PARIS - FRENCH bank BNP Paribas said on Wednesday its net profit sank by more than half in the third quarter on a 1.1 billion euro (S$2.08 billion) loss linked to the financial crisis.

The euro-zone's largest banking group reported net profit of 901 million euros, down sharply from 2.03 billion euros a year earlier.

BNP said its earnings for the July-September quarter were affected by 'numerous critical situations in the financial services industry and unprecedented turbulence in the markets since early September'.

In a statement on Wednesday, the bank blamed the collapse of US investment bank Lehman Brothers and major Icelandic banks. These contributed to the 1.1 billion euros loss in writedowns.

Despite this, all the Paris-based bank's divisions made money during the third quarter - with flat sales and earnings at its French retail banking franchise but a drop in profits at its international retail, asset management and corporate investment banking arms.

The bank said pre-tax profit from its corporate and investment banking business plunged to 38 million euros in the quarter from 760 million euros a year earlier, as the cost of risk skyrocketed following rating agencies' downgrade of monoline insurers to 'doubtful' status, as well as the collapse of investment banking giant Lehman Brothers and Icelandic banks.

BNP Paribas' domestic retail banking division, which has 6 million clients and 2,200 branches throughout France, withstood the financial turmoil thanks to a sales and marketing drive that saw the bank open 50,000 new checking and deposit accounts in the quarter, while increasing loans to individuals and businesses. -- AP