BNP Paribas is considering a higher level of shareholder distributions as it generates more capital from stronger growth and profitability. The discussion comes after the French lender reported results ahead of forecasts and announced a 1.3 billion euro share buyback.
Highlights
- BNP Paribas is considering raising its payout ratio from 60% to 70% of annual earnings, with a board decision expected in the coming weeks.
- BNP Paribas may return excess capital above a 13% CET1 ratio, with share buybacks among the options under review.
- On Wednesday, BNP Paribas beat earnings forecasts and announced a €1.3 billion share buyback, emphasizing management's focus on capital return.
Capital return options under review
As reported by Reuters, BNP Paribas Chief Executive Jean-Laurent Bonnafe says the bank could raise its payout ratio to 70% of annual earnings from 60% as part of an upcoming board discussion.Bonnafe tells analysts that a faster-growing, more competitive and more profitable bank would generate more free cash flow and free equity, supporting an increase in regular payouts. He says one option is to lift the ratio from 60% to 70%.
He also says that, separately from any change to the payout ratio, BNP Paribas could decide to return excess capital above a 13% CET1 ratio. The executive board is set to reach a final decision in the coming weeks, with buybacks likely to be one of the tools considered.
European bank distributions stay in focus
Earlier on Wednesday, the euro zone's largest bank by assets beats forecasts and unveils a 1.3 billion euro share buyback, reinforcing investor focus on its capital return plans.European banks have enjoyed record profits since 2024, helped by higher interest rates and leaving many with excess capital available for shareholder distributions. BNP Paribas' review of its payout framework highlights how lenders in the region are weighing larger buybacks and other returns as earnings and capital levels remain strong.
In our earlier article on Equites Property Fund’s higher interim distribution after its accelerated UK exit, we explained how the REIT used asset-sale proceeds to strengthen its balance sheet and support shareholder payouts. We also noted that the capital freed up from the Aviva portfolio disposal was being redirected into South African logistics growth while leverage fell and FY27 distribution guidance was reaffirmed.
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