BNP Paribas 4Q Net Profit Misses Expectations -- Earnings Review
By Pietro Lombardi
BNP Paribas SA (BNP.FR) reported fourth-quarter results Tuesday morning. Here are some highlights:
PROFIT: BNP Paribas 4Q net profit fell 1.1% compared with the year earlier to 1.43 billion euros ($1.78 billion), undershooting expectations. Analysts had forecast net profit of EUR1.46 billion, according to a consensus forecast provided by FactSet.
REVENUE: BNP's revenue beat expectations. France's largest listed bank by assets reported revenue of EUR10.53 billion. This compares with expectations of EUR10.4 billion, according to consensus.
WHAT WE WATCHED
COSTS: Transformation costs--which include investment in digital banking, new technologies and operating efficiency--were EUR408 million in the quarter. Last fall, BNP said it expected a gradual increase in transformation costs to an average of EUR250 million a quarter. The 4Q figure is "above the average... due to specific IT costs," the bank said Tuesday. BNP has targeted about EUR3 billion in transformation costs between 2017 and 2019.
CORPORATE and INSTITUTIONAL BANKING: The performance of BNP's corporate and institutional banking business weighed on 4Q results. Revenue declined 6.9%, or 3.7% at constant scope and exchange rates, to EUR2.63 billion, a decrease BNP said was linked with "an unfavourable market context this quarter." Low volatility and limited client activity hindered the fixed income, currencies and commodities business, which fell 27% at constant scope and exchange rates. The performance of the CIB business "will be under particular scrutiny in 2018," UBS has said, as BNP "is significantly geared to CIB."
DIVIDEND: The bank said it would pay its shareholders a dividend of EUR3.02 a share for 2017, a 12% increase compared with Deutsche Bank's forecast for EUR3. The rise is in line with BNP's steady dividend increase in the past few years. However, UBS has said it won't be easy for BNP to maintain this trend due to factors like rising costs and the low interest rate environment that is hurting the bank's domestic retail operation.
Write to Pietro Lombardi at email@example.com
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February 06, 2018 04:49 ET (09:49 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.