BNP Paribas has announced a 2.1 billion euro profit for the second quarter of 2011, despite setting aside 534 million euros to provide for the losses in its Greek government bond holding.
The big European bank has committed to the Greek assistance program, which will result in a 21 per cent loss for private holders of Greek government bonds that mature before 31 December 2020. Since BNP Paribas holds 2.3 billion euros in these types of bonds, the bank will set aside 534 million euros to account for the loss (along with the corresponding effect in BNP Paribas’s insurance businesses).
Despite the provision for Greek government bonds, BNP Paribas recorded a quarterly profit of 2.128 billion euros — up 1.1 per cent compared to the second quarter of 2010. The company’s revenues grew across three divisions, with retail banking up 1.5 per cent, investment solutions up 6.8 per cent and corporate and investment banking up 5.7 per cent.
The introduction of ‘systemic taxes’ in some European countries in 2011 affected BNP Paribas’s operating expenses (up 2.9 per cent compared to the second quarter of 2010) and gross operating revenue (down 8 per cent).
The total cost of risk for BNP Paribas for the second quarter of 2011 was 1,350 million euros, which included the 534 million euros set aside for Greek government bonds.
