by Mathieu Rosemain

PARIS (Reuters) – BNP Paribas fell sharply on the Paris Stock Exchange on Thursday after reporting lower than expected results in the fourth quarter, due to a series of exceptional charges and a weakening of activities linked to consumer credit and commercial real estate, leading the leading French bank to revise downwards some of its objectives for 2025.

At 12:02 p.m., the stock fell 7.91% to 57.6 euros, its biggest drop in session since March 2023. It dragged Société Générale (-2.83%), Crédit Agricole (-2.17) in its wake. %) and the Stoxx banking sector index (-0.86%).

In the fourth quarter, BNP Paribas’ group share of net income fell 50% year-on-year, to 1.07 billion euros, below analysts’ estimates, which averaged 1.74 billion euros. , according to a consensus compiled by BNP Paribas.

The group’s net banking income in the fourth quarter increased by 0.1% to 10.9 billion euros, again below the expectations of analysts who expected on average 11.4 billion euros.

The difference in BNP’s results with forecasts is partly explained by the constitution of a provision of 645 million euros to cover “net charges for risk on financial instruments”, half of this amount corresponding to a dispute over long-standing regarding mortgage loans in Poland.

In the fourth quarter, the net banking income of the investment bank (CIB) fell by 2.6%, penalized by a 32% drop in income from activities on rates, currencies and commodities (FICC).

The performance of the Investment and Protection Services (IPS) division was also worse than expected, with a 12.9% drop in revenue in the last quarter of 2023.

REVIEW OF 2025 OBJECTIVES

BNP has also revised its ROTE (return on tangible equity) outlook downwards, indicating that it will not be able to achieve its objective of 12% before 2026 due to “various decisions by public authorities”, including new requirements from the European Central Bank in terms of reserve requirements.

The group now anticipates a ROTE of between 11.5% and 12% in 2025 and has also reduced its target for the average annual growth rate of group net profit over the period 2022-2025 to around 8%, compared to more than 9%. previously.

“The deterioration of the 2025 objectives is disappointing, even if the consensus is slightly below the adjusted forecast,” commented RBC analysts in a note.

“Revenue trends are discouraging but remuneration remains favorable to shareholders,” underline JPMorgan analysts.

ECONOMIC DOWNTURN

BNP Paribas, which has cash of more than 7 billion euros after selling its U.S. retail operations last year, announced an 18% increase in the dividend to 4.60 euros in cash, as well as a share buyback program of 1.05 billion euros.

BNP Paribas has already used three billion euros of capital since January 2022 and it has 4.6 billion euros left to redeploy, the bank indicated in its results presentation.

Eurozone banks have increased their profits and returns to shareholders in recent quarters thanks to rising interest rates from the European Central Bank (ECB). But the economic situation is deteriorating and a drop in the cost of credit is expected.

“The economy is rather slowing down,” admitted the general director of BNP Paribas, Jean-Laurent Bonnafé, during a press conference.

“The ECB is not lowering its short-term rates, it is waiting for inflation to return to normal. Obviously, it is taking a little longer than expected. The year 2024 from this point of view will not be very favorable to us “, he added.

(Report by Mathieu Rosemain, by Augustin Turpin and Blandine Hénault, edited by Kate Entringer)

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