BNP Paribas reports strong earnings but CET 1 declines

BNP Paribas SA reported third-quarter earnings in line with expectations on Thursday, though a drop in a key capital adequacy metric weighed on its stock. The Paris-based bank’s attributable net income rose 7.9% to €2.87 billion from €2.66 billion, meeting the company-compiled consensus of €2.86 billion. Revenue grew 3.1% to €11.94 billion from €11.58 billion.

BNP Paribas reports strong earnings but CET 1 declines

“These strong results were driven by the performance of our operating divisions and show our capacity to grow while managing risks and resources carefully,” said Chief Executive Jean-Laurent Bonnafé. Corporate & Institutional Banking (CIB) revenue rose 9.0% year-on-year, with notable growth across all business lines. Global Banking revenue increased by 5.9%, driven by Capital Markets activities in Europe, the Middle East, and Africa, which rose 12% from a year ago. Revenue from Commercial, Personal Banking & Services fell by 2.6%, though it remained stable when excluding revenue from Arval’s used-car disposals. BNP noted improved results in Commercial & Personal Banking in the eurozone and Personal Finance, with more challenging market conditions for Arval and in Belgium. Investment & Protection Services (IPS) revenue rose by 4.9%, including a 7.9% rise in Asset Management and a 6.4% increase in Insurance, which contributed significantly to growth. Wealth Management remained stable with higher fees. Bonnafé highlighted CIB’s capacity to gain market share and IPS’s solid momentum, particularly in Insurance and Asset Management. He added that Commercial & Personal Banking could benefit from the improved rate environment over time.

CET 1 ratio dips

The bank’s common equity tier 1 (CET1) ratio dropped to 12.7% as of September 30, down 30 basis points from June 30 and slightly below the 12.9% market consensus. The decline was attributed to the Arval consolidation, with organic capital generation balanced by growth in risk-weighted assets. BNP Paribas maintained its full-year guidance, projecting annual revenue growth of over 2% from the €45.87 billion reported in 2023. Shares of BNP Paribas fell 6.2% to €61.46 in Paris trading on Thursday. Barclays analysts noted that while net profit met expectations, the lower CET1 ratio—20 basis points below consensus—could dampen sentiment due to increased risk-weighted assets.