Net profit of BNP Paribas doubled in Q4 2016

BNP ParibasThe net profit of French bank BNP Paribas doubled in fourth fiscal quarter, supported by a strong performance of investment banking, which is recovering from difficult quarter a year ago. The Paris-based lender, which is also the largest public bank in France in terms of assets, reported net profit off 1.44 billion EUR, against 665 million EUR during the corresponding period last year. The revenues of BNP Paribas increased by 2% to 10.66 billion EUR.

The net profit, decreased from disposal of subsidiary in Poland and restructuring costs for a total of 127 million USD, remained below the analysts’ expectations for value of 1.57 billion EUR.

BNP Paribas said it expects net profit to increase by more than 6.5% annually over the next three years, maintaining a ceiling on spending and increasing revenues mainly from its international financial services and investment banking, as part of the strategic plan.

The French bank has benefited from increased trade after the presidential election in the US, which has helped to compensate for low interest rates and moderate economic growth. The revenues of the business with fixed income of BNP Paribas grew by 23%, which increased revenues from corporate and investment banking by 8% to 2.82 billion EUR in the period October-December 2016.

The division with international financial services of the bank, which includes retail banking outside the Eurozone, wealth management, consumer finance and insurance, reported an increase in revenue of 3% to 4.03 billion EUR.

Revenues from retail banking in France, Italy, Belgium and Luxembourg, however, fell by 1% to 3.87 billion EUR, affected by sustained low interest rates.

The bank said it expects revenue to increase by at least by 2.5% yoy between 2017 and 2020. This should allow the bank to increase the return on capital to 10% by 2020 compared to 9.4% in 2016, as well as the ratio of core capital Tier I to 12%. In December, it was at a level of 11.5%.

BNP Paribas said it would pay shareholders a dividend of 2.7 EUR per share for 2016 and the bank aims to increase its dividend by 9% annually on average between 2017 and 2020.

BNP is the first major French bank that submits its report on the fourth quarter. Societe Generale will publish the results on February 9 and Credit Agricole – on February 15.