BNP Paribas (BNP) Shares Slide Despite Delivering Record-Breaking Q1 Earnings

Key Highlights

• Record first-quarter net profit reached €3.22 billion, representing a 9% annual increase and surpassing consensus by 9%
• Total group revenues climbed 8.5% to €14.06 billion, exceeding the €13.82 billion analyst consensus
• Investment and Protection Services saw a 32.8% revenue jump, fueled by the AXA Investment Managers acquisition
• Arval and Leasing Solutions segment underperformed with an 11.7% decline as used-vehicle valuations plummeted
• Management reaffirmed 2028 strategic objectives, including over 13% return on tangible equity and double-digit net income growth

French banking heavyweight BNP Paribas achieved its strongest-ever opening quarter performance on Thursday, reporting net profit of €3.22 billion—a 9% year-over-year improvement. This figure significantly exceeded the company-compiled analyst consensus of €2.93 billion.

Total revenues reached €14.06 billion, marking an 8.5% annual increase and surpassing the forecasted €13.82 billion. Gross operating income jumped 13.7% to €5.35 billion, likewise beating projections.

Chief Executive Jean-Laurent Bonnafé characterized the performance as a “record first quarter,” highlighting strength across the bank’s operational units and advancement on strategic initiatives. He noted that preparatory work for the 2027-2030 strategic plan has already commenced.

BNP Paribas S.A., BNP.DE

The cost-to-income ratio settled at 62%, with operating costs totaling €8.71 billion—marginally below the €8.75 billion expectation. This delivered a positive jaws effect of three percentage points across the organization.

A significant growth catalyst this quarter was the integration of AXA Investment Managers, which the bank acquired in the previous year. The Investment and Protection Services division saw revenues soar 32.8% to €1.98 billion. Total assets under management reached €2.46 trillion at quarter-end.

Corporate and Institutional Banking generated revenues of €5.24 billion, essentially unchanged with a 0.8% year-over-year decline but showing 3.1% growth when adjusted for constant scope and currency. Global Markets revenues increased 2.5% to €2.88 billion, with Equity and Prime Services advancing 9.3% at constant rates.

Jefferies analysts, who maintain a buy rating with a €127 price target, noted that markets revenue exceeded their internal estimate by 3%, primarily driven by equities performance.

Areas of Underperformance

Not all divisions met expectations. Commercial, Personal Banking and Services revenues grew 4.9% to €6.85 billion, marginally missing Jefferies’ €6.91 billion projection.

The Arval and Leasing Solutions business represented the most significant disappointment. Revenues contracted 11.7% to €742 million as used-vehicle prices experienced a steep decline in March. Pre-tax income of €253 million fell 27% short of Jefferies’ €345 million forecast.

Operating costs increased 5.5% annually, partially attributed to restructuring expenses associated with the AXA IM consolidation.

The corporate centre also presented several notable items. BNP established a €219 million provision for UK Motor Finance exposures following the Financial Conduct Authority’s consumer compensation framework announced on March 30. This resulted in a €98 million net adverse impact on net income.

This negative effect was counterbalanced by a €372 million pretax revaluation gain on the bank’s Allfunds holding, triggered by Deutsche Börse’s acquisition offer and BNP’s consequent loss of significant influence over the company.

Capital Position and Forward Guidance

The Common Equity Tier 1 ratio measured 12.8%, surpassing the consensus forecast of 12.65% and improving 20 basis points from the previous quarter. BNP is working toward a CET1 ratio target of 13% by 2027.

Cost of risk totaled €922 million, equivalent to 39 basis points of outstanding customer loans—remaining within the bank’s 2026 guidance threshold of below 40 basis points.

BNP reconfirmed its 2028 strategic targets, which include achieving a return on tangible equity exceeding 13% and net income compound annual growth surpassing 10% throughout the 2025–2028 timeframe.

Notwithstanding the record-setting profitability, BNP Paribas shares declined more than 4% on Thursday.

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