BNP Paribas Exceeds Analyst Expectations in Second Quarter

In trading with bonds, currencies and commodities, however, revenues remained largely stable, leaving BNP Paribas behind its US competitors. Revenues in trading with bonds, currencies and commodities even declined slightly. Compared with the major US banks, however, the increase was rather modest.

Costs and Risk Provisions Rise

Operating costs rose 10 percent. The bank's costs also rose more sharply than analysts had expected. Risk provisions came in somewhat higher than expected, with an increase of more than 7 percent, as the bank set aside additional reserves for geopolitical uncertainties. BNP Paribas set aside 949 million euros more for looming loan defaults than in the prior-year period. This was also due to the consequences of the Iran war.

The Common Equity Tier 1 (CET1) ratio reached 13 percent at the end of June. BNP Paribas has thus already reached its target for this important financial-strength metric ahead of schedule. The bank stuck to its financial targets for 2026 and 2028. BNP Paribas plans to present its next strategic plan in February of next year.

Capital Ratio Above Target, Strategic Plan in February

The bank also benefited from a one-time gain of 858 million euros from the reorganization of its partnership with the Belgian insurer Ageas. This special item helped provide additional support to the result.

Stock Declines, Analysts Remain Optimistic

On the stock market, however, investors reacted cautiously: at one point the stock lost 1.555 percent in Paris at 105.12 euros. The stock was thus among the weaker performers in the eurozone index EuroStoxx 50. Compared with the turn of the year, however, the BNP stock has still gained around 30 percent.

Analysts remained confident: RBC Capital Markets rated BNP Paribas at 11:06 with "Outperform", JP Morgan Chase & Co. rated the stock at 12:41 with "Overweight". Buy recommendations thus predominate among the major houses, even if the short-term market reaction to the higher costs and geopolitical risks was subdued.