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The BNP Paribas group closed the 2023 financial statements with a distributable net profit increasing to 11.23 billion (+10.2% compared to 2022). Even more evident is the improvement in the accounts of the Dutch banking group ING, which practically doubled its net profits (from 3.6 to 7.2 billion euros). But the results of both European banking giants were greeted by a real collapse in stock market prices, with losses exceeding 8% in the middle of the session.
What disappointed analysts’ expectations were the accounts for the fourth quarter of 2023 but above all the “guidance” for the results of the next two years, which was significantly lower than investors’ expectations.
The numbers
According to the first comment reports, «the net profit of the BNP Paribas group in the fourth quarter (2 billion) is 20% lower than the consensus – we read in a Citigroup note – due to lower revenues and extraordinary provisions due to legal cases (645 million) in particular on the mortgage portfolio in Poland”. But what disappointed the market above all was the announcement that profitability in the next two years will grow less than expected, with the postponement of the Rote target (Return on tangible equity) of 12% which will no longer be achieved in 2025 but only in 2026.
The stock exchange gave a similar welcome to the accounts of Dutch ING which, despite having closed 2023 with a net profit that beat consensus estimates by 1%, disappointed analysts’ expectations regarding the dynamics of the interest margin . Especially in the forecasts for 2024 which, according to Citi analysts, sees a net interest income 4% lower than expected. Which, added to the cost dynamics, implies a 5% cut on net profit forecasts.
As can be seen, the exploitative phase of bank profits due to the large increase in interest rates in Europe seems to be behind us. And the overly rosy forecasts of the analysts clash with the more prudent ones of the banks, leading to a revision of earnings expectations which immediately weighs on stock market valuations.