BNP Paribas Targets Higher Shareholder Returns Through 2025
February 08 2022 - 1:04AM
Dow Jones News
By Mauro Orru
BNP Paribas SA plans to raise the proportion of earnings it pays
to shareholders through 2025, joining a cohort of European lenders
in increasing shareholder returns after the European Central Bank
lifted the restrictions on payouts it had imposed at the onset of
the coronavirus pandemic.
The French bank said Tuesday that it is targeting a payout ratio
of 60% as part of its new plan from 2022 to 2025, including a
minimum cash payout of 50%.
For 2021, it is proposing a dividend of 3.67 euros ($4.20) in
cash, representing a 50% payout ratio that rises to 60% when
factoring in a EUR900 million share-buyback program that BNP
Paribas completed in December. The bank will be distributing EUR5.4
billion in total for 2021 if shareholders back its proposal at the
annual general meeting on May 17.
Major European banks are planning higher returns to shareholders
after the ECB lifted restrictions that curbed lenders' dividend
payments and share buybacks. The central bank had imposed the
restrictions in March 2020 when the pandemic hit markets, in an aim
to boost banks' capacity to absorb losses.
The curbs have been particularly contentious for lenders since
dividend payments are among the most effective tools to attract and
retain investors. Now, banks in the continent are playing
catch-up.
UniCredit SpA said it would return at least EUR16 billion by
2024, Intesa Sanpaolo SpA plans EUR22 billion by 2025, and UBS
Group AG said it would buy back up to $5 billion worth of shares
this year.
BNP Paribas's plan to raise its payout ratio comes as the bank
targets average annual growth in net income of more than 7%
throughout the period from 2022 to 2025, with revenue growth of
more than 3.5% annually.
It also expects a common equity Tier 1 ratio--a key measure of
capital strength--of 12% in 2025. The return on tangible equity--a
key metric of profitability--should be more than 11%, the bank
said.
BNP Paribas ended 2021 with a net profit of EUR9.49 billion, up
34% from 2020 and 16% from 2019. In the fourth quarter, the lender
posted net profit of EUR2.31 billion up from EUR1.59 billion a year
earlier. Revenue rose to EUR11.23 billion from EUR10.83
billion.
Analysts polled by FactSet had forecast net profit of EUR2.01
billion on revenue of EUR11.40 billion for the last three months of
the year.
Loan-loss provisions fell to EUR510 million compared with
EUR1.60 billion a year ago, when banks were still preparing for
potentially large losses on loans to consumers and businesses due
to the pandemic.
Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94
(END) Dow Jones Newswires
February 08, 2022 01:49 ET (06:49 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
BNP Paribas (EU:BNP)
Historical Stock Chart
From Apr 2024 to May 2024
BNP Paribas (EU:BNP)
Historical Stock Chart
From May 2023 to May 2024