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Bloomberg
BNP Paribas SA cut revenue and profitability targets after the French bank was among the hardest hit by a stock market rout at the end of last year.
France’s biggest lender is planning 600 million euros ($684 million) in additional cost cuts, focussing on the investment bank that Chief Executive Officer Jean-Laurent Bonnafe had targeted as a growth driver. Income from trading shrank 40 percent in the fourth quarter, led by the worst equities performance
of the large investment banks reporting so far.
The bank cited “extreme market movements at the end of the year,†weak client demand for structured products and a loss on index derivatives hedging as reasons behind the trading slump. The bank lost about $80 million in derivatives trades linked to the US stock market late last year, people with knowledge of the matter said last month. It didn’t give more details on the loss during fourth-quarter results on Wednesday.
A second straight annual revenue decline and the misstep in derivatives, a traditional stre-ngth of the firm, are threatening Bonnafe’s ambition to make BNP Paribas a dominant force in Europe as rivals shrink and forcing the lender to pare back or exit some businesses. The results also highlight how difficult it has been for banks to thrive with extra-low interest rates, slowing economies and mounting political tensions that have whipsawed markets.
BNP Paribas fell as much as 3.5 percent and was trading 0.5 percent lower at 10:56 a.m. in Paris trading. Before today, the stock had fallen 37 percent over the past 12 months, underperforming the 26 percent decline by Europe’s Stoxx 600 banking index.