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UPDATE 1-BNP Paribas eyes Germany push after earnings slip
July 31, 2013 / 5:29 AM / 4 years ago

UPDATE 1-BNP Paribas eyes Germany push after earnings slip

* To hire hundreds of staff, chase client deposits in Germany

* Q2 net income down 4.7 pct, a smaller-than-expected drop

* Italy loan losses, investment-banking weakness weigh

* BNP seeing “signs of improvement” in Europe -COO Bordenave

* Not seeking acquisitions, “no need” to raise capital

By Lionel Laurent and Matthias Blamont

PARIS, July 31 (Reuters) - French bank BNP Paribas unveiled a plan to boost its presence in relatively resilient Germany on Wednesday, after fresh cost cuts failed to offset sliding earnings in markets like Italy in the second quarter.

The plan will see BNP, the euro zone’s biggest bank by market value, hire hundreds of staff over the next three years and chase client deposits online without building a branch network.

BNP derives more than half its annual revenue from its core French, Italian and Belgian markets. The euro zone’s woes are pushing the bank to chase growth in markets like Asia and the U.S., as well as Germany, while stepping up cost savings.

While cost cuts helped bring expenses down in the second quarter, they were not enough to avert a 4.7 percent drop in quarterly net income to 1.76 billion euros ($2.33 billion), hurt by rising loan-loss provisions in Italy and investment-banking weakness. BNP’s revenue also fell 1.8 percent to 9.92 billion.

This was a smaller-than-expected drop, however. Analysts had been expecting 1.51 billion euros in net profit and 9.84 billion in revenue, according to the average of forecasts compiled by Thomson Reuters.

Among one-off items in the quarter was a 218 million euro gain from the sale of a “bad-bank” portfolio of toxic assets that once belonged to Fortis, a Benelux bank bought by BNP in the midst of the 2008 financial crisis.

BNP Chief Operating Officer Philippe Bordenave said there were already signs of improvement in Europe but that they would only fully become visible in the second half of 2013.

“We are seeing early signs of improvement but...it will be more in the second part of the year,” he told Reuters Insider.

Commenting on the outlook for loan-loss provisions, he added: “We are relatively confident as far as France and Belgium are concerned...in Italy, it may be somewhat more difficult.”

Italy has been in recession since mid-2011 and its government does not see a return to growth before the fourth quarter of this year.

BNP is not seeking acquisitions and does not need to raise capital as its balance sheet is “rock solid”, Bordenave said. ($1 = 0.7547 euros) (Editing by James Regan)

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