BNP Paribas raises CET1 ratio target to 13% by 2027
- The French bank’s shares have gained about 13% this year
French bank BNP Paribas on Thursday raised its CET1 ratio target to 13% by 2027, up from 12.5% previously, based on stronger group profitability, moderate growth in risk-weighted assets of around 2% per year, and faster sales of non-strategic assets.
The euro zone’s biggest bank by assets said it would decide at the end of each year how much of the capital above the new target would be returned to shareholders.
“By leveraging existing growth drivers, we aim to further enhance our profitability profile, (with) a disciplined and attractive distribution policy,” CEO Jean-Laurent Bonnafé said in a statement.
The group said it had also received authorization from the European Central Bank to proceed with a 1.15 billion euro ($1.32 billion) share buyback programme, which it aims to launch before the end of November. BNP Paribas confirmed its target for a return on tangible equity of 13% by 2028.
The French bank’s shares have gained about 13% this year, as higher interest continued to boost profitability and bad loans remained low.
However, they are lagging the 47.8% rise seen on Europe’s benchmark banking index overall.
BNP shares have seen less than half the gains the average European bank has enjoyed in the past three years, as investors questioned whether the lender could improve its profitability versus rivals.
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