Revenue at its investment bank, which CEO Jean-Laurent Bonnafe has been expanding, fell from a year earlier as did sales at its consumer and commercial real estate businesses.
Fourth-quarter group net income dropped by 50% year on year on a reported basis to 1.07 billion euros ($1.16 billion), short of the 1.74 billion euro average of 15 analyst estimates compiled by the company.
JP Morgan analysts called the results "disappointing" despite more shareholder payouts. The "top line was weaker in all divisions except Corporate Banking, but the miss mainly came from CIB (corporate investment banking)," they said in a note.
BNPP said it would increase its full-year cash dividend by 18% to 4.60 euros per share and spend a further 1.05 billion euros buying back shares.
The euro zone's biggest bank by assets said it has already used 3 billion euros of excess capital from more than 7 billion euros generated after selling its U.S. retail operations last year, leaving it with about 4.6 billion euros to redeploy.
By 0825 GMT, shares in BNPP were down 7.9% at 57.64 euros per share, in what would be their biggest one-day fall since March.
Euro zone banks have been reporting a surge in profits and payouts to shareholders in recent quarters, thanks to rising interest rates. However, the outlook is clouded by economic uncertainty and expectations that interest rates will fall.
Shares in Dutch bank ING also fell sharply on Thursday after it forecast lower total income for 2024.
BNPP's miss was in part due to it setting aside 645 million euros to cover losses tied to "risk on financial instruments".
Half of that sum relates to a long-running case involving Swiss franc mortgages in Poland, which turned out to be costly for borrowers when the currency soared against the zloty.
Europe's top court ruled last year in favour of the mortgage holders, empowering them to reclaim some of the payments.
BNPP's fourth-quarter group sales were up 0.1% at 10.9 billion euros, against a 11.4 billion euro average analyst estimate.
TRADING REVENUES TUMBLE
BNPP also reported a 2.6% fourth-quarter decline in revenue at its investment bank, dragged down by a 32% slide in revenue from trading in fixed income, currencies and commodities (FICC).
The bank's insurance and wealth management IPS division performed worse than expected, with sales down nearly 13%.
It also reduced its 2025 target for return on tangible equity (ROTE) - a measure of profitability - saying it would not hit its 12% target until 2026 because of higher regulatory reserve requirements and pressure to increase deposit rates.
BNPP now sees its ROTE in 2025 in the range of 11.5% and 12%, down from about 12%. It also reduced its average annual net income growth target over the 2022 to 2025 period to about 8% from more than 9%, linking that to minimum reserve requirements from the European Central Bank and a Belgian bank levy.
The bank confirmed its other targets, including a payout dividend ratio of 60% and Common Equity Tier 1 (CET1) capital of 12% in 2025.
($1 = 0.9256 euros)
