BNP PARIBAS

Analysis of BNP Paribas share price

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The banking sector is one of the most speculative sectors at present and bank shares are fairly easy to trade due to their high volatility and responsiveness to financial news. Some major French banking groups, such as BNP Paribas, therefore issue shares on the stock market with the possibility for shareholders to receive dividends or for online traders to speculate up or down on the evolution of the price of these shares. Here is a complete presentation of BNP Paribas shares and some advice on how to trade them effectively.  

Elements that can influence the price of this asset:

Analysis N°1

Given the group's positioning among the leaders in the banking sector in Europe, we will of course closely monitor its main competitors in this sector, but also the development of its international activities, particularly in emerging countries.

Analysis N°2

The group's activities in the digital segment are also to be closely monitored with the development of new innovative services designed to attract younger customers and build their loyalty over time.

Analysis N°3

Of course and as is the case for all European banks, BNP Paribas' activities are likely to be influenced by the decisions of the European Central Bank or ECB. You should therefore give priority to following the publications and communications of this official institution.

Analysis N°4

We will also keep an eye on the group's assets and its ability to maintain compliance with the Basel III solvency agreements.

Analysis N°5

Finally, you will, of course, be kept informed of all the Group's strategic communications to its investors with development and growth plans and compare these objectives with the actual results that will be recorded and published by BNP Paribas in its annual reports.

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General presentation of BNP Paribas :

Few people know this, but the BNP Paribas group as we know it today is the result of the merger of two banks, BNP and Paribas, which took place during the year 2000. Today, BNP Paribas is the leading French banking group and even the world's leading group in terms of the number of assets.

At the end of 2018, BNP Paribas had €796.5 billion in deposits and €765.9 billion in loans under management.

It should be noted that the market affected by BNP Paribas is mainly European with more than 74.6% of its activity, but also affects North and South America with nearly 10.9% of activity and the rest in Asia for 7.1% of the turnover.

The activity of BNP Paribas breaks down as follows:

 

To know the competition of the BNP Paribas share:

BNP Paribas is one of the leaders of the banking sector in France. Its main competitors are therefore the other French banking organisations offering the same type of products and services in the same geographical area. All these companies are also listed on the Euronext market and their shares are therefore generally comparable. By following the news in this sector, you will therefore be able to predict which securities investors wishing to invest their money in the banking sector will turn to. To help you better understand what can influence the BNP Paribas share price, here is a list of the main competitors of this banking group:

 

The strategic alliances set up by the BNP Paribas Group :

To strengthen its commercial strategy, BNP Paribas has forged links with certain other companies through targeted partnerships. Here are the bank's main current partners.

 

The strengths and advantages of the BNP Paribas share as a stock market asset :

The bank's market positioning is of course one of its main strengths. BNP Paribas is currently the leading deposit bank in continental Europe and in four main markets: France, Belgium, Italy and Luxembourg. The group also manages to position itself as a leader in several specific business sectors such as creditor insurance. For the rest, BNP Paribas ranks seventh among asset managers in Europe and is also the sixth largest private bank worldwide. The group is also the European leader in syndicated loans as well as in the Middle East and Africa and is also the world leader in aeronautics.

Although the economic crisis has had a very strong impact on most of the world's banking groups, BNP Paribas seems to be doing very well, which reassures investors. Indeed, it is one of the global banking groups that have best withstood the crisis and has a return on equity that is also among the highest in the world.

The currently very favourable economic environment for credit activities can also be counted as a strong point for the future of the company. The latter in fact authorises a reduction in risk provisions and a recovery in net banking income. In addition, the Quantitative Easing policy implemented by the European Central Bank has resulted in a more than positive balance sheet for BNP Paribas.

The distribution of BNP Paribas' activities is another asset of this banking group. Indeed, the group organises its activities into three distinct groups: the banking networks located in France, Italy, Belgium and the Netherlands, international financial services and investment banking activities or CIB. These three major divisions each generate about one third of BNP Paribas' revenues, which makes the company's risk exposure lower.

The BNP Paribas banking group also benefits from a positive outlook on its management with its recent compliance of its prudential capital in line with new European rules. Its Common Equity Tier One ratio is 11.4%, well above the 9% required by the Basel 3 agreements, and its leverage ratio is 4%, once again above the required 3%.

The group's investors and shareholders also appreciate the fact that the BNP Paribas group offers a payout rate of 45%, which is a very comfortable level for this sector of activity.

Last but not least is the praise given to the BNP Paribas group by analysts who consider this banking group to be one of the best in its sector and its stock market stock to be the most interesting banking stock.

 

Weaknesses and disadvantages of the BNP Paribas share as a stock market asset :

As we have just seen together, the BNP Paribas share has what it takes to appeal to investors because of its many advantages, and long-term buying strategies are still favoured at the moment. However, it goes without saying that this stock does not only offer advantages and that it is necessary, in order to implement efficient and well thought-out strategies, to also be aware of the possible obstacles to the growth and development of this company.

Firstly, it is essential to understand that some investors are reluctant to take a buying position on European bank securities in general. This hesitation is due in particular to the capital-intensive European regulations and the often low interest rates that make them less attractive than other securities.

The banking market has also undergone a notable change in recent years with the arrival on the market of online banks, which are gaining a little more market share every year. The latter are in fact fiercely competing with physical banks with very attractive rates and a new, more modern and intuitive way of using banking services and products that is very attractive to younger customers.

The BNP Paribas banking group has also suffered a decline in revenues from CIB financing activities in recent months due to a difficult market. This comes on top of higher transformation costs for the bank as part of the efficiency and transformation plan recently implemented.

Finally, analysts specialising in this stock also fear a risk of a fall in the BNP Paribas share price if the Belgian State were to sell its stake in the group.

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Trade the BNP Paribas share!
76.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.