BNP Paribas results down but beats forecasts 14/05/2008 00:00

French bank BNP Paribas reports better-than-expected first quarter earnings of EUR 1.98 billion.

14 May 2008  

PARIS - 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 EUR 1.98 billion, well above analyst forecasts for around EUR 1.77 billion and twice its fourth quarter result.

Revenue was down 10 percent at EUR 7.40 billion.

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 EUR 546 million on its exposure to the US subprime collapse. This compared with EUR 512 million for peer Societe Generale and was much less than the EUR 1.2 billion 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.

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 EUR 7.8 billion.

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 2007. 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 EUR 318 million, down sharply from the year-earlier EUR 1.17 billion but up from EUR 308 billion in the fourth quarter of 2007.

The bank also raised its estimate of synergies from the acquisition of BNL in Italy to EUR 550 million in 2009 from the EUR 480 million previously anticipated. BNL had a first quarter pre-tax profit of EUR 177 million, up 22.1 percent.

Pre-tax profit at the French retail banking operations rose 6.9 percent to EUR 481 million.

[AFP / Expatica]