BNP Paribas Profit Falls On U.S. Sanctions Troubles

PARIS-BNP Paribas, the largest French bank, on Thursday reported fourth-quarter profit that fell far short of market expectations as it set aside $1.1 billion to settle charges that it violated American economic sanctions.

The bank, based in Paris, said that net income for the three months through December fell 76 percent to 127 million euros, or $173 million. Analysts had been expecting fourth-quarter profit of closer to €1 billion. Revenue rose 1.8 percent to nearly €9.6 billion.

The bank did not disclose where it was suspected of violating sanctions, noting only that fourth-quarter results included a $1.1 billion provision “related to the retrospective review of U.S. dollar payments involving parties subject to U.S. economic sanctions.”

The charge would appear to be a step toward the denouement of a longstanding investigation by the United States Department of Justice. BNP Paribas and Crédit Agricole, another French bank, both reported in their 2011 annual reports that they were reviewing certain transactions to see if they were in violation of American sanctions.

Banks including JPMorgan Chase, HSBC Holdings and Wells Fargo have been fined in recent years for conducting illegal transactions with countries like Iran. Julia Boyce, a spokeswoman for BNP Paribas, did not immediately respond to a request for comment.

For 2013 as a whole, BNP Paribas said net income fell 26 percent to €4.8 billion as revenue slipped 0.6 percent to €38.8 billion.

Shares of BNP Paribas, up about 32 percent over the last 12 months, fell 3.9 percent Thursday in morning trading on the Paris bourse.

Jean-Laurent Bonnafé, the bank’s chief executive, and Baudouin Prot, chairman of the board of directors, said in a statement that the “operating divisions held up well in 2013 in a lackluster economic environment in Europe.”

The lender’s retail banking business posted fourth-quarter pretax income of €1.2 billion, down 18 percent from a year earlier as deposits rose in France, even as loan demand shrank amid high unemployment and economic stagnation.

Its corporate and investment banking unit reported pretax income of €350 million, up 36 percent. Its investment solutions division posted pretax income of €493 million, down 15 percent.

BNP Paribas reported that its “fully loaded” common equity Tier 1 capital ratio under the coming Basel III regime, a measure of its ability to withstand financial shocks, stood at 10.3 percent at the end of December, up slightly from a year earlier. BNP Paribas said its balance sheet was “rock-solid,” with an “immediately available liquidity reserve” of €247 billion, an amount “equivalent to over one year of room to maneuver in terms of wholesale funding.”

On Wednesday, BNP Paribas’s crosstown rival Société Générale reported fourth-quarter net income of €322 million, swinging from a loss a year earlier and beating expectations, as revenue rose 20 percent to €5.78 billion.