BNP Paribas banks huge profit

2nd August 2004, Comments 0 comments

PARIS, Aug 2 (AFP) - French bank BNP Paribas said Monday it increased net profit 40.3 percent in the first half with a surge of nearly 50 percent in second-quarter profit on low risk provisions, cost cutting and judicious acquisitions.

PARIS, Aug 2 (AFP) - French bank BNP Paribas said Monday it increased net profit 40.3 percent in the first half with a surge of nearly 50 percent in second-quarter profit on low risk provisions, cost cutting and judicious acquisitions.

BNP Paribas, the biggest bank in the euro zone by capitalization, said net profit reached EUR 1.352 billion (USD 1.634 billion) in the quarter, up from EUR 902 million a year earlier. The result trounced analysts' consensus forecast of EUR 1.015 billion.

Unlike other banks that are luxuriating in extremely low risk provisions amid the economic recovery, BNP Paribas continued to slash overhead in all its businesses, including its finance and investment bank BFI, where costs were reduced 10.7 percent.

The group reported a gross operating profit up 7.2 percent at EUR 1.903 billion from a year ago, with much of the improvement coming from strong performance in asset management.

"Few groups can pride themselves on posting in the second quarter an RBE (gross operating profit) that is rising, including in comparison with the first quarter 2004," BNP Paribas chief executive Baudouin Prot said at a news conference.

The operating ratio, or expenses related to sales, passed "for the first time" under the 60 percent level at 59.9 percent, Prot said.

Net banking income rose to EUR 4.743 billion from EUR 4.651 billion last year.

That compared to analysts' forecasts of between EUR 4.571-4.687 billion.

Corporate and investment banking operations, meanwhile, saw risk provisions fall to just EUR 7 million from EUR 142 million last year, way ahead of analysts' hopes, and driving an overall fall for the bank to EUR 215 million from EUR 318 million in 2003.

The analysts' consensus for overall risk provisions in the second quarter had been EUR 273 million.

The results reflected the general upturn in economic conditions, which consequently allows banks to reduce their risk charges. French peer Societe Generale, for example, reported Friday a 7.8-percent rise in second-quarter net profit, mainly on the back of a 66.6 percent plunge in risk provisions. First-half net profits rose 31.6 percent.

BNP Paribas' results showed improvement throughout the group, pushing first-half results up 40.3 percent to EUR 2.615 billion from the same period in 2003.

Shares in BNP Paribas slipped 0.33 percent to EUR 48.22 in morning trade in Paris, while the CAC 40 index was off 1.01 percent at 3,610.21 points as renewed terror alerts in the United States and Britain dampened sentiment.

"Revenues were better than expected in asset management, private banking and insurance," said Deutsche Bank.

Asked about last week's agreed takeover bid of Spain's biggest bank Santander Central Hispano for the British bank Abbey National, which if successful would bump BNP Paribas off its number-one perch in the euro zone, Prot said simply that Abbey National "didn't interest" BNP Paribas.

As for future cross-border banking mergers, he said they were "difficult to organise today in retail banking in Europe due the lack of regulation harmonisation".

© AFP

Subject: French news

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