BNP Paribas SA, France’s largest bank, recorded its fourth straight quarterly profit, helped by the purchase of Fortis and lower provisions for bad loans.
BNP Paribas rose as much as 3.4 per cent in Paris trading after the company reported net income of €1.37 billion ($1.89 billion) in the fourth quarter, up from a loss a year earlier and above estimates.
The bank, like Germany’s Deutsche Bank AG and New York- based Goldman Sachs posted a rebound in profit last year after emerging from the worst financial crisis since the Great Depression.
Provisions for doubtful loans declined 26 per cent in the quarter from a year earlier, and CEO Baudouin Prot said in a Bloomberg Television interview that loans losses have “hopefully” passed the peak.
“Provisions were much better than expected,” Kian Abouhossein, an analyst at JPMorgan Chase & Co. in London, said in a note today.
BNP Paribas climbed €1.20, or 2.4 per cent, to €50.40 by 9:50 a.m. The stock gained 116 per cent in Paris trading in the last 12 months, compared with a 69 per cent advance in the 52-company Bloomberg Europe Banks and Financial Services Index.
ING Groep NV, the biggest Dutch financial-services company, reported a €712 million fourth-quarter loss today as the bank and insurer set aside €930 million for extra payments to the Netherlands after receiving state aid.
BNP Paribas became the largest bank by deposits in the euro region with the €10.4 billion purchase of Fortis’s banking units in Belgium and Luxembourg last year.
The French bank set aside €1.9 billion in provisions for doubtful loans in the fourth quarter, less than analysts’ estimate of €2.3 billion.
Mr Prot said the group "has hopefully crossed a peak for the cost of risk." He said that While BNP Paribas expects the level of bad-loan provisions to decline in 2010 from last year, “it’s difficult to say how much lower and how fast this would appear.”
Pretax earnings at BNP Paribas’s corporate and investment banking unit amounted to €834 million in the quarter. That compares with €1.24 billion in the previous three months and a record €2.07 billion pretax loss in the year-earlier period, triggered by market swings after the collapse of Lehman Brothers Holdings Inc.
Revenue at the investment-banking unit was €2.21 billion in the fourth quarter, a 25 per cent decline from the prior three months.
Bad-loan provisions at the investment bank were at €282 million, 51 per cent less than the third quarter and 78 per cent less than the year-earlier period.
BNP Paribas’ corporate- and investment-banking unit is off to a “strong start” in 2010, Prot said, as the financing business gains market share.
BLOOMBERG