BNP Paribas Net Profit More than Halves

Third-quarter net profit at BNP Paribas more than halved due to higher provisions tied to the financial crisis, France's biggest bank by market capitalisation said on Wednesday.

The bad debt charge rose to 1.992 billion euros ($2.56 billion) during the quarter, higher than many analysts had estimated and four times as big as a year ago. BNP said this reflected higher provisions in areas such as investment banking and its overseas businesses.

Net profit fell to 901 million euros, down 55.6 percent on a year ago. Analysts had on average forecast a net profit of 1.27 billion euros according to a Reuters poll of 10 analysts.

"The cost of risk was the main issue and was worse than expected," said West LB analyst Christoph Bossmann, who kept an "add" rating on BNP Paribas shares.

Chief Executive Baudouin Prot said the bank was well placed to handle the tough market environment.

"The group's ability to withstand the crisis, the attractiveness of its franchises and its sound financial standing enable it, in an environment that will remain difficult going forward, to grow its business units in order to continue servicing the real economy," he said in a statement.

In total the crisis had a negative impact of 507 million euros on the third-quarter figures.

This included a hit of 289 million euros at its investment banking arm and an 87 million euro impairment charge at its American unit BancWest due to problems at U.S. lenders Fannie Mae and Freddie Mac .

Turmoil Triggered Writedowns

The market turmoil, which began as U.S. homeowners defaulted on mortgages, has hurt banks across the globe. Many governments, including France, have intervened with taxpayers' money to shore up financial companies.

Smaller French rival Societe Generale has already reported an 84 percent fall in its third-quarter net profit, while Credit Suisse reported a third-quarter loss.

In France President Nicolas Sarkozy has earmarked 360 billion euros for the country's finance sector as part of an international effort to help banks survive the worst financial crisis since the Great Depression almost 80 years ago.

France has also agreed to lend 10.5 billion euros to the country's top banks to encourage them to lend to businesses.

France has agreed to subscribe to subordinated debt issued by Credit Agricole for 3 billion euros, BNP Paribas for 2.55 billion, SocGen for 1.7 billion euros, and for 1.2 billion by Credit Mutuel.

The French government aid should help lift BNP Paribas's Tier 1 capital ratio from 7.6 percent at the end of September to around 9 percent.

In October BNP bought some of the main assets of troubled European bank Fortis for 14.5 billion euros and as part of the deal the Belgian government took a stake of 11.7 percent in BNP. The deal makes BNP the eurozone's biggest bank in terms of deposits. BNP Paribas shares closed up 5.6 percent at 58.50 euros on Tuesday.

At that price, BNP has a market capitalisation of around 53 billion euros, just below the 55 billion euro value of Spain's Santander, which is the eurozone's biggest bank by market capitalisation.

BNP's share price has fallen around 21 percent since the start of the year, outperforming the 50 percent decline in the DJ Stoxx European banking sector index.

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