BNP Paribas's quarterly earnings missed expectations on Thursday after a string of one-off losses and declining sales at the lender's consumer and commercial real estate units, leading it to revise down its profit targets for 2025.

Fourth-quarter net income fell by 50% on a reported basis from a year earlier to 1.07 billion euros ($1.16 billion), the euro zone's biggest bank by assets said in a statement, below the 1.74 billion-euro average of 15 analyst estimates compiled by the company.

BNP Paribas, which has excess capital of more than 7 billion euros after selling its U.S. retail operations last year, also said it would hike its full-year dividend paid in cash by 18% to 4.60 euros per share and spend another 1.05 billion euros buying back shares.

The earnings miss was driven in part by the French lender setting aside 645 million euros to cover losses tied to "risk on financial instruments", with half of the sum related to the sale of Swiss-franc denominated mortgages in Poland.

Half of that sum relates to a long-running case involving Swiss-franc denominated mortgages in Poland, which turned out to be costly for their holders when the currency soared against the zloty.

Europe's top court ruled last year in favour of the mortgage holders, empowering them to pursue lawsuits to reclaim some of the payments. Another case involves BNP's consumer unit that the lender didn't elaborate on in its results. The bank has recently settled with customers of the division.

BNP's group sales in the fourth quarter were up 0.1% to 10.9 billion euros, below the 11.4 billion-euro average analyst estimate.

The bank's insurance and wealth management IPS division performed worse than analysts expected, with sales down nearly 13% in the fourth quarter.

The bank also reduced its 2025 target for return on tangible equity (ROTE) - a measure of profitability - saying it would not hit its 12% target until 2026 because of higher regulatory reserve requirements and the pressure to increase deposit rates.

BNP now sees its ROTE in 2025 in the range of 11.5% and 12%, down from about 12%. It also reduced its average annual net income growth target over the 2022 to 2025 period to about 8% from above 9%.

The bank confirmed its other targets, including a payout dividend ratio of 60% and a Common Equity Tier 1 (CET1) -- a key measure of financial strength -- of 12% in 2025.

Euro zone banks have been reporting a surge in profits in recent quarters, thanks to rising interest rates boosting the income they earn on loans minus deposit costs.

($1 = 0.9256 euros) (Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes and Kim Coghill)