BNP Paribas SA share price up, profit hit by record fine

BNP Paribas SA, Frances largest listed bank, posted its second ever quarterly net loss today, reflecting a record US fine, to which BNP agreed earlier this year. The French lender is the latest in a number of banks to report the impact of US justice on their performance.

Revenue for the second quarter of 2014 was down 2.26% to €9.568 billion, while expenses increased by 4.25% to €6.517 billion. Gross operating income was down 13.76% to €3 051 billion for a gross margin of 31.9%, behind the 36.1% of Q213. The bank still had a sizable liquidity reserve of €244 billion as of June 30.

Net loss was logged at €4.317 billion, which included the €5.75 billion charge for the $9 billion fine. The bank agreed to the fine, pleading guilty of violating US sanctions on Sudan, Iran, Cuba and other countries since 2002.

“The bank has reached a comprehensive settlement with the U.S. authorities,” Chief Financial Officer Lars Machenil said. “As long as the bank performs all the remediation steps, that basically settles the matter.”

Excluding the charge, the net result for the quarter was a profit of €1.433 billion, which is still 18.81% lower than the profit of Q2 of 2013.

The company also set aside further €200 million for compliance-related expenses, as the bank takes steps towards improving its image.

“The group has learned lessons from these past events and is implementing a major reinforcement of its internal control,” said Chief Executive Jean-Laurent Bonnafé in a statement.

The company added that Jean Clamon, head of compliance since 2008, will retire this year in light of the criminal inquiry and the record fine.

BNP is not the only foreign bank in trouble with US authorities. Barclays, Lloyds and Deutsche also face a number of allegations as the US crank up defenses against the problems, which cause the financial crisis.

BNP Paribas SA was down 0.29% to trade at €49.74 per share at 14:03 GMT today, giving the company a market capitalization of €62.16 billion. According to the Financial Times, 27 analysts offering 12 month price targets for BNP Paribas SA have a median target of €56.00, with a high estimate of €65.00 and a low estimate of €43.10. The median estimate represents a 12.27% increase from the last price of €49.88.