TLDR
- France’s largest bank reported a record first-quarter net income of €3.22 billion, representing a 9% annual increase and exceeding analyst predictions by 9%
- Total revenues climbed 8.5% to reach €14.06 billion, surpassing the €13.82 billion analyst consensus
- The acquisition of AXA Investment Managers fueled a 32.8% revenue jump in the Investment and Protection Services division
- Arval and Leasing Solutions underperformed, with revenues declining 11.7% amid a steep drop in used vehicle valuations
- Management reaffirmed 2028 financial objectives, targeting return on tangible equity exceeding 13% and annual net income growth above 10%
BNP Paribas reported its strongest first-quarter performance in company history on Thursday, with net income advancing 9% to reach €3.22 billion. The figure exceeded the analyst consensus estimate of €2.93 billion by a substantial margin.
Total revenues registered at €14.06 billion, marking an 8.5% year-over-year increase and surpassing the €13.82 billion projection. Gross operating income jumped 13.7% to €5.35 billion, likewise exceeding analyst expectations.
Chief Executive Jean-Laurent Bonnafé characterized the results as a “record first quarter,” highlighting strong performance throughout the bank’s operational divisions and advancement on strategic initiatives. He noted that preparations have commenced for the institution’s 2027-2030 strategic roadmap.
The cost-to-income ratio reached 62%, with operational expenditures of €8.71 billion arriving marginally below the €8.75 billion forecast. This resulted in a favorable jaws effect of three percentage points at the consolidated level.
A significant contributor this quarter was the integration of AXA Investment Managers, which the bank acquired in the previous year. Investment and Protection Services revenues soared 32.8% to €1.98 billion. Total assets under management reached €2.46 trillion at the end of March.
Corporate and Institutional Banking revenues remained essentially unchanged at €5.24 billion, declining 0.8% year-over-year but increasing 3.1% on a constant scope and exchange rate basis. Global Markets revenues advanced 2.5% to €2.88 billion, with Equity and Prime Services climbing 9.3% at constant rates.
Jefferies, maintaining a buy rating with a €127 price objective, noted that markets revenue exceeded its internal forecast by 3%, primarily driven by equities performance.
Where It Missed
The quarter wasn’t without blemishes. Commercial, Personal Banking and Services revenues increased 4.9% to €6.85 billion, marginally below Jefferies’ €6.91 billion projection.
The Arval and Leasing Solutions division represented the most significant disappointment. Revenues contracted 11.7% to €742 million as used automobile prices experienced a sharp decline in March. Pre-tax earnings of €253 million arrived 27% below Jefferies’ forecast of €345 million.
Operational costs increased 5.5% year-over-year, partially attributable to restructuring charges associated with the AXA IM acquisition.
The corporate centre also presented several complications. The bank established a €219 million reserve for UK Motor Finance exposures following the Financial Conduct Authority’s consumer reimbursement program announced on March 30. This resulted in a net adverse impact of €98 million on bottom-line earnings.
This was counterbalanced by a €372 million pretax revaluation gain on the bank’s Allfunds holding, after Deutsche Börse submitted a takeover proposal for the company and BNP forfeited substantial influence over it.
Capital and Outlook
The Common Equity Tier 1 ratio registered at 12.8%, exceeding the consensus forecast of 12.65% and improving 20 basis points from the previous quarter. The bank is pursuing a CET1 ratio of 13% by 2027.
Cost of risk totaled €922 million, equivalent to 39 basis points of outstanding customer credit exposure — consistent with the bank’s 2026 guidance of remaining below 40 basis points.
Management reaffirmed its 2028 objectives, including achieving a return on tangible equity above 13% and net income compound annual growth rate exceeding 10% for the 2025–2028 timeframe.
Notwithstanding the record-breaking quarterly profit, BNP Paribas stock declined more than 4% on Thursday.
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