BNP Paribas SA
reported a drop in fourth-quarter profit, hurt by record low interest rates and the fallout of the coronavirus pandemic, but said it expected revenue to bounce back this year as the global economy gradually recovers.
France’s biggest bank by assets said net profit for the three months to Dec. 31 fell by 13.9% to €1.59 billion euros, equivalent to $1.9 billion, and revenue declined by 4.5% to €10.83 billion, dented by a weak insurance and consumer credit business.
Still, the bank’s earnings and outlook were slightly above expectations, underscoring the resilience of BNP Paribas’s diversified business model, analysts said.
The Paris-based lender said it expected revenue to increase next year as its cost of risk, which reflects provisions for bad loans, declined.
France’s economy has been badly bruised by two national lockdowns to contain the spread of the coronavirus, which has killed over 37,000 people in the country and infected millions. The government’s massive subsidy program, rolled out last spring to prevent widespread unemployment, has helped cushion the economic blow.
Like other European and U.S. banks, BNP Paribas has also benefited from a trading boom amid market volatility during the pandemic.
In the fourth quarter, revenue from fixed-income trading rose about 22% to €1 billion, pushing BNP Paribas’s corporate and investment bank total revenue 6.9% higher to €3.32 billion. The bank said fixed-income trading revenue last year was boosted by “exceptionally intense” client activity, which was unlikely to continue.
The bank’s domestic-markets division, which includes retail operations in Italy, France and Belgium, posted a 1.3% decline in revenue to €3.84 billion, impacted by low interest rates.
BNP Paribas said it would pay a dividend of €1.11 per share in cash in May, based on a 21% payout ratio, within limits set by the European Central Bank for lenders to preserve capital amid the economic and health crisis. It plans to pay out more in the fourth quarter when the ECB allows it to reach its target of 50% payout ratio.
BNP’s core Tier 1 capital ratio, which measures a bank’s top quality capital such as equity and retained earnings against risk-weighted assets, stood at 12.8% in December. This was up from 12.6% in September and well above the 9.31% threshold set by the ECB.
Write to Noemie Bisserbe at [email protected]
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