BNP Paribas Q4 and full-year 2021 earnings: Profit beats expectations

BNP Paribas has reported net profit above expectations for the final quarter of 2021, driven by a strong activity in domestic markets.

The bank’s net income attributable to shareholders came in at 2.31 billion euros ($2.63 billion) for the quarter. That’s above the 2.05 billion euros expected by analysts, according to data from Refinitiv.

The French lender also surprised to the upside with its annual figure, with net income standing at 9.49 billion euros, above the 8.92 billion euros forecasted.

“For the whole of 2021, Domestic Markets’ results were up very sharply, driven by increased activity,” the bank said in a statement.

Other highlights of the quarter:

  • Revenues hit 11.2 billion euros — down 1.5% from the previous quarter, but up by 3.7% from a year ago.
  • Operating expenses reached 7.93 billion euros, which was 7% higher than the previous quarter
  • CET 1 ratio — a measure of bank solvency — stood at 12.9%.

Loan-loss provisions also fell from 1.6 billion euros a year ago to 510 million euros in the fourth quarter, due to a “limited number of new defaults,” the bank said. Lenders bolstered their loan provisions in 2020 due to the pandemic.

BNP Paribas also said it wants to achieve a return on tangible equity — a measure of return for investors — of more than 11% by 2025. This is below the targets of some other European lenders.

“We followed the buoyant economy,” bank CFO Lars Machenil told CNBC’s Charlotte Reed about the latest set of results.

“And we were basically delivering performance on all of those axes. So if you look at revenues, they’re up 4.4% versus 2020 and roughly the same thing versus 2019.”

Ready to benefit from higher rates

The latest earnings release comes as markets consider the possibility of higher interest rates in Europe. This could support the profit margins of many European lenders, which have long complained about the low interest rate environment.

“If there would now be interest rates picking up to reflect a step up in the economy, well, we will be there to accompany that and take the benefits from it,” Machenil said.

He also sounded confident about the bank’s performance in upcoming quarters, saying authorities were managing the coronavirus pandemic and Europe’s economy was on track to grow at a solid pace.

Shares of BNP Paribas are up by about 46% over the last 12 months.

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