Third-quarter net profit at BNP Paribas more than halved due to higher provisions tied to the financial crisis, France's biggest bank by market capitalisation said today.
The bad debt charge rose to €1.992 billion ($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, down 55.6 per cent on a year ago. Analysts had on average forecast a net profit of €1.27 billion 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 on the third-quarter figures.
BNP Paribas employs 200 people in Dublin in the International Financial Services Centre in international lending and structured finance and proprietary trading.
This included a hit of €289 million at its investment banking arm and an €87 million impairment charge at its American unit BancWest due to problems at US lenders Fannie Mae and Freddie Mac.
The market turmoil, which began as US 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 has already reported an 84 per cent fall in its third-quarter net profit, while Credit Suisse reported a third-quarter loss.
In France President Nicolas Sarkozy has earmarked €360 billion 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.
Reuters