BNP Paribas has announced it will invest billions in a new digitalisation push as it reports a growth in gross operating income and revenues for 2016.
Revenues grew by 1.1 per cent in 2016 compared to the previous year to reach €43.4bn (£37.3bn), although €597m came from the sale of shares in Visa Europe.
Domestic revenues fell by 0.5 per cent, which the bank blamed on a low interest rate environment, but it recorded a stronger performance in international financial services.
Gross operating income grew by 2.6 per cent to hit €7.7bn.
The bank upped its dividend to €2.70 per share.
BNP Paribas will invest €3bn (£2.6bn) in what it calls a "digital transformation" to target 6.5 per cent annual growth of profits by 2020. It hopes to generate €3.4bn (£2.9bn) in cost savings over the same period.
Why it's interesting
The move to digital is keeping banks around the world on their toes, as bricks and mortar premises become increasingly outdated when customers can access banking services from their mobile phones.
Big job cuts are due as the bank moves to cut costs from its massive high street network, offering a glimpse into the future of work as well.
Europe’s banking sector has not been known for its solid performance in recent years – indeed, BNP Paribas had to contribute €52m to Italian banks in 2016 – but the Paris-based bank bucks that trend. It reduced the cost of risk by 14.1 per cent, in part because of the wider operating environment.
What BNP Paribas said
Jean-Laurent Bonnafe, chief executive of BNP Paribas, said: “Revenues are up despite a lacklustre environment this year. Costs were well contained and the cost of risk was significantly lower."
He added: “After the success of its 2014-2016 plan, which allowed to attain the defined targets, the group now unveils its 2020 business development plan that announces an acceleration of digitalisation and targets an average growth of net income of more than 6.5 per cent per year until 2020.”
BNP has succeeded where many other European banks have failed, but a new digital strategy will likely be the deciding factor for how it copes in the long term.