BNP Paribas net profit soars in 2nd quarter

[August 02, 2010]  PARIS (AP) -- BNP Paribas SA said Monday its net profit soared 31 percent in the second quarter as steep retail banking gains in France and the Benelux region offset declines in its investment banking operations.

The eurozone's largest banking group by deposits said in a statement its net profit for the three months to June was euro2.1 billion ($2.7 billion), up from euro1.6 billion a year earlier.

The Paris-based bank, which owns San Francisco's BancWest Corp., said the performance "demonstrated the robustness of its diversified, integrated and customer-driven banking model."

BNP Paribas' retail banking division's profits swelled as deposits and loans edged higher in the bank's core French and Benelux regions while its cost of risk dropped significantly from the year earlier period.

The division reported pre-tax profit of euro1.23 billion, more than double the euro571 million made a year earlier, while revenue rose 17 percent to euro5.9 billion.

Retail banking offset a weaker performance in the bank's corporate and investment banking division. This unit, the bank's largest in terms of profitability, saw revenue slump 30 percent to euro2.7 billion in the quarter. Capital markets, fixed income and equities and advisory operations all saw their revenue decline during the spring quarter, when the euro-zone financial markets were buffeted by the crisis brought on by Greece's near debt default and eventual bailout.

BNP Paribas' Tier 1 ratio, a measure of a bank's capital seen as a key barometer of its financial health, rose to 10.6 percent at June 30, up from 10.5 percent at the end of March.

For the first six months of the year, BNP Paribas' net profit rose 39 percent to euro4.4 billion, on revenue of euro22.7 billion. The bank pointed to "a significant shrinking of the cost of risk" during the first half, at almost half the year-earlier level, as one of the main factors behind the rise in first half profit.

BNP Paribas shares jumped 2 percent to euro54.67 at the open on the Paris stock exchange as investors welcomed the results.

The European debt crisis this year raised worries about how much troubled debt Europe's banks were holding, leading to a "stress test" exercise whose results were unveiled last month. Like nearly all the banks tested, BNP Paribas passed, with the French bank able to rely on a buffer of euro20 billion in equity above the amount regulators deemed the minimum necessary to endure a worst-case scenario.

Europe's debt crisis has already forced Greece to take a euro110 billion international bailout to avoid bankruptcy, and pushed governments to put up a $1 trillion backstop for troubled governments if they need it. Greece's near-failure sent shivers of fear through investors wondering which banks' balance sheets were hiding Greek and other debt that could go bad.

[Associated Press; By GREG KELLER]

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