BNP Paribas first quarter profits up 14.6 percent

BNP Paribas announced a 14.6-percent rise in net profit to 2.61 billion euros ($3.86 billion), in its first-quarter results on May 14. The results had occurred against a backcloth of an "improved" world economic climate, it said. The bank had achieved a "very good performance" in all sectors. Deposits had risen by 8.5 percent and lending by 3.9 percent.
Net banking income, a key measure for retail banks of the margin on taking in money and putting it to work, had risen by 1.3 percent from a high level in the first quarter of last year to 11.6 billion euros, owing notably to "an exceptional performance in capital market activities."
Income from investment banking activities was 3.46 billion euros, marking a "limited" fall of 8.6 percent from the equivalent figure last year.
The company attributed the strong overall performance in part to a reduction of bad risk charges, by 919 million euros or by 31.3 percent from the level at the same time last year.
The total of outstanding doubtful loans fell by 1.5 billion euros from the figure at the end of last year to 34.1 billion euros.
The bank made cost savings from the integration of its 2009 acquisition of Fortis and strong performances from all its units, it said.
The total outcome was above the average figures expected by analysts of 2.17 billion euros.
Chief executive Baudouin Prot said that if Greece were to restructure its debt and the value of its bonds were to fall to the level at the end of March, the cost to BNP Paribas would be about 1.2 billion euros.
The cost would amount to about one euro per shares in the bank, on the assumption that the bonds would lose 25-30 percent of their value, he said.
"BNP Paribas would be well able to absorb this given the moderate extent of our exposure to these countries and to the great strength of our shareholder funds," he said.
Many economists and people active in financial markets consider that the risk of a debt restructuring by Greece has increased given recent remarks by German Finance Minister Wolfgang Schauble referring to a need for "new measures" if structural reforms being carried out in Greece were not enough to overcome the debt crisis there.
Prot said that his bank's exposure to the three countries involved in rescues by the EU and IMF, Greece, Ireland and Portugal, totalled 6.7 billion euros.