Weak markets hit BNP

September 5, 2001 Posted: 0903 GMT

LONDON (CNN) -- French bank BNP Paribas posted a smaller-than-expected 7.1 percent drop in second quarter net profit.

The fall in earnings came as strength in retail banking was offset by falls in investment banking income.

France's biggest bank by assets said in a statement that net profit fell to 1.16 billion from 1.25 billion in the same period last year. Analysts surveyed by Reuters had expected a 17 percent decline to 1.04 billion.

Diluted earnings per share were 5.51 for the first half of 2001, compared to 5.9 on the year-ago period.

Bank issues cautions outlook

But the bank's chairman and CEO, Michel Pebereau, issued a note of caution on the results, saying: "... In light of the difficulties that economies and financial markets are going through, it would not be advisable to extrapolate the results of the first six months."

"The employees of BNP Paribas... will have to continue to adapt to a rapidly changing situation marked by uncertainty."

BNP's earnings were driven last year by its investment banking business, but mergers, acquisitions and share sales have diminished as stock markets have dropped and the global economy has slowed.

Gross operating profit came in at 1.68 billion, above consensus estimates for 1.54 billion, Reuters reported, while net banking income was 4.37 billion, beating forecasts of 4.26 billion.

Shares in the bank, formed by the 1999 takeover of investment bank Paribas by BNP, closed at 99.30 on the CAC 40 index on Tuesday, around 10 percent below their all-time high of 110 reached in August 2000.

Since the start of the year they have risen just over 6 percent, outperforming the DJ Stoxx European banks index which has retreated by over 7 percent over the same period amid worries over slumping equity markets and economic weakness, Reuters reported.

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