Business World

Third-quarter net profit at BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) more than halved due to higher provisions tied to the financial crisis, France’s biggest bank by market capitalization said on Wednesday.

The bad debt charge rose to 1.992 billion euros ($2.56 billion) during the quarter, higher than many analysts had estimated and four times as big as a year ago.

BNP said this reflected higher provisions in areas such as investment banking and its overseas businesses.

Net profit fell to 901 million euros, down 55.6 percent on a year ago. Analysts had on average forecast a net profit of 1.27 billion euros according to a Reuters poll of 10 analysts.

“The cost of risk was the main issue and was worse than expected,” said West LB analyst Christoph Bossmann, who kept an “add” rating on BNP Paribas shares.

Chief Executive Baudouin Prot said the bank was well placed to handle the tough market environment.

“The group’s ability to withstand the crisis, the attractiveness of its franchises and its sound financial standing enable it, in an environment that will remain difficult going forward, to grow its business units in order to continue servicing the real economy,” he said in a statement.

In total the crisis had a negative impact of 507 million euros on the third-quarter figures.

This included a hit of 289 million euros at its investment banking arm and an 87 million euro impairment charge at its American unit BancWest due to problems at U no fax pay day loans.S. lenders Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz).

TURMOIL TRIGGERED WRITEDOWNS

The market turmoil, which began as U.S. homeowners defaulted on mortgages, has hurt banks across the globe. Many governments, including France, have intervened with taxpayers’ money to shore up financial companies.

Smaller French rival Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz) has already reported an 84 percent fall in its third-quarter net profit, while Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) reported a third-quarter loss.

In France President Nicolas Sarkozy has earmarked 360 billion euros for the country’s finance sector as part of an international effort to help banks survive the worst financial crisis since the Great Depression almost 80 years ago.

France has also agreed to lend 10.5 billion euros to the country’s top banks to encourage them to lend to businesses.

France has agreed to subscribe to subordinated debt issued by Credit Agricole (CAGR.PA: Quote, Profile, Research, Stock Buzz) for 3 billion euros, BNP Paribas for 2.55 billion, SocGen for 1.7 billion euros, and for 1.2 billion by Credit Mutuel. 

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