5% from December 2019. Based on the information provided by the bank, its cost of risk increased due to the Covid pandemic. BNP Paribas set aside a further 1.4 billion euros in loan loss provisions. It makes sense to allocate money to cope with potential problems. Unfortunately, the coronavirus pandemic is not over yet, and many companies all over the world are struggling to adapt to the ever-changing environment.
Hopefully, the revenues are stable compared to the year before at 44 billion euros and the costs are down by 1.1 billion euros. As a result, the gross operating income which is the difference between the two is up in a very material way.
One of the major French banks and its plans
As mentioned earlier, BNP Paribas is one of the most famous banks in the world. Interestingly, revenues came in at 10.8 billion euros for the fourth quarter, a drop of 4.5% from a year ago. It is worth noting that, for the fiscal year, revenues stood at 44.2 billion euros, marginally lower than in 2019.
Importantly, gross operating income rose by 6.2% from the previous year. Also, the CET 1 ratio which is a measure of bank solvency stood at 12.8%, up by 70 basis points from a year ago.
However, the Corporate and Institutional Banking division saw a 1.7% drop in revenues from the previous quarter. Nonetheless, domestic markets delivered a 2.8% increase in revenues over the same period.
It is worth noting that, despite euro zone banks having restrictions on dividends due to severe economic crisis in the region, the French bank will pay out a dividend of 1.11 euros per share in May.
According to one of the largest banks in the world, 29% of its 2020 net income would be invested in share buybacks once the European Central Bank rescind its current recommendation regarding dividends and share buybacks. Moreover, the bank wants to distribute 50% of its 2021 net income as well. Last but not least, the bank’s stock is down almost 3% since the start of the year.