BNP Paribas introduced a €900m share buyback plan on Friday morning after France’s largest listed financial institution revealed it was one of many greatest winners from a surge in equities buying and selling over the previous three months.
The dimensions of the buyback programme — which is able to run from November to February — is about 1.3 per cent of BNP’s market capitalisation and caught analysts off-guard. Most eurozone banks have taken a extra cautious strategy to shareholder returns as they emerge from the pandemic.
BNP posted a 32 per cent rise in internet earnings from a 12 months earlier to €2.5bn, beating analyst expectations of €2.2bn. That additionally represented a 29 per cent enhance versus 2019 ranges.
However the group suffered a much bigger fall in mounted earnings buying and selling over the third quarter in contrast with different world funding banks.
Shares in BNP had been up 1 per cent in early buying and selling on Friday to €58, having doubled over the previous 12 months.
“We count on the principle focus for traders to be on the rise on the brand new buyback, the outlook for revenues,” mentioned Azzurra Guelfi, an analyst at Citigroup. She added there would even be a give attention to the outlook for the funding financial institution and the retail enterprise.
The European Central Financial institution lifted a cap on dividends and share buybacks at eurozone banks this summer season, following comparable reversals of pandemic insurance policies by the US Federal Reserve and the Financial institution of England.
Since then, Swiss and UK banks have proven essentially the most urge for food amongst European lenders to launch additional cash to shareholders. This week, UBS said it expected to repurchase $2.6bn of shares this 12 months, whereas HSBC announced a $2bn buyback.
BNP has benefited from decrease provisions in opposition to dangerous loans in latest quarters, after it booked greater expenses when the pandemic hit in 2020, and its value of danger dropped greater than 40 per cent from a 12 months earlier. An financial turnround after lockdowns lifted and authorities programmes to assist stave off small enterprise bankruptcies additionally boosted its retail banking division.
“BNP Paribas’ outcomes are stable and make sure the potential for progress past the rebound that has already occurred,” mentioned chief govt Jean-Laurent Bonnafé.
In its funding financial institution, BNP Paribas’ efficiency was extra combined. A dealmaking increase boosted its payment earnings and echoed good points at US friends, however earnings fell in some components of its buying and selling enterprise. Income within the division was up 6.4 per cent 12 months on 12 months to €3.6bn.
The financial institution mentioned exercise was weaker in charges and overseas change buying and selling, with revenues in its mounted earnings, commodities and currencies unit down 28 per cent in contrast with the third quarter of 2020.
Its equities enterprise shone, with fairness and prime companies income up 79 per cent to €835m on the again of robust derivatives volumes and contributions from Exane, the funding firm it took over this 12 months.
Against this, income from mounted earnings buying and selling at giant US banks was down 13 per cent within the third quarter, although equities revenues had been up 35 per cent, on common.