Paris - BNP Paribas, France’s largest bank, posted a fourth-quarter profit far below estimates on Thursday as it wrote down the value of the firm’s Italian unit and booked an accounting charge on its own debt.
The bank, based in Paris, said net income fell to 514 million euros ($688 million) in the three months through Dec. 31, a 33 percent fall compared to the same period in 2011. The quarterly earnings were well below the roughly 1 billion euros figure that analysts surveyed by Reuters had anticipated. Revenue fell 3 percent from a year earlier, to 9.4 billion euros, over the same period.
BNP Paribas said it had recorded a 298 million goodwill impairment on the value of its Banca Nazionale del Lavoro division because of expectations that the Italian central bank will raise capital requirements. It also booked a 286 million euro charge to revalue its own debt, an accounting requirement, as the market value of the debt had improved.
Still, BNP Paribas noted, its 2012 net income of 6. billion euros, up 8.3 percent from 2011, was third among the world’s biggest lenders, behind only JPMorgan Chase and Wells Fargo.
The bank’s results were the second disappointment for French investors in as many days, after Société Générale - the country’s second-largest listed bank - on Wednesday posted a fourth-quarter net loss of 476 million euros, roughly double what analysts had been expecting.
Jean-Laurent Bonnafé, the BNP Paribas chief executive, said in a statement that despite a weak economy, the bank had achieved “solid results.†Under Mr. Bonnafé, the bank’s share price has risen by a third over the last year, as BNP Paribas, like other euro zone banks, has sought to reduce its reliance on dollar investors, raising its reliance on deposits, and restructured in response to the sovereign debt crisis.
With Europe moribund, the bank said it planned to focus on rolling out services in higher-growth markets, including in Turkey and the Asia-Pacific region, an! d strengthen its investment banking offerings in the United States. Next year it will begin a restructuring to “simplify the way the group functions and improve operating efficiency,†it said, with 1.5 billion euros “in transformation costs spread out over three years.â€
Without closing any businesses, it said, the plans will allow it to save 2 billion euros a year beginning in 2015.
BNP Paribas said its investment banking business had cut its dollar funding needs by $65 billion. And it noted that it was ahead of most global peers in adapting to new capital regulations, attaining a common equity Tier 1 ratio, a measure of an institution’s ability to withstand financial shocks, of 9.9 percent by the end of 2012 under the accounting rules known as the Basel III regime. The French bank said it had cut its risk-weighted assets by 62 billion euros over the course of 2012.
Pretax profit earned by the bank’s investment banking business rose 29 percent in the fourth-quarter from a year arlier. The bank noted, however, that the unit’s bad loan provisions rose to 206 million euros compared to 72 million euros in the third quarter of 2012. The increase, it said, “is due, in particular, to a provision set aside for one specific loan.†The bank did not provide further details.
