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BNP Paribas profits fall 50% due to Greek write-down

France’s biggest listed bank reported a 50 percent fall in profits for the final quarter of 2011 on Wednesday, weighed down by further losses on its Greek debt holdings.

Bnp paribas 2012 02 15Enlarge
BNP Paribas Chief Executive Jean-Laurent Bonnafé said the euro zone debt crisis was stabilizing, with the ECB’s massive injection of cheap cash in late December boosting the overall outlook and potentially enabling Europe to escape recession. (PHILIPPE HUGUEN/AFP/Getty Images)

BNP Paribas, France’s biggest listed bank, reported a 50 percent fall in profits for the final quarter of 2011 on Wednesday, weighed down by further losses on its Greek debt holdings.

The bank reported a net income of $1 billion for the last three months of last year, due to fresh write-downs of its Greek assets by a further $740 million, according to the BBC.

BNP said it had now written down the value of its Greek debt by 75 percent. The bank’s net income for 2011 as a whole was down 22.9 percent to $7.8 billion.

The euro zone debt crisis has hit European banks’ profits by forcing them to write down their exposures to sovereign debt. In September BNP said it would cut risk-weighted assets by $90 billion, and announced almost 1,400 job cuts at its corporate and investment bank in November, according to The Wall Street Journal.

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However, despite the bank’s sharp drop in final quarter profits, the results were better than expected, and BNP sounded an upbeat note on Wednesday, putting it at odds with the more sombre tone of many of its European rivals.

Chief Executive Jean-Laurent Bonnafé said the euro zone debt crisis was stabilizing, with the European Central Bank’s massive injection of cheap cash in late December boosting the overall outlook and potentially enabling Europe to escape recession, Reuters reported.

BNP’s stronger-than-expected fourth quarter results and its early delivery on tougher capital targets saw its shares rally as much as 7 percent in early Wednesday trading.

According to The New York Times, BNP said that it had met its new capital requirements ahead of schedule, with the bank’s Tier 1 capital ratio – assets held in reserve as a buffer against financial difficulties – reaching 9.2 percent.

The European Banking Authority has called on banks to hit a minimum ratio of 9 percent by the end of June 2012.

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http://www.globalpost.com/dispatch/news/business-tech/120215/bnp-paribas-profits-fall-50-due-greek-write-down