BNP Paribas 4Q Net Profit Misses Expectations -- Earnings Review
February 06 2018 - 4:04AM
Dow Jones News
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 pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
February 06, 2018 04:49 ET (09:49 GMT)
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