BNP Paribas (EU:BNP) reported a record net profit of €3.22 billion for the first quarter on Thursday, exceeding analyst expectations by around 9%, as strong trading activity and the integration of AXA Investment Managers supported revenue growth. Performance, however, was uneven across divisions, with auto-leasing and retail banking coming in below forecasts.
Net income rose 9% year over year from €2.95 billion, beating the company-compiled consensus estimate of €2.93 billion.
Revenues and operating income beat expectations
The BNP Paribas generated €14.06 billion in group revenue, up 8.5% and ahead of the €13.82 billion consensus. Gross operating income increased 13.7% to €5.35 billion, surpassing expectations of €5.06 billion.
Chief executive Jean-Laurent Bonnafé said the group had “delivered a record first quarter, driven by very good momentum in our operating divisions and implementation of our strategic plans,” adding that work is already underway to prepare for the 2027–2030 strategy.
Costs contained as corporate centre drives upside
The cost-to-income ratio stood at 62%, with operating expenses of €8.71 billion coming in slightly below the €8.75 billion consensus, resulting in a positive jaws effect of three percentage points.
Analysts at Jefferies noted that pre-tax performance “was driven by the corporate centre,” where results swung to a €3 million profit compared with expectations for a €411 million loss.
The corporate centre absorbed a €219 million provision linked to UK motor finance risks following the Financial Conduct Authority compensation scheme announced on March 30, with a net negative impact of €98 million on earnings.
This was more than offset by a €372 million pre-tax gain from the revaluation of the bank’s stake in Allfunds after Deutsche Börse launched a bid and BNP lost significant influence over the business.
Divisional performance mixed
Corporate and Institutional Banking revenues were broadly stable at €5.24 billion, down 0.8% year over year but up 3.1% at constant scope and exchange rates.
Global Markets revenue increased 2.5% to €2.88 billion, with equities and prime services rising 9.3% at constant rates. Jefferies highlighted that trading income came in about 3% above its estimates, driven by equities performance.
Investment and Protection Services revenue surged 32.8% to €1.98 billion, reflecting the consolidation of AXA IM. Assets under management reached €2.46 trillion at the end of March.
Commercial, Personal Banking and Services revenue rose 4.9% to €6.85 billion, slightly below Jefferies’ €6.91 billion forecast.
Arval and Leasing Solutions revenue declined 11.7% to €742 million, impacted by a sharp drop in used-car prices in March. Jefferies noted the unit’s pre-tax profit of €253 million was 27% below its €345 million estimate.
Risk, capital and outlook
The cost of risk totaled €922 million, or 39 basis points of customer loans, within the group’s 2026 target of below 40 basis points.
The Common Equity Tier 1 ratio stood at 12.8%, above the 12.65% consensus, with the bank aiming to reach 13% by 2027.
BNP Paribas reaffirmed its 2028 targets, including a return on tangible equity above 13% and compound annual net income growth exceeding 10% between 2025 and 2028.
Leave a Reply