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BNP Paribas results are down but better than forecast

Latest update : 2008-05-14

French bank BNP Paribas posted results that were not as bad as expected on Wednesday, with profit falling by 21%. The bank considers itself among the major banks that have held up best to the US subprime home loan crisis.

French bank BNP Paribas on Wednesday reported better-than-expected first quarter earnings as it escaped the worst of the credit crunch which has led to heavy losses at many of its peers.
The bank, the biggest in France by market value, said three months to March net profit fell 21 percent from a year earlier to 1.98 billion euros (3.06 billion dollars), well above analyst forecasts for around 1.77 billion euros and twice its fourth quarter result.
Revenue was down 10 percent at 7.40 billion euros.
In a statement, BNP Paribas said the first quarter had been "marked by a markets crisis of a rare violence" but it was among the major banks that had held up best to the US subprime home loan crisis.
It said it had taken a write-down of some 546 million euros on its exposure to the US subprime collapse. This compared with 512 million euros for peer Societe Generale and was much less than the 1.2 billion euros hit at Credit Agricole.
The market welcomed the results and in early trade BNP Paribas shares were up 2.07 percent while the main CAC 40 index was up 0.74 percent.
Analysts at Natixis wrote that they expected BNP Paribas to outperform its competitors over the balance of the year while Credit Mutuel-CIC highlighted how it had held up well despite the financial market turbulence.
At the same time, however, "the crisis is still there," said Pierre Chedeville of CM-CIC, noting how the investment bank operations had been badly mauled with revenues down 45 percent at 1.31 billion euros.
BNP Paribas head Baudoin Prot had warned in early April that the bank would not manage to reproduce its 2007 performance when it posted record profits of 7.8 billion euros.
On Wednesday, Prot said the results showed that BNP Paribas had done well despite the crisis and this allowed it to pursue its development strategy.
He said conditions remained in place for the group to keep outperforming its main competitors.
The bank said its Tier 1 capital ratio in the first quarter was 7.6 percent, unchanged from the end of last year. The internationally recommended minimum for this key measure of a bank's financial health in respect of its risk assets is four percent, with the total capital ratio at eight percent.
BNP's corporate and investment banking operations posted a first quarter pre-tax profit of 318 million euros, down sharply from the year-earlier 1.17 billion euros but up from 308 billion euros in the fourth quarter of 2007.
The bank also raised its estimate of synergies from the acquisition of BNL in Italy to 550 million euros in 2009 from the 480 million euros previously anticipated. BNL had a first quarter pre-tax profit of 177 million euros, up 22.1 percent.
Pre-tax profit at the French retail banking operations rose 6.9 percent to 481 million euros.

Date created : 2008-05-14