By Swissquote Analysts
BNP Paribas Raises Targets, to Launch Buyback After Revenue Surges on Interest Income
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BNP Paribas SA’s fourth-quarter profit fell but revenue rose on bumper net interest income, as it raised its targets to 2025 and said it would launch a 5 billion euro share buyback. The French bank, the largest in the eurozone by market capitalization, reported net profit of 2.15 billion euros ($2.31 billion) in the three months to December, down from EUR2.31 billion in the same period in 2021. Revenue rose 7.8% on year to EUR12.11 billion, driven by interest income that jumped 16%. The results were, however, slightly below expectations of net profit of EUR2.34 billion and revenue of EUR12.19 billion, according to analysts’ consensus provided by FactSet. At its Corporate & Institutional Banking arm, revenue increased 18%, with all three businesses areas growing by double digits. But commission income fell 5.9% to EUR2.75 billion. The Paris-based lender also raised its midterm targets, including for net income to grow on average by more than 9% and earnings per share by more than 12% between 2022 and 2025, and now aims for return on tangible equity of around 12% in 2025. BNP added that it would return EUR5 billion to shareholders via two tranches of share buybacks in 2023, with EUR4 billion related to the recently completed sale of Bank of the West and EUR1 billion in an ordinary distribution. The company declared a dividend of EUR3.90 for 2022.
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The Switzerland stock market ended on a weak note on Monday after staying negative right through the day's session, largely in line with the trend seen across Europe. Concerns about the outlook for U.S. interest rates following last week's data showing stronger than expected non-farm payroll growth in the month of December, and geopolitical tensions weighed on sentiment. The benchmark SMI, which fell to 11,229.48 around mid morning, ended the session at 11,283.25, down 66.14 points or 0.58% from the previous close. Credit Suisse ended 3.5% down. Geberit lost nearly 3% and Logitech ended lower by 2.86%. Richemont drifted down 2.36%. Partners Group, Sonova, UBS Group and ABB lost 1.4 to 1.8%, while Swiss Re ended 1.04% down. Lonza Group and Roche Holding gained 0.8% and 0.55%, respectively. In the Mid Price Index, AMS ended nearly 3.5% down and Julius Baer lost 3.12%. Temenos Group, Adecco, Georg Fischer, Dufry and Straumann Holding lost 2 to 2.8%. Schindler Holding ended nearly 2% down. Schindler Ps, Belimo Holding, Clariant, VAT group and Ems Chemie Holding also ended notably lower. Zur Rose surged 3.54%. SIG Combibloc and Tecan Group gained about 1% and 0.8%, respectively. Barry Callebaut and Galenica Sante posted modest gains.
European stocks closed notably lower on Monday as last week's data showing stronger than expected jobs growth in the U.S. raised concerns the Federal Reserve will continue to hold rates at higher levels for longer than earlier thought. Geopolitical tensions after the U.S. military shot down a suspected Chinese spy balloon off the California coast on Saturday weighed as well. Investors also digested the latest batch of economic data from the region, and corporate earnings announcements. The pan European Stoxx 600 drifted down 0.78%. The U.K.'s FTSE 100 declined 0.82%, Germany's DAX ended 0.84% down, and France's CAC 40 ended lower by 1.34%, while Switzerland's SMI closed 0.58% down. Among other markets in Europe, Austria, Belgium, Finland, Ireland, Netherlands, Norway, Poland, Portugal, Spain, Sweden and Turkiye ended weak. Denmark, Iceland and Russia closed higher, while Czech Republic and Greece ended flat. In the UK market, Prudential tumbled 4.76%. Ocado Group, Hargreaves Lansdown, BT Group, Land Securities, Next, Informat, Scottish Mortgage, Persimmon, Melrose Industries and B&M European Value Retail lost 2 to 3.4%. Airtel Africa rallied more than 3.5%. Centrica, GSK and Fresnillo gained 1.3 to 1.8%. In the German market, Zalando ended 5.6% down. Porsche, Adidas, Puma, Cov3stro, Siemens Energy, Siemens Healthineers, Vonovia, BASF, Infineon Technologies, Deutsche Bank and Deutsche post ended lower by 1.5 to 3.6%. Aurubis shares plunged nearly 5%. The German copper producer reported that its first quarter net income dropped 81% to 57 million euros from 301 million euros in the same quarter last year.
U.S. stocks fell Monday, continuing their decline after strong jobs data last week raised the prospect of additional interest-rate increases by the Federal Reserve. The S&P 500 dropped 25.40 points, or 0.6%, to 4111.08, after falling 1% Friday. The Dow Jones Industrial Average slipped 34.99 points, or 0.1%, to 33891.02. The technology-heavy Nasdaq Composite declined 119.50, or 1%, to 11887.45. Nine of the S&P 500's 11 sectors declined Monday, with tech, communications and materials stocks posting the sharpest drops, and utilities - a classic defensive play - posting gains. Shares of Dell Technologies fell $1.28, or 3%, to $40.96 after the computer maker said it would cut 5% of its workforce due to worsening market conditions. A flurry of news related to mergers and acquisitions drove moves in some stocks. Newmont fell $2.25, or 4.5%, to $47.60 after the gold mining company made a roughly $17 billion offer for Australia's Newcrest Mining. Shares of Life Storage surged $12.47, or 11%, to $123.05 after the self-storage company received an $11 billion unsolicited offer from rival Public Storage. Shares of Catalent rallied $10.95, or 20%, to $67 after Bloomberg News reported that Danaher had expressed interest in taking over the contract manufacturer.
With the negative US stock markets, the stock markets in East Asia and Australia are mostly slightly down on Tuesday. The Chinese central bank, on the other hand, is expected to continue its loose monetary policy, according to traders. "Consumer price inflation in China is likely to remain moderate this year," said Louis Kuijs, an economist at S&P Global Research. He therefore does not think the People's Bank of China will raise interest rates. This assumption is also shared by many other investors and supports the Chinese stock markets. In Shanghai, the Composite Index is up 0.1 per cent.
U.S. treasurys sold off Monday, pushing the yield on the 10-year note up to 3.632% from 3.531% Friday. The yield on the two-year note, which is more sensitive to Fed rate moves, climbed to 4.454% from 4.299% on Friday, its highest 3 p.m. ET settle in more than two months.
Bank of America lifts Intesa Sanpaolo to Buy (Neutral) – Target EUR 3.25 (2.70)
UBS lowers OMV target to EUR 54 (56) – Buy
Deutsche Bank raises Erste Group target to EUR 40 (39) – Buy
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