BNP Paribas beats estimates on equity trading boom, retail rebound
BNP Paribas Second-Quarter Results and Performance Overview
By Mathieu Rosemain
PARIS, July 23 (Reuters) - French lender BNP Paribas beat forecasts with a 33% increase in second-quarter net profit on Thursday after its investment bank rode a boom in trading and performance at its retail unit rebounded while it kept a lid on costs.
Net income in the three months to end-June rose to €4.35 billion ($4.97 billion), helped by one-off gains from a reworked Ageas insurance partnership, and beat the €4.21 billion average of 15 analyst estimates compiled by the bank.
Revenue at the euro zone's biggest bank by assets rose 12% year-on-year to €14.1 billion, also above expectations, while operating expenses increased at a pace of 10%.
Market Context and Trading Activity
BNP Paribas is the first of the European investment banks to report second-quarter numbers, with investors eager to see how they have fared amid a surge in trading activity triggered by the Iran war, as well as a frenzy of corporate dealmaking, that has delivered a huge revenue haul for bigger Wall Street rivals.
Volatility in financial markets triggered by the Iran war has provided a boon for trading floors, while blockbuster M&A deals and IPOs have fuelled investment banking fees.
Equity Trading Revenue and Investment Banking Performance
EQUITY TRADING REVENUE HITS RECORD
BNP's long-time CEO Jean-Laurent Bonnafe has made the investment bank critical to the French lender's overall success, but performance has been subdued in some recent quarters.
Sales at BNP's corporate and institutional banking division rose 13%, ahead of expectations, supported by a 43% jump in equity and prime services revenue to a record level.
Fixed-income, currencies and commodities trading revenue was broadly flat, however, lagging U.S. peers, which all reported strong growth in the business.
Morgan Stanley had forecast second-quarter investment banking revenue growth of 7% for BNP, compared with forecasts of 21% for UBS and 2% for Societe Generale.
Several Wall Street rivals, including JPMorgan and Bank of America, reported overall investment bank revenue increases of more than 30%.
Retail Banking Performance
In its core French and Belgian retail businesses, BNP reported year-on-year growth of about 17% in net interest income -- the difference between what a bank earns on loans and pays on deposits. BNP's Italian retail unit, by contrast, posted a near 5% decline in net interest income as lending revenue weakened.
The recovery in the retail business has helped power BNP's shares, which had underperformed rivals in recent years, but are up 30% in 2026, nearly double the average lender in Europe.
Capital Position and Strategic Targets
CAPITAL BOOST, TARGETS REAFFIRMED
The bank said it had reached its 13% Common Equity Tier 1 (CET1) ratio target, a key measure of financial strength, at the end of June, ahead of an end-year target Bonnafe cited in April.
The capital position was helped by the completion in April of a reworked partnership with Belgian insurer Ageas, which generated €858 million in gains.
Legal Matters and Strategic Outlook
Investors are also monitoring BNP's appeal against a U.S. court judgment linked to a Sudan-related litigation.
The bank filed its opening brief with the U.S. Court of Appeals for the Second Circuit in May and said it has since received support through amicus briefs from the U.S. and Swiss governments, as well as academics and industry groups. BNP has not booked any provision related to the case.
The French lender, which confirmed its 2026 and 2028 financial targets, said it would lay out its next strategic plan in February of next year.
The bank's cost of risk came in slightly above expectations, up by more than 7%, as BNP added forward-looking provisions to reflect geopolitical uncertainty.
Exchange Rate Information
($1 = 0.8746 euros)
(Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes, Ingrid Melander)
