French bank BNP Paribas suffered a 50 per cent slump in the fourth quarter net profits as Europe's financial crisis intensified last autumn and slashed the value of its holdings of Greek government bonds.
The Paris bank said in a statement yesterday it suffered a €567 million (Dh2.72 billion) hit to its bottom line after accounting for expected losses on its Greek bonds in line with a European agreement that aims to cut Greece's debt burden.
After accounting for the Greek bond losses, BNP Paribas made a net profit of €765 million in the three months to December 31, down from €1.55 billion a year earlier, the bank said.
Rise in share value
BNP Paribas shares rose on the news as investors took comfort that earnings hadn't fallen more steeply.
To offset the ongoing crisis, BNP Paribas said it had slashed its holdings of sovereign debt by over a quarter and shrunk its medium- and long-term dollar financing needs by $53 billion (Dh194.68 billion), while boosting its loss provisions to cover a full 75 per cent of its total exposure to Greek government debt.
BNP Paribas CEO Jean-Laurent Bonnafe called the bank's performance "solid" despite "an economic and regulatory environment undergoing radical changes."
The bank is now well positioned thanks to its lower exposure to Greek and other sovereign debt, smaller dollar financing needs and reinforced capital cushion, Bonnafe added.