Bank giant stuns with early warning

Jane Padgham12 April 2012

BANKING group BNP Paribas caught investors on the hop by releasing weaker-than-expected second-quarter results ahead of schedule, blaming 'exceptional turbulence' in financial markets.

France's biggest bank took the unusual step of publishing preliminary results to warn that net profit had slumped by about 13% to e1bn (£641m) during the second quarter. It said it would provide full details on 1 August, as scheduled. Gross operating profit fell 16% to e1.4bn and net banking income slipped by just under 6% to e4.1bn in the three months to 30 June.

'This is a revenue warning,' said a Paris-based analyst. 'It is not clear what the precise problem is but you can expect this to weigh on the French banks today. It is a bad surprise.' BNP Paribas spokesman Michele Sicard said: 'The impact from the markets was significantly greater than analysts were estimating.'

The market had expected net banking income of e4.44bn and gross operating profit of e1.63bn. Net profit had been expected to be e1.03bn. Shares in the bank slid more than 3% as French markets opened.

The BNP statement said: 'In view of the exceptional turbulence currently affecting financial markets, BNP Paribas has deemed it appropriate to give preliminary indications on its level of results for the second quarter of 2002 as soon as it had completely the initial phase of its account consolidation process.'

It said the disappointing results stemmed 'mainly from the conditions prevailing in equity and debt (especially corporate debt) markets, which in June adversely affected the revenues of the asset management and services core business, and even more significantly those of the corporate and investment banking core business'.

The bank, the euro-zone's largest by market capitalisation, estimated that risk provisions for the quarter would total e300m, below a consensus of e368m. It said it sees a return on equity for the period of 16%.

BNP Paribas snapped up JP Morgan's private banking and asset management units in Spain earlier this month. The bank has between e5bn and e9bn to spend in the next three years and is looking to buy in Britain and the rest of Europe.

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