French bank BNP Paribas beat forecasts with a 28.8% rise in fourth-quarter net profit on Thursday, but some analysts expressed concerns over the performance of its French retail banking division.
BNP Paribas, the euro zone's second-biggest bank by market capitalization, said net profit rose to 1.719 billion euros ($2.2 billion), boosted by last year's takeover of Italian bank BNL.
Twenty-one analysts polled by Reuters gave an average net profit forecast of 1.563 billion euros.
BNP Paribas' results come a day after rival French bank Societe Generale posted a 6% rise in its fourth-quarter net profit.
Gross operating profit rose 22.8%to 2.398 billion euros, below the average forecast as costs came in higher than expected at 4.654 billion euros. This rise in costs was mainly related to the takeover of BNL.
However, some analysts focused on a slowdown in momentum at its French retail banking arm. Similar to SocGen, the bank's domestic retail division has been hurt by margin pressure.
As short-term rates have risen, long-term rates have remained low, flattening out the differences between the two -- as reflected in the yield curve. A flattened yield curve squeezes banks' net interest margin, the difference between what they pay to borrow money and what they charge to lend it.
"Overall, retail's contribution to the group's earnings is disappointing," ING analysts said in a note.
BNP Paribas increased its dividend by 19%to 3.1 euros, in line with forecasts.
Its stock has risen around 5%since the start of 2007, in line with a similar increase in the DJ Stoxx European bank sector.