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article imageBNP Paribas profits plunge on one-time charges

By Mehdi Cherifia (AFP)     Feb 13, 2014 in Business

French bank BNP Paribas reported on Thursday a drop of net earnings by more than a quarter, mostly due to exceptional items, and announced a strategy to raise profitability.

Net profit fell by 26.4 percent to 4.83 billion euros ($6.6 billion), below the 5.72 billion euros expected by analysts according to FactSet.

Exceptional items pushed down profits by 1.21 billion euros, following a positive contribution of 184 billion euros in 2012.

Among these was a 798-million-euro provision tied to a US investigation for handling dollar payments for parties covered by US sanctions. This compares to the $650 million settlement reached by Britain's Standard Chartered bank in a similar case.

That charge contributed to a fall of fourth-quarter net profit of 75 percent to 127 million euros.

Net banking income, which measures the difference between what the bank pays for deposits and earns from lending, dipped 0.6 percent to 38.82 billion euros, but still beat analyst expectations of 38.49 billion.

Chief executive Jean-Laurent Bonnafe said "BNP Paribas showed good operating resilience in a lacklustre economic environment in Europe in 2013" thanks to its containing of expenses and revenues holding up.

But BNP Paribas shares led the losers on the Paris stock exchange, dropping 4.0 percent to 58.45 euros, while the CAC-40 index was down 0.26 percent.

France's largest commercial bank announced new elements of a strategic plan for the coming years.

Top among them is to boost profitability as expressed by return on equity to at least 10 percent in 2016, from 6.1 percent in 2013 (7.7 percent excluding exceptional items).

It also set a target of increasing net profit per share by at least 10 percent on average over the 2013-2016 excluding exceptional items.

Profit per share came in at 3.69 euros (4.67 euros excluding exceptional items) in 2013.

On the operational level, the bank will focus on development in Asia and North America, particularly in investment banking.

In the retail banking, it aims to make more of an effort in private banking for wealthy clients.

The bank is now targeting 2.8 billion euros in annual savings from 2016, up from a 2.0-billion-euro target in 2015.

It expects this will cost 2 billion euros over 2013-2015, 500 million euros more than initially foreseen.

The bank said its balance sheet remained "rock-solid", exceeding levels under new international rules coming into effect.

The bank's management proposed a divident of 1.50 euros per share, a similar level to last year.

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