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France's largest bank shows signs of rapid return to profit
By Fabio Benedetti-Valentini |
February 20, 2009, Friday
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Print Edition
Print Edition
BNP Paribas SA, France's largest bank, said its corporate and investment banking unit enjoyed a "very good performance" in January, after the division led the company to a loss in the fourth quarter.
"I really hope that CIB will be profitable again as soon as the first quarter of this year," Chief Executive Officer Baudouin Prot said in an interview with Bloomberg Television in Paris yesterday. BNP Paribas as a whole will be "largely profitable this year whatever the environment is," he said.
BNP Paribas rose as much as 3.1 percent in Paris trading. The bank, which avoided the worst of the United States subprime crisis, suffered after the September bankruptcy of Lehman Brothers Holdings Inc caused "exceptionally violent movements in capital markets," the bank said last month. The company also had 345 million euros (US$434 million) of losses related to Bernard Madoff's alleged scam.
Dividend slashed
The bank had a 1.37-billion-euro fourth-quarter loss, compared with a 1.01-billion-euro profit in the year-earlier period, Paris-based BNP said in a statement yesterday. The bank lowered its dividend for 2008 to 1 euro a share from 3.35 euros.
BNP Paribas rose 58 cents, or 2.3 percent, to 25.20 euros by 10:13am in Paris. The stock had previously declined 17 percent so far this year, valuing the company at 23 billion euros. That compares with a 34-percent drop in Societe Generale SA, France's third-largest lender by market value.
Total provisions for risky loans at BNP Paribas more than tripled to 2.55 billion euros in the quarter, above the 1.95-billion-euro estimate of analysts. The French bank last month gave preliminary results, saying it had a fourth-quarter loss of about 1.4 billion euros.
BNP Paribas's investment bank had a pre-tax loss of 2.07 billion euros. Profit before tax from asset management was 210 million euros. The bank said late Wednesday it will swap the leaders of the two units at the end of March, putting Alain Papiasse, who currently runs asset management, in charge of corporate and investment banking. Jacques d'Estais, who heads the investment bank, will lead the asset management and services division.
CEO confident
"I'm confident that BNP Paribas will be able again to have a good performance and certainly be profitable," Prot said in the interview. "I do believe that the French market will be the most resilient in Europe revenue-wise and risk-wise."
Earnings at the French retail banking network fell 2.5 percent to 314 million euros. Retail banking in emerging markets had a pretax loss of 40 million euros, compared with a 97-million-euro pretax profit a year earlier. The unit booked 272 million euros of provisions related to the "economic deterioration" in Ukraine. BNP Paribas stopped making new loans in Ukraine and will close 100 branches in the country.
Earnings before tax at Bancwest, the US consumer-banking unit, rose to 17 million euros from 15 million euros a year earlier. Pretax earnings at the Italian retail network BNL, acquired in 2006, fell 14 percent to 100 million euros. However, BNP Paribas plans to open 50 new branches in Italy.
"I really hope that CIB will be profitable again as soon as the first quarter of this year," Chief Executive Officer Baudouin Prot said in an interview with Bloomberg Television in Paris yesterday. BNP Paribas as a whole will be "largely profitable this year whatever the environment is," he said.
BNP Paribas rose as much as 3.1 percent in Paris trading. The bank, which avoided the worst of the United States subprime crisis, suffered after the September bankruptcy of Lehman Brothers Holdings Inc caused "exceptionally violent movements in capital markets," the bank said last month. The company also had 345 million euros (US$434 million) of losses related to Bernard Madoff's alleged scam.
Dividend slashed
The bank had a 1.37-billion-euro fourth-quarter loss, compared with a 1.01-billion-euro profit in the year-earlier period, Paris-based BNP said in a statement yesterday. The bank lowered its dividend for 2008 to 1 euro a share from 3.35 euros.
BNP Paribas rose 58 cents, or 2.3 percent, to 25.20 euros by 10:13am in Paris. The stock had previously declined 17 percent so far this year, valuing the company at 23 billion euros. That compares with a 34-percent drop in Societe Generale SA, France's third-largest lender by market value.
Total provisions for risky loans at BNP Paribas more than tripled to 2.55 billion euros in the quarter, above the 1.95-billion-euro estimate of analysts. The French bank last month gave preliminary results, saying it had a fourth-quarter loss of about 1.4 billion euros.
BNP Paribas's investment bank had a pre-tax loss of 2.07 billion euros. Profit before tax from asset management was 210 million euros. The bank said late Wednesday it will swap the leaders of the two units at the end of March, putting Alain Papiasse, who currently runs asset management, in charge of corporate and investment banking. Jacques d'Estais, who heads the investment bank, will lead the asset management and services division.
CEO confident
"I'm confident that BNP Paribas will be able again to have a good performance and certainly be profitable," Prot said in the interview. "I do believe that the French market will be the most resilient in Europe revenue-wise and risk-wise."
Earnings at the French retail banking network fell 2.5 percent to 314 million euros. Retail banking in emerging markets had a pretax loss of 40 million euros, compared with a 97-million-euro pretax profit a year earlier. The unit booked 272 million euros of provisions related to the "economic deterioration" in Ukraine. BNP Paribas stopped making new loans in Ukraine and will close 100 branches in the country.
Earnings before tax at Bancwest, the US consumer-banking unit, rose to 17 million euros from 15 million euros a year earlier. Pretax earnings at the Italian retail network BNL, acquired in 2006, fell 14 percent to 100 million euros. However, BNP Paribas plans to open 50 new branches in Italy.
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