BNP Paribas is keeping its payout to shareholders, despite its $8.97bn (£5.2bn) fine for breaking US sanctions against Iran, Cuba and Sudan.
The giant French bank pledged to maintain its €1.50 per share dividend for 2014, pleasing investors – its share price shot up 3.6 per cent yesterday.
However, its €51.33 share price is still well down on this year’s peak of €61.82 in early February.
When the bank began setting funds aside to cover the fine it made provisions of $1.1bn, before that jumped to the near-$9bn total over several months of intense negotiations.
“Whilst the overall settlement is broadly in line with expectations, we expect shares to catch up following the significant underperformance over the past four months,” said JP Morgan analyst Delphine Lee.
She noted that “the group is able to absorb the negative impact from the fine with Basel 3 Core Tier I at 9.9 per cent end of the second quarter and the dividend per share has been unexpectedly maintained.”
The bank has also decided it can afford to keep paying some bonuses.
But there were some new clouds – ratings agency Moody’s warned that the criminal charges against the bank could lose it some business.
“Some clients could cease doing business with the bank, either voluntarily or because of internal policies or legal prohibitions that prevent them from doing business with a firm that has pled guilty to a criminal felony,” said the agency, putting BNP’s rating on negative outlook.
“A permanent loss of a material amount of client business would reduce the bank’s profitability and its ability to generate capital internally.”