BNP Paribas’ profit targets increased

BNP Paribas, France’s largest listed bank, has increased its profit targets for the next two years after announcing its plans to reinvest the profits from its $16.3 billion sale of its US retail bank in technology and small acquisitions.

The bank confirmed that it would return €4 billion of the US sale proceedings to shareholders through a share buyback this year and another €1 billion planned buyback in 2023. The bank also earmarked €7.6 billion for spending on its business including IT upgrades and potential acquisitions in areas such as consumer credit, insurance, equities, and asset management.

BNP Paribas CEO, Jean-Laurent Bonnafé, stated that the bank was targeting “small businesses that are easy to integrate and can be brought in-house quickly”. The bank expects net income to grow more than 9% annually to 2025 and its return on tangible equity to be more than 12% by 2025.

BNP Paribas’ fourth-quarter net income of €2.15 billion was down 6.7% compared to a year earlier and below the expected €2.37 billion in a Refinitiv poll. However, some of its businesses outperformed in the three months to December, with earnings from trading fixed income, rates, and commodities standing out compared to Wall Street rivals. The bank’s fixed income, rates, and commodities income surged 45% year-on-year, compared to a 20% average rise at other European investment banks that had reported so far.

By midday, BNP shares were up more than 2% as analysts at Barclays described the bank’s revised guidance as a “positive”. BNP Paribas is currently selling some of its personal finance businesses outside Europe and reshaping that unit elsewhere.