BNP Paribas is an icon of banking excellence. Hard-hit by the calamitous market downturns of 2022, fueled by political turmoil, high inflation and investor reluctancy to borrow and spend, the France-based bank worth over $85 billion in market capitalization has impressively bounced back in the past quarter, on-track towards a supreme 2023 for the banking behemoth.

In its latest fiscal quarter, BNP was far from mediocracy; the firm achieved formidable growth across its divisions from corporate & intuitional banking to investment & protection services, driven by improved performance in targeted investments and accelerating organic growth.

Has the company set foot into a bright new year, or will it be subdued by a potential imminent recession?

Recent Performance

BNP Paribas surpassed its year-on-year (YoY) figures, attributed to a bolstering fourth fiscal quarter. Here are the fiscal year results for 2022:

·      Annual Revenue: €50.4 billion – up 9% YoY

·      Operating Expenses: €33.7 billion – up 8.3% YoY

·      Net Income: €10.19 billion – up 7.5% YoY

According to a statement from the bank, the additional growth has potentially stemmed “from the redeployment of capital released by the sale of Bank of the West, combined with the positive impact of the rise in interest rates in 2022,” which in-turn re-affirmed its 2025 strategic ambitions focused on growth, technology and sustainability.

The Federal Reserve hiked interest rates in a relentless manner throughout 2022 in order to fight-off inflation, making it harder for businesses and investors to lend and borrow funds. The banking sector, while hard-hit, witnessed some positive impacts from such hawkish monetary policy, including higher lend repayments.

How has this affected the BNP Paribas stock?

Movement of BNP Paribas’s stocks in the last five years (Source: TradingView)*

When examining the BNP Paribas stock (BNP.PA) from a technical viewpoint, the current stock price of €65.43 has recently breached the previous resistance level near €68 and has propelled ever since, presenting a very positive outlook for both the short- and the long-term. *

The short-term trajectory seems positive, but given the history of previous inflations, markets are widely expected to enter to a recession which may last throughout 2023, and this may pose as a threat to the stock’s short-term growth.

Trading near its 52-week high, the volatile stock is outperforming the S&P 500 index which is far from its yearly high, and that is a great sign for the stock. The current resistance level near $66 represents the next price target, with the average analyst consensus price target of €72 marking a 10% upside from today’s valuation, low estimations hover by €60 and high projections near the €80 mark. [1]

Future Outlook

As BNP Paribas excelled in the previous quarter and the 2022 fiscal year as a whole, the French banking tycoon re-affirmed its strategic plan for 2025, predominantly focused on bolstering growth, technology and sustainability.

Its long-term strategy centers on endeavors including the leveraging of its market positioning in Europe, improving technology for optimizing the user experience, and accelerating mobilization of the group’s businesses. As part of its efforts, the company wants to attract a younger audience.

Recently, BNP Paribas partnered with digital insurance company Lemonade which focuses on leveraging artificial intelligence (AI) technology, and the alliance strives to meet the dynamic expectations and demands of young customers.

Peter Svoreň, executive director of APME FX

* Past performance is no guarantee of future results

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.