BNP profit falls as bad debt provisions rise
BNP Paribas SA pledged to cut costs further after first quarter profit fell by a third as French bank set aside more money to cover potentially damaged loans and disruption caused by the pandemic coronavirus disease wiped out income from its equity business, while warning that the health crisis could squeeze profits this year.
Net profit for 2020 could fall by 15% to 20% due to the pandemic, the effects of which have already been felt in the first quarter on both income and provisions for bad debts, the first listed French bank announced on Tuesday. in assets. The lender will step up its efforts to reduce operating costs, but this could be offset by increasing provisioning.
The bank’s bad debt provisions soared 85% to 1.43 billion euros ($ 1.56 billion), more than a third of which was linked to the pandemic.
The increase in provisions, together with the decrease in revenues, resulted in a 33% drop in net profit to EUR 1.28 billion.
Revenue fell 2.3% to 10.89 billion euros.
The pandemic dealt a severe blow of 568 million euros to the bank’s turnover, linked to two one-off impacts on its equity and insurance activities. Income from equities in particular slumped to a negative 87 million euros in the quarter – up from 488 million euros a year earlier – as they were hit by the “extraordinary shocks” in European markets late March, he said. Rate income increased by around 35%.
BNP’s Tier 1 core capital ratio – a key measure of capital strength – was 12% in March from 12.1% in December.