DealBook: BNP Paribas First Quarter Profit Falls 45%

Jacky Naegelen/ReutersA branch of BNP Paribas in Paris.

PARIS – BNP Paribas, France’s largest bank, said on Friday that first-quarter profit fell from a year earlier, but it still managed to beat market expectations.

Net income for the January-March period came in at 1.6 billion euros, or $2.1 billion, down 45 percent from the same three months a year earlier, BNP Paribas said in a statement. That was slightly better than the 1.5 billion euros that analysts surveyed by Reuters had expected.

Jean-Laurent Bonnafé, the bank’s chief executive, said in a video statement that results were weaker because the European financial crisis weighed on demand for credit, even as loans were made at low interest rates. Deposits continued to grow “significantly” in all the bank’s markets, particularly in Italy, he said.

BNP Paribas noted that the year-earlier results included a one-time gain of 1.8 billion euros on the sale of a stake in its Klépierre unit, which made the most recent quarter look weaker in comparison. It said that a better reflection of its performance could be seen in the fact that pretax profit at its operating divisions fell just 8.1 percent.

The bank, based in Paris, also reported first quarter revenue of 10.1 billion euros, up 1.7 percent from a year earlier. Revenue was affected by two one-off items of note, a 215 million euro write-down on the bank’s own debt and a gain of 364 million euros as a result of its adoption of new accounting rules.

Mr. Bonnafé noted the bank had attained “a very strong solvency and liquidity positions,” with a Basel 2.5 common equity Tier 1 ratio of 11.7 percent, and a “fully loaded” Basel 3 common equity Tier 1 ratio of 10 percent. Such measures of regulatory capital provide an indication of an institution’s ability to bear financial shocks.

BNP Paribas described the period as a “transitional quarter” for its corporate and investment banking business, in which revenue slid 21.1 percent from a year earlier to 2.5 billion euros, and pretax income tumbled more than 30 percent to 806 million euros.

The investment banking unit’s advisory and capital markets revenue fell 25 percent to 1.7 billion. Revenue in the fixed income sector fell 27 percent to 1.3 billion. The equities and advisory business posted a 20 percent decline in revenue, to 395 million euros.

BNP Paribas, which recorded 155 million euros in restructuring costs in the quarter, said “many projects” to improve and streamline its operations were getting under way, including early retirement programs at its BNPP Fortis unit in Belgium and BNL unit in Italy.

This post has been revised to reflect the following correction:

Correction: May 3, 2013

Article source: http://dealbook.nytimes.com/2013/05/03/quarterly-profit-at-bnp-paribas-falls-45/?partner=rss&emc=rss