A raft of European bank results did little to lift the financial sector gloom today with a recurring trend of falling profits and rising provisions stemming from the global financial crisis.
France's biggest bank BNP Paribas posted a 55.6 per cent fall in third-quarter profits, Allied Irish Banks (AIB) cut its earnings per share forecast for the year, and Austria's Raiffeisen Zentralbank said it may ask the government for €2 billion.
Allied Irish Banks, Ireland's largest by market capitalisation, cut its full-year earnings per share target to around 120 cents to reflect higher bad debt charges, costly funding and the cost of the government bank guarantee scheme.
AIB also said it planned to increase its core tier 1 capital ratio to 7 per cent "over time" from a targeted 6 per cent at the end of 2008, but without diluting existing shareholdings.
The company didn't detail its plans but said its capital position was strong and it had a number of options for increasing its capital ratios. In Greece, Emporiki Bank swung to a nine-month net loss of €121.3 million ($156 million) from a profit of €76.5 million a year earlier.
The DJ Stoxx banking shares index was down 2.4 per cent in morning trade, with Allied Irish down 7.87 per cent and BNP down 6.4 per cent. Despite the tumbling profits, several of the banks sought to reassure investors.
BNP said it was well placed to withstand the crisis, Germany's second-largest player Commerzbank AG said it had a relatively comfortable liquidity position, and Allied Irish Banks said its capital position was good and would remain so.
Meanwhile, UBS AG, the world's biggest wealth manager, said it was looking at past bonuses, an issue that has disgruntled public and regulators alike, saying its board would consider repaying bonuses already granted.
BNP said net profit more than halved to €901 million in the third quarter due to higher provisions tied to the financial crisis, well below the €1.27 billion forecast by analysts.
Its 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.
Allied Irish Banks, Ireland's largest by market capitalisation, cut its full-year earnings per share target to around 120 cents to reflect higher bad debt charges, costly funding and the cost of the government bank guarantee scheme.
AIB also said it planned to increase its core tier 1 capital ratio to 7 per cent "over time" from a targeted 6 per cent at the end of 2008, but without diluting existing shareholdings.
The company didn't detail its plans but said its capital position was strong and it had a number of options for increasing its capital ratios.
In Austria, Raiffeisen Zentralbank (RZB) invited shareholders to a meeting to pave the way for asking the government for up to €2 billion. RZB owns emerging Europe's second-biggest lender Raiffeisen International.
Reuters