French bank BNP Paribas raised net profit slightly in the first quarter, it said on Wednesday, beating analyst expectations, but the shares fell on the risk of penalties in the United States. The net figure was boosted largely because a deal in Belgium had reduced interest payments, it said. But the bank warned that it may have under-estimated the cost of penalties over payments said to have breached US embargoes in some countries. Net profit rose by 5.0 percent from the equivalent figure last year to 1.69 billion euros ($2.33 billion). Net banking income, a key measure of the cost of taking in deposits and of lending them out, fell by 0.6 percent to 9.91 billion euros. But this outcome was better than expected by analysts polled by Dow Jones Newswires who had foreseen a figure of about 9.41 billion euros, and also a fall in net profit. However, although gross operating income rose by 0.8 percent to 3.531 billion euros "it was down 3.6 percent for the operating divisions", the bank said. The price of shares in the bank was showing a fall of 3.20 percent to 54.11 euros in mid-morning trading. Market sources said that investors were concerned at the uncertainty over the size of possible penalties on the bank by US authorities. The overall CAC 40 French index was down 0.35 percent. The boost to profits came from the purchase at the end of last year of the share held by the Belgian state in Fortis bank-assurance group. This enabled BNP Paribas to save interest payments which it had been paying to Belgium. But provisions for loans which might not be repaid rose by 19.0 percent, mainly because of an increase of 23.0 percent for risks in Italy where the economic climate was difficult and also because of provisions of 100 million euros to take account of the possible effects of tension in Ukraine, the statement said. The bank also warned that it risked being hit by penalties in the United States in respect of dollar payments made in countries subject to US embargoes. The cost of this could be significantly higher than the provision made by the bank of 798 million euros. Many European banks are cautious about the possible implications of tough so-called stress tests on their ability to withstand crises without putting the financial system in danger. These tests are being carried out by the European Central Bank under new post-crisis powers. BNP Paribas said: "The group's balance sheet is rock solid." Its ratio of top-quality shareholder funds relative to risks taken on, under new Basel III banking rules, was 10.6 percent, it said. The bank said in a statement that it had achieved "solid earnings in an economic environment still lacklustre in Europe". Chief executive Jean-Laurent Bonnafe said the performance was achieved "thanks to resilient revenues across the board, continuing cost control and despite a higher cost of risk this quarter."