BNP Paribas, France's biggest listed bank, reported a 34 per cent fall in second-quarter net profit today, although the earnings were slightly ahead of analysts' average forecast.
Net profit fell to €1.51 billion ($2.33 billion) from €2.28 billion a year earlier, mainly due to a sharp drop in profit at its corporate and investment banking arm to €523 million from €1.22 billion a year earlier.
This was after an overall negative impact of €542 million on counterparty risks for debt insurers that were affected by the credit crunch.
Eighteen analysts polled by Reuters gave an average forecast for net profit of €1.48 billion.
BNP Paribas' gross operating profit fell 20.8 per cent to €2.67 billion - also slightly ahead of the average analyst forecast for a profit of 2.63 billion.
BNP Paribas also announced a €44 million provision on its US retail banking arm BancWest. BNP Paribas is the latest heavyweight European bank to post lower profit due to the impact of the financial market turmoil.
While leading US banks such as Merrill Lynch and Citigroup have posted huge second-quarter losses, some of Europe's top banks have reassured investors by remaining in profit and publishing results above expectations.
Yesterday, rival French bank Societe Generale posted a 63 per cent fall in second quarter net profit which came in above forecasts.
Germany's Commerzbank also beat expectations with a 6.4 per cent rise in second-quarter net profit today.
Almost a year ago, BNP Paribas spooked markets by freezing three investment funds due to the credit crisis, but since then the French bank has ridden out the tough market environment better than many of its rivals.
BNP Paribas shares closed up 4 per cent at €61.88 yesterday. The stock has fallen around 17 per cent since the start of 2008, compared with a 29 per cent decline in the DJ Stoxx European bank sector.