French bank BNP Paribas offered up disappointing figures in its quarterly earnings reports late last week, but the financial institution has a plan to help bring those numbers up.
Reports on Friday (Feb. 5) said BNP will be looking to revamp its Corporate and Institutional Banking (CIB) unit, a move said to be part of the bank’s efforts to remain resilient through regulatory changes.
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The initiative was announced as BNP released earnings data that fell short of analysts’ expectations. The bank reported $742 million in earnings for the quarter, far short of the $943 million expected. Reports noted that earnings were also a 51.7 percent decline from the same period a year prior.
While the bank said it is “generating best-in-class profitability” in Europe, “a new step in CIB’s adaptation is now needed in order to cope with new constraints.”
Details on the revamping of CIB were scarce, but the bank did note that it plans to achieve $1.1 billion in cost savings by 2019 and reduce risk-weighted assets by billions of dollars through the effort.
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In a recent interview with reporters, the bank’s chief financial officer, Lars Machenil, said that, despite a welcome 13 percent increase in revenue for CIB this year, “we know that there are some headwinds ahead.”
“We started to embark on a transformation to confront these headwinds,” he added. According to reports, a key part of this plan is to adapt to regulatory restraints.
“The change basically aims to improve by 2019 pre-tax return on equity by eight points, and we do this along three levers: focus, improve and grow,” the CFO said.
Last November, BNP Paribas announced plans to reexamine its corporate banking strategy following boosted quarterly figures for Q3. The bank said that it would be looking to strengthen its corporate banking operations and obtain greater market share of this segment.
