SKN | BNP Paribas Shares Jump on Profit Beat as Higher Mid-Term Targets Lift Confidence

Takeaways

• BNP Paribas beat fourth-quarter profit expectations, reinforcing confidence in earnings momentum.

• Management raised key 2028 profitability and efficiency targets, signaling a more ambitious medium-term outlook.

• Investors responded positively, pushing the stock to a fresh intraday record as sentiment toward European banks improves.

Profit Beat Sparks Strong Market Reaction

BNP Paribas climbed sharply after the lender reported stronger-than-expected fourth-quarter results and raised several mid-term financial targets. Net income reached €2.97 billion for the quarter, topping the €2.86 billion consensus estimate and underscoring improving operating leverage as higher European interest rates flow through earnings.

The results prompted a swift market response, with the stock rising as much as 4.7% in early Paris trading and touching a new all-time intraday high. The move reflects renewed investor confidence in Chief Executive Jean-Laurent Bonnafé’s long-running effort to close the performance gap with European peers.

Higher Rates Translate Into Results

Management emphasized that the long-anticipated benefit from higher interest rates is now becoming visible across the group. Revenue exceeded expectations in the quarter, credit provisions came in lower than forecast, and fixed-income trading delivered a notable outperformance, offsetting some weakness in equities trading.

While operating costs missed estimates, investors appeared more focused on the trajectory of profitability rather than short-term expense noise, especially given the bank’s renewed focus on efficiency.

Upgraded 2028 Targets Signal Strategic Confidence

BNP Paribas raised its 2028 return on tangible equity target to above 13% and tightened its cost-income ratio goal to below 56%, from around 58% previously. The bank also unveiled plans for €600 million in additional cost savings in the current year, reinforcing its commitment to margin improvement.

These revisions mark the second upward adjustment in targets in recent months, following a similar move in November aimed at rebuilding market trust after legal uncertainty weighed on sentiment. Since then, the share price has rebounded strongly and is up around 15% year to date.

Business Revamp and Portfolio Optimization

Alongside financial targets, the group continues to reshape parts of its business. Efforts to overhaul the French retail and commercial banking operations are intended to bring their profitability closer to group averages, while asset disposals and restructuring — including job reductions linked to the integration of Axa Investment Managers — aim to streamline the portfolio.

Analysts broadly welcomed the update, describing the quarter as a solid step forward and highlighting continued progress toward BNP Paribas’ strategic objectives.

Outlook

With earnings momentum improving and mid-term targets reset higher, BNP Paribas has re-entered the conversation as a stronger European banking play rather than a perennial laggard. Execution on cost savings, trading performance consistency, and resolution of outstanding legal risks will remain key variables in sustaining the rally.

For a confidential discussion on how European bank profitability cycles, capital efficiency targets, and legal or restructuring risks can be evaluated within a global financials allocation, contact our senior advisory team