BNP Paribas posted a 34-percent fall in quarterly net profit as France's biggest listed bank met forecasts while Germany's Commerzbank gave a cautious outlook in its results, hitting its shares. Last August, BNP froze withdrawals from three funds linked to US subprime mortgages in a stark warning to markets that the credit crunch was set to hit Europe's banks.
Writedowns and lower profits continue to hit Europe's lenders, though most have fared better than US peers which have posted recent losses, including Citigroup and Merrill Lynch. BNP Chief Executive Baudouin Prot told reporters: "There is no credit crunch at BNP".
Its profit fall was less than that at rival Societe Generale , the French bank hit by a rogue trader scandal, which this week posted a 63 percent fall in quarterly net profit. BNP's profit fall stemmed mainly from weakness at its corporate and investment banking arm, where profit fell to 523 million from 1.22 billion.
It took a 542 million euro charge on counterparty risks for debt insurers affected by the credit crunch and a 44 million euro provision on US retail banking arm BancWest. BNP's net profit of 1.51 billion euros ($2.33 billion) edged an average forecast of 1.48 billion euros from a Reuters poll of analysts which ranged from 1.11 billion to 1.79 billion.
"If there is one European bank that has resisted the crisis well, it's BNP Paribas," said Arnaud Scarpaci, a fund manager at Paris-based investment company Agilis Gestion. Scarpaci said he would continue to steer clear of banking stocks, citing ongoing uncertainty over the credit crisis triggered by losses in the US subprime mortgage market.
Analysts said they were reassured because BNP had not flagged any need to raise capital. BNP joined European banks reporting lower earnings but without negative surprises, including top lender HSBC, which posted a 28-percent profit drop on Monday which analysts deemed a "resilient" performance against a tough backdrop.
Commerzbank posted a 6.4 percent rise in net profit to 817 million euros ($1.26 billion), boosted by a tax credit of 386 million, well above an average forecast of 311 million euros from analysts. Yet Chief Financial Officer Eric Strutz said the outlook for the year remained challenging for Germany's second-biggest listed lender.
"Due to the continuing market volatility, we reiterate that - without accounting for the tax gain - it could be very difficult to reach the good result of the previous year in 2008," Strutz said.
Commerzbank booked an impairment charge of 119 million euros for its portfolio of US residential mortgage-backed securities and a one-off loan loss charge of 250 million euros. "Commerzbank has shown that the subprime crisis is not over yet," said Agilis Gestion's Scarpaci.
In Europe, the credit crunch forced Britain to nationalise mortgage lender Northern Rock and has triggered take-overs including Spain's Santander buying UK bank Alliance & Leicester .
Commerzbank is seen as the favoured candidate for a merger with Allianz's Dresdner Bank, which would create a new German banking champion alongside its biggest lender, Deutsche Bank. A quick deal is not on the cards, sources familiar with the situation told Reuters this week and its results release made no mention of a transaction.
BNP CEO Prot said the bank would "keep a cool head" regarding any acquisition opportunities, giving priority to organic growth. Bank shares have fallen this year, with the DJ Stoxx European banking index down about 30 percent.
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