BNP Paribas Surpasses Earnings Forecasts with Strong Trading Performance

BNP’s stock was up 1.9%, outperforming CAC 40, a benchmark French stock market index, and European banks.

BNP Paribas, a French multinational universal bank, reported a forecast-beating jump in its quarterly earnings due to a spike in trading activity. It boosted the French bank’s struggling stock prices as it pushed ahead to cut costs and increase profitability.

After facing a challenging year for the lender’s retail operations in France and Belgium, CEO Jean-Laurent Bonnafe, who placed his bets on the investment bank while his European competitors withdrew, will be relieved to see the results.

BNP’s stock was up 1.9%, outperforming CAC 40, a benchmark French stock market index, and European banks.

The euro’s biggest bank by assets said that net income increased 15.7% to 2.32 billion euros ($2.39 billion) in the three months ending December, above the 2.24-billion-euro average of 13 analyst projections complied by the business.

Revenue grew 10.8% to 12.1 billion euros, above the expected 11.6 billion euros.

The results helped BNP to be able to announce a dividend of 4.79 euros per share, up 4.1% from 2023, and a 1.08 billion euro share buyback program that will begin in the second quarter of this year.

However, BNP said it will further reduce costs and lower its key profit target in 2025.

Barclays analysts stated that BNP had fulfilled its key elements like return on equity and that they believed the Q4 results were encouraging.

BNP has recently disappointed its investors in the latest quarters and last year its shares performed the poorest of all the major lenders, falling almost 7% while its European competitors surged.

Investment banking revenue saw a 20% gain in this quarter, mostly due to a 34% increase in trading in fixed income, currencies and commodities and 30% increase in equity prime services.

The Fixed Income Clearing Corporation (FICC) outperformed the Wall Street banks’ average growth rate, which Jefferies, the world’s leading full-service investment banking, estimated to be 26%.

CEO Bonnafe has placed a bet that BNP’s investment bank would compete with its influential US peers and fill the void left by its European competitors.

Investment banking has helped counterbalance BNP’s weal retail performance, while record inflows into the government-regulated high-interest savings squeezed French banks’ profitability while bankers in the eurozone profited from higher rates.

Statistics from research firm Dealogic indicated that BNP’s market share in investment banking in Europe, the Middle East, and Africa increased from 4.6% in 2023 to 4.9% in 2024 in income.

BNP lowered its key profitability objective for 2025 and promised 600 million more in cost cuts in 2026 on top of 600 million euros this year.

This year, BNP aims for an 11.5% return on tangible equity instead of its previous 11.5%–12% target.

It expects to achieve a 12% return on tangible equity (ROTE) in 2026, but it stated that figures should increase due to the 5.1 billion euro acquisition of AXA’s (a French multinational insurance corporation) asset management division, scheduled to finalize mid-year.

When Bonnafe was questioned about future acquisitions, he reaffirmed that he is trying to avoid large cross border transactions even as expectations grow for additional partnerships among Europe’s numerous lenders.

He stated that it is challenging to integrate two banks who belong to two different countries. He added that domestic mergers makes sense therefore the banks that are in a position to do so clearly benefit from them.

BNP expects an average yearly growth in net income of over 7% during 2024-2026, in contrast to the previous estimate of around 8% in 2022-2025 which some analysts predict would be difficult to achieve.

European Banking Authority data shows that the bank has significantly improved its cost-to-income rate, a measure to calculate its efficiency, but it is still higher than the norm for European banks.