BNP Paribas earnings slump on Greek debt
(AP) French bank BNP Paribas suffered a 50 percent earnings slump in the fourth quarter as Europe's financial crisis intensified last autumn and slashed the value of its holdings of Greek government bonds.
The Paris bank, one of Europe's largest financial institutions, said in a statement Wednesday it suffered a €567 million hit to its bottom line after accounting for expected losses on its Greek bonds in line with a European agreement that aims to cut Greece's debt burden and finally halt the crisis.
After accounting for the Greek bond losses BNP Paribas made €765 million in the three months to December 31, down from €1.55 billion a year earlier, the bank said.
To offset the ongoing crisis BNP Paribas said it's slashed its holdings of sovereign debt by over a quarter and shrunk its medium- and long-term dollar financing needs by $53 billion, while boosting its loss provisions to cover a full 75 percent of its total exposure to Greek government debt.
BNP Paribas CEO Jean-Laurent Bonnafe called the bank's performance "solid" despite "an economic and regulatory environment undergoing radical changes." The bank is now well positioned thanks to its lower exposure to Greek and other sovereign debt, smaller dollar financing needs and reinforced capital cushion, Bonnafe said.
The bank made €6 billion in profit for all of 2011, down 23 percent from a year earlier, while revenue slipped 3.4 percent to €42.4 billion. Retail banking saw profits surge despite flat revenue as French savers boosted deposits and the bank's cost of risk diminished. The corporate and investment banking division bore the brunt of volatile markets, seeing its profit nearly wiped out entirely in the fourth quarter, leaving earnings down by a third for the year as a whole.