Profit was up nearly 60% for the leasing
sector of BNP Paribas despite a sharp drop in income for the
banking group as a whole due to exposure to Greek debt.
The French bank’s Equipment Solutions
sector generated €629m in pre-tax income for 2011, up 58.4% from
the €397m generated in 2010.
The fourth quarter was the lowest quarter
in terms of pre-tax income; totalling €119m, a drop of €27m
compared to the third quarter. The first and second quarter saw
pre-tax incomes of €195 and €169m respectively. However,
pre-tax income in the fourth quarter still increased by 35.2%
compared to the same period in 2010.
Revenue for 2011 was €1.57bn, a 7.2%
increase from the €1.47bn attained in 2010. Revenue for the fourth
quarter was €378m, a 3.1% decline from the third quarter’s
€390m.
BNP Paribas attributed this success to
refocusing its leasing business to comply with Basel III. In
2011, BNP Paribas Leasing Solutions
began withdrawing its Fortis business from the UK market in
response to the regulation. Real estate, yacht and private jet
leasing were cut, and plans were made to withdraw from countries
with insufficient scale, such as Hungary and Switzerland.
This reduced operating costs significantly,
saving €15m in the fourth quarter, according to a statement from
the bank. The cost of risk also contracted in 2011, down 51% on the
previous year further reducing expenses.
For the BNP Paribas group, pre-tax net
income was €9.7bn for the year to 31 December 2011, down 26% from
the €13bn recorded in 2010. Pre-tax income for the fourth quarter
was €1.3bn, a drop of 44% from 2010’s figure.
The French bank attributed the poor group
performance to its decision to increase the provision covering its
Greek debt to 75% and reduced its sovereign debt outstandings by
29%, taking a €872m loss.
Jean-Laurent Bonnafé, chief executive of
BNP Paribas, admitted that BNP did not end the year on a high, and
argued the differences in regulation between US and UK banks should
be fixed.
“Our fourth quarter was difficult, with
market conditions impacting CIB and asset management. Additionally,
Greek debt led us to set aside €600m. The US has committed to
implementing Basel III, but probably at a different timing. We
really hope they will comply swiftly with Basel III. This is a
condition to have a level playing field between US and European
banks.”
