BNP Paribas SA reported a 21 percent increase in third-quarter profit, beating analysts' estimates, on higher fees from managing money and the sale of a stake in Bouygues SA's mobile-phone unit.
Net income rose to €2.03 billion ($2.97 billion) from €1.68 billion a year earlier. BNP Paribas said writedowns and risk provisions linked to the collapse of the U.S. subprime mortgage market reduced earnings by €301 million, with the bulk of the losses affecting loans for leveraged buyouts. The bank's writedowns were dwarfed by those of UBS AG and Deutsche Bank AG in Europe, as well as Merrill Lynch & Co. and Citigroup Inc. in the U.S.
"The group enjoys a broad mix of well-positioned businesses which help it to resist in more difficult times," Chief Executive Officer Baudouin Prot said. The 10 biggest banks and securities firms wrote down a combined $30 billion in the quarter after record foreclosures on U.S. home loans to borrowers with poor credit histories rattled debt markets. New York-based Citigroup Inc., the largest U.S. bank, said this week it may face as much as $11 billion in additional writedowns, while UBS AG of Zurich last week reported its first loss in almost 5 years.
Morgan Stanley, the second-biggest U.S. securities firm, said yesterday that it had losses of $3.7 billion on subprime mortgage-related assets in the two months through Oct. 31, adding that the outlook for credit markets is bleaker than in September. BNP Paribas's shares declined 15 percent this year, valuing the bank at €64 billion.
Societe Generale SA, France's second-largest bank by market value, has fallen 18%. Paris-based Societe Generale yesterday said third-quarter profit fell 12 percent on writedowns linked to the subprime contagion.
At BNP Paribas, profit before tax from asset management jumped 35 percent to €485 million as the amount of money the bank oversees rose to €590 billion, a 12 percent increase from a year earlier. Assets fell from the second quarter as investors withdrew €4.1 billion from its money-market funds, the bank said.
Earnings at the French consumer bank rose 2.2 percent to €417 million, while pretax profit at BNL, the Italian unit purchased last year for about €9 billion, climbed 36% to €146 million.
Profit at BancWest Corporation, BNP Paribas's U.S. bank, fell 30 percent to €172 million because of higher provisions for bad loans. The bank set aside €18 million against lending to defaulted U.S. mortgage lenders as well as a 50 million-euro cushion for bad loans to the U.S. construction industry.
BancWest has "very limited exposure to the subprime market," BNP Paribas said in a presentation on its Web site. Subprime borrowers accounted for $155 million of BancWest's $13.3 billion of loans at the end of September. It also held $275 million in subprime mortgage securities in an investment portfolio.
BNP Paribas got caught up in the credit market seizure during the third quarter when it froze three of its funds on Aug. 9, saying it could no longer find prices for some of the securities they held. The European Central Bank pumped money into the market as overnight borrowing rates soared. BNP Paribas re-opened the three funds between Aug. 28 and Aug. 30.
[137] 08.11.2007 Source: Bloomberg
Popular News
French Bank to Repay Government Bailout - 14.10.2009 Crédit Agricole, the French bank, said Wednesday that it would repay the €3 billion of debt the government bought last December, becoming the latest big bank to pay back a bailout. Source: New York Times
Card fraud in the UK falls by 23% - 08.10.2009 The amount of money being lost through card fraud fell by 23% in the first half of the year in the UK, as criminals changed their strategies and prevention measures began to take effect, according to figures published today. Source: Guardian.co.uk
The trend: large banks will acquire smaller banks - 18.09.2009 KBW Inc., the New York-based boutique that advises financial institutions, expects 500 to 1,000 U.S. banks to fail by 2011, Chief Executive Officer John Duffy said. Source: Bloomberg
Colonial Banc Group declares bankruptcy - 15.08.2009 Colonial became the largest US bank to fail this year after it was declared bankrupt and had the bulk of its assets taken over by rival BB&T, the government banking insurer said Friday. Source: Agence France-Presse
Fighting economic crisis in U.K. - 27.07.2009 Current economic difficulties in U.K. were caused by global financial crises and have resulted into the following changes in the country's economy in 2007-2008: Source: BanksDaily.com
The European Central Bank injects €442 billion into banking system - 25.06.2009 The European Central Bank (ECB) allotted €442 billion to banks for 12 months, the biggest amount it has ever given in a single auction. The amount was more than most economists had expected. Source: RTTNews
"The group enjoys a broad mix of well-positioned businesses which help it to resist in more difficult times," Chief Executive Officer Baudouin Prot said. The 10 biggest banks and securities firms wrote down a combined $30 billion in the quarter after record foreclosures on U.S. home loans to borrowers with poor credit histories rattled debt markets. New York-based Citigroup Inc., the largest U.S. bank, said this week it may face as much as $11 billion in additional writedowns, while UBS AG of Zurich last week reported its first loss in almost 5 years.
