PARIS, Feb 6 (Reuters): BNP Paribas slightly increased its 2020 profitability target on the back of a strengthening European economy, although its quarterly earnings came below expectations due to higher costs and provisions against two specific corporate clients.
The French bank's net profit fell to 1.43 billion euros ($1.8 billion) in the fourth quarter from 1.44 billion a year earlier, below the 1.59 billion euros expected by analysts in a Reuters poll.
Revenues fell 1.2 per cent to 10.53 billion euros, versus the 10.47 billion predicted by analysts. BNP Paribas also set a 2017 dividend of 3.02 euros, up 11.9 per cent from last year.
France's biggest bank confirmed its 2020 targets, but said it was now targeting a return on equity of above 10 per cent in 2020 versus a target of 10 per cent disclosed in March last year.
"In a lacklustre interest rate and market environment, the business activity of the group developed vigorously, sustained by a gradually stronger European growth," the bank said in a statement.
BNP Paribas' cost of risk, a measure which reflects how much is set aside for bad loans, rose to 264 million euros in the fourth quarter at its investment banking unit, from 70 million a year ago.
Revenues at the corporate and institutional banking (CIB) division also dropped by 6.9 per cent. Fixed income trading declined by 27.4 per cent, although equity and prime services revenue rose 12.1 per cent.
The French bank outperformed the big five US banks that on average reported fixed income, currencies and commodities revenues down 31 per cent, and equities trading 7 per cent lower.
BNP Paribas has said it aims to grab market share from rivals pulling back from investment banking even as it moves ahead with its own cutbacks.
The bank has also embarked this year on a 3.0 billion euros plan to bring in new digital technologies in response to changing customers' behaviour, with an aim to making it run more efficiently by 2020.
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