BNP Paribas reported a forecast-beating 9% rise in first-quarter profit on Thursday thanks to its retail bank, even as its investment bankers and traders failed to capitalise on market turbulence caused by the war in Iran.
The euro zone’s largest bank by assets struck a note of caution by setting aside more cash against heightened uncertainty linked to the war – one of several European lenders to do the same this week.
The headline beat was boosted by one-off items, some analysts said, with underlying performance broadly in line with expectations.
Royal Bank of Canada noted that a positive revaluation of BNP’s stake in fund trading platform Allfunds — which Deutsche Boerse has agreed to buy — more than offset higher legal provisions, adding that revenues stripped of these items were roughly in line with consensus.
BNP’s net income in the January‑to‑March period rose 9% year-on-year to 3.22 billion euros, comfortably above the 2.93 billion‑euro average of 14 analyst estimates compiled by the company. Revenues increased 8.5% to 14.1 billion euros, also exceeding expectations.
INVESTMENT BANK TRAILS PEERS
Unlike Wall Street heavyweights and Swiss rival UBS, which posted their strongest trading quarters in years, BNP reported a more modest 2.5% rise in trading revenues, with fixed income, currencies and commodities broadly stable.
BNP’s investment banking overall revenue edged down just 0.8%, partly reflecting the impact of a weaker dollar. French rival Societe Generale had a worse quarter in investment banking.
Activity in BNP’s global banking division, which serves corporate, institutional and financial clients, fell by close to 10%, with the bank saying the geopolitical situation delayed some transactions in March.
Chief Executive Jean‑Laurent Bonnafe, who has led the group since 2011, has gradually turned investment banking into a key growth engine alongside retail banking, insurance and asset management.
That universal model has helped position BNP as one of Europe’s leading investment banks. But it also brings greater operational complexity and higher costs at a time when Wall Street rivals are benefiting from lighter regulation and deeper capital markets.
STRONG MOMENTUM IN RETAIL UNIT
In the retail unit, momentum remained strong, supported by improving net interest margins in France and Belgium.
The first full-quarter consolidation of AXA Investment Managers, the asset management business formerly owned by French insurer AXA, helped support BNP’s revenue growth in the quarter, though it also brought higher integration costs.
BNP shares, which fell after an October 2025 U.S. court ruling linked to a Sudan‑related case, have since rebounded after the bank pledged to lift its common equity tier 1 (CET1) capital ratio to 13% by 2027, a target it reiterated. The ratio stood at 12.8% at end-March.
The bank hiked its provisions for credit losses to 922 million euros in the quarter from 766 million euros over the same period in 2025, to cover macroeconomic uncertainty tied to the Middle East — a cautious stance also seen at Deutsche Bank and Lloyds this week.
($1 = 0.8570 euros)
(Reporting by Mathieu Rosemain)
