Lowerprovisions helped BNP ParibasSA beat market expectations for first-quarter profits despite sagging revenues, andexecutives said the cost of risk should remain low even amid uncertainty overinvestment banking and regulation.

Costof risk fell 27.5% year over year to €757 million, or 43 basis points ofcustomer loans, BNP Paribas said. First-quarter net attributable profit was€1.81 billion, up 10.1% year over year and 47% higher than analyst forecastscited by UBS.

"[T]hegood origination policy of the group and the low interest environment …contributed to a reduction in the cost of risk in several areas," CFO LarsMachenil told a call with analysts.

Butthe low rates that helped cut provisions also put pressure on some margins.Revenue slipped 2% from the first quarter of 2015 to €10.84 billion.

Thecost of risk will remain low in the future, Machenil predicted, pointing to BNPParibas' personal finance business, where he said the metric should tend tocome in at about 180 basis points of customer loans, compared to what he saidwere analysts' expectations of about 200. Personal finance's cost of risk slidto 149 basis points in the most recent quarter, down 56 basis points year overyear, but this figure was flattered by sales of nonperforming loans, Machenilsaid.

Costof risk also feeds into the parameters used to calculate risk-weighted assets,which edged down by €7 billion from the end of December 2015 to €627 billion,helping boost the bank's common equity Tier 1 ratio to 11.0% from 10.9%.

Thebank's better-than-expected first quarter performance came despite a 54.5%slump in its pretax income from corporate and institutional banking, which washit by the market turbulence caused by fears over 's contingentconvertible bonds, coupled with concerns about global growth and monetarypolicy, in January and February. Although corporate bond issuance picked up inMarch, it is not clear if this will continue at a pace sufficient to compensatefor the first two months of the year, Machenil said.

Regulationis also a source of uncertainty, with the CFO saying he could not assess theimpact of yet-to-be-finalized Basel regulations that will affect risk-weightedasset calculations, potentially pushing up capital requirements for some banks.Rules requiring banks to hold reserves of liquid assets are already crimpinglending, Machenil said, describing the lender's 116% liquidity coverage ratioas "too high."

"Thereis a lot of liquidity that is somewhat suffocated through the regulation andnot entirely finding its way back," he said. "If we can fuel it intothings like growth in personal finance, our retail activities like Belgium orFrance which have very good profitability, that is of course what we would wantto do."

Askedabout exposure to oil, Machenil repeated guidance that the bank would be ableto halve its cost of risk in the sector even if oil were to trade at $30 abarrel, less than three-quarters of today's level.

BNPParibas' corporate tax rate is also likely to come in slightly lower thanexpected, at 31% instead of a previously guided 32%, partly because of morebusiness in lower-tax jurisdictions than previously assumed, he said.