France’s largest bank estimates 42 percent drop in 4Q profit
PARIS
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French bank BNP Paribas SA on Wednesday estimated fourth-quarter net profit plunged 42 percent.
France’s largest bank by market value pointed to a deepening crisis in the market during the second half of the year and said it had issued an early performance statement because of an exceptional level of concern about the subprime mortgage crisis that is disrupting the markets.
The announcement by BNP Paribas follows the immediate aftermath of an alleged trade scandal at French rival Societe Generale SA %26mdash; with news reports saying BNP is considering a takeover bid for its scandal-tainted competitor.
BNP Paribas said fourth-quarter net profit probably fell to 1 billion euros ($1.48 billion) from 1.7 billion euros in the same period of 2006. Net profit for 2007 rose 7 percent to 7.8 billion euros ($11.52 billion), from 7.3 billion euros.
Its corporate and investment bank estimated 1.4 billion euros in fourth-quarter revenue, after a 589 million euro ($870 million) write-down related to the direct impact of the crisis %26mdash; in particular, BNP Paribas’ rising counterparty risk on monoline, or single-service insurers.
BNP Paribas also said the crisis pushed the group’s cost of risk higher to 309 million euros ($456 million) in the fourth quarter, of which 138 million euros ($204 million) is for corporate and investment banking. Another 171 million euros ($252 million) is related to BNP Paribas’ U.S. subsidiary BancWest bringing down its net subprime exposure to about 300 million euros ($443 million).
BNP Paribas stock is down about 20 percent over the last 12 months, giving the bank a market value of about 60 billion euros ($89 billion).
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