UPDATE 1-Loan charges weigh on BNP Paribas profits amid Covid-19 crisis

Adds details on trading gains

PARIS, Feb 5 (Reuters) - Charges linked to the COVID-19 pandemic ate into BNP Paribas' BNPP.PA net profit in the fourth quarter as the lender set aside more provisions for loans that could turn sour.

Rivals such as Santander SAN.MC have also been setting aside funds as the COVID-19 upends economies globally and hurts lenders forced to brace for loan repayment problems, although the crisis has also yielded a trading bonanza for some.

BNP Paribas, the eurozone's biggest listed lender, struck a more upbeat note for 2021, saying it expected its cost of risk, which reflects provisions for bad loans, to drop compared to 2020 as the outlook improves in the second half.

Its cost of risk rose by 65.5% to 1.59 billion euros in the October to December period versus a year earlier.

Net income fell 13.9% to 1.59 billion euros - though this was higher than the average profit forecast by a poll of four analysts - while revenue fell by 4.5% to 10.83 billion euros, broadly in line with expectations.

The lender also expects costs to be flat this year while revenue should slightly increase.

Revenue at its corporate and institutional banking business rose 6.9% in the quarter as fixed-income, currencies and commodities trading revenue jumped by 22%, echoing gains at some peers including in the United States.

Last month, Wall Street investment banks reported blockbuster results, helped by a trading boom amid market volatility linked to the COVID-19 pandemic, although consumer-oriented lenders exposed to economic hiccups, including Bank of America BAC.N, took a hit to their business.

BNP Paribas said it planned to pay a dividend of 1.11 euros per share in May, based on a 21% payout ratio - within limits set by the European Central Bank for lenders to preserve capital amid the crisis.

It is considering paying out more in the fourth quarter, it said, which would see it reach its 50% payout target.

($1 = 0.8358 euros)

(Reporting by Matthieu Protard and Marc Angrand; Editing by Sarah White)

((matthieu.protard@thomsonreuters.com; +33-1-49495381;))