Phiadvisor's bullish signal on BNP(BNP-FR)
BNP is a €54.5bn market cap and France's largest banking group. Net banking product (NBP) is split between 1/retail banking (58%) including retail banking activity in France (6.8 million clients), in Belgium and Italy (2.7 million clients with BNL) international activities and specialized financial services activities. 2/finance and investment banking (27%) including consulting and capital market activities and financing. 3/ institutional and private management and insurance (15%): including asset management, private banking activity (No. 1 in France), real estate and on-line brokerage services, insurance and securities services.
In 2020, BNP Paribas' net income group share fell 13.5% to € 7.067 bn wellabove its guidance of a 15-20% decline. The decline is led by the sharp increase in the cost of risk due to the impact of Covid-19 on the economy. It jumped by 78.5% to €5.7 bn, but a first step of normalization is expected in 2021 after the peak of 2020. Net banking income, at € 44.3 bn, was almost stable yoy, in line with expectations.
Over the last three months of 2020, net income, adjusted for exceptional items, net profit exceeded expectations., FICC brokerage revenues jumped by 22.1% to € 1bn euros, driven by customer activity volumes and by market share gains.
BNP Paribas will propose to pay a €1.11 dividend per share in May 2021, payable in cash, i.e. a distribution of 21% of the 2020 result, the maximum resulting from the ECB's recommendation.
The additional restitution of 29% of the 2020 result is considered in the form of a share buyback as soon as the ECB's restriction recommendation is repealed by the end of September 2021. This year, BNP Paribas anticipates moderate revenue growth thanks to the gradual normalization of activity and cost stability.
Short term catalyst : Rate curve improvement, return to dividend payments and shares buy-back.
This signal looks consistent with the European Banking sector, currently in Major Bullish Trend.