BNP Paribas beats Q4 forecasts on lower charges

France’s biggest listed bank BNP Paribas took fewer bad debt provisions than expected in the fourth quarter, helping it beat profit forecasts, and said these charges would be lower again in 2010.

BNP struck a relatively confident note despite the economic uncertainty clouding the banking industry. Its profit was up on the previous quarter and it swung back from a big year-ago loss.

Net profit rose 4.6 percent to 1.365 billion euros ($1.9bn), also helped by higher investment bank earnings and its acquisition of Fortis assets. Revenues came in slightly below forecasts at 10.06 billion.

Chief Executive Baudouin Prot said he expected the cost of risk to fall this year, and that BNP had a relatively small exposure to Greece’s economic problems.

“Altogether we would expect the cost of risk at group level this year to be a bit lower than last year,” Prot told CNBC television.

The bank raised its dividend to 1.50 euros a share from one euro.

“The bottom line looks good but on the underlying level it was slightly below estimates,” said WestLB analyst Christoph Bossmann.

Bonus controversy
BNP Paribas is the first of France’s top banks to post fourth-quarter results with the sector still weighed down by writedowns on toxic assets, the debt woes of Greece and a political backlash against bankers’ bonuses.

Rival Societe Generale publishes results on Thursday while Credit Agricole and BPCE report next week.

The global banking sector has so far seen a mixed set of figures, with higher profits at Barclays, Credit Suisse and JP Morgan contrasting with losses at Citigroup and Bank of America  and client withdrawals at UBS.

European bancassurance group ING also posted a bigger-than-expected fourth-quarter loss of 712 million euros on Wednesday although, like BNP, ING had a smaller-than-expected loan-loss provision.

Like many banks around the world, France’s lenders have come under political pressure to make moderate bonus payments. France has also joined Britain in imposing a tax on the bonuses of traders.

Prot said BNP had set aside 500 million euros overall for its 2009 bonus payout and added that its bonus payments were lower than many of its peers.

Prot said BNP’s 2009 compensation-to-revenue ratio within its investment banking division stood at 27.7 percent.

By contrast, Barclays said on Tuesday that its compensation ratio stood at 38 percent while Deutsche Bank’s stood at 40 percent..

BNP Paribas shares closed up 2.8 percent at 49.20 euros on Tuesday. The stock, which rose 90 percent in 2009, has fallen 12 percent so far this year while the DJ Stoxx European bank index has fallen around 10 percent.


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