PARIS - BNP Paribas said Thursday its earnings slumped 33 per cent in the fourth quarter as the cost of provisioning a risky loan in its investment banking division weighed on the bank's profits.
The Paris-based bank reported net profit of €514 million ($693 million) for the October-December quarter, down from €765 million a year earlier.
BNP Paribas' cost of risk climbed in the fourth quarter as it was forced to set aside €345 million in provisions for "one specific loan" in investment banking as well as its personal finance branch.
The bank also announced a cost-cutting drive aimed at squeezing savings of €2 billion annually from 2015. About half of the savings are to come from its retail banking division, and another third from investment banking.
BNP Paribas' corporate and investment banking and asset management divisions both posted strong profit rebounds in the fourth quarter compared to a year earlier, when Europe's sovereign debt crisis hammered earnings.
For all of 2012, BNP Paribas' net profit rose 8.3 per cent to €6.6 billion despite revenue that slid 7.8 per cent to €39 billion.
Asset management was the best performing division as rising financial markets in the second half of the year helped lift pre-tax profits nearly 38 per cent.
Corporate and investment banking saw its 2012 pre-tax profit plunge 21 per cent on steep drops in revenue from equities, advisory and corporate banking activities.