French debt holdings under scrutiny
France's fiscal and political turmoil formed the backdrop to the earnings report. Last week, the country's 10-year government bond yield exceeded 5% for the first time since 2002, with a divided parliament struggling to approve next year's budget amid mass street protests. Moody's left France's credit rating unchanged on Friday while retaining a negative outlook.
BNP said roughly €16 billion of its approximately €19 billion in French government bonds is accounted for at amortized cost, meaning market-price fluctuations do not affect its capital. The bank estimated that an additional 0.5-percentage-point widening of the French-German bond yield gap would reduce its Common Equity Tier 1, or CET1, capital ratio by about 0.02 percentage points.
During the earnings call, the chief financial officer described French sovereign exposure as very limited. About €3 billion is measured at fair value through other comprehensive income, rather than through profit and loss. He put total French sovereign exposure at roughly €20 billion and said BNP aims to limit any single investment to less than about 1% of its approximately €3 trillion balance sheet, or around €30 billion.
The bank's results presentation also showed how much its earnings mix has shifted: France accounted for less than 10% of the parent company's pre-tax income in 2025, roughly half its share in 2016.
Equities lead the earnings gain
Group revenue reached €13.76 billion, a 9.5% increase from a year earlier. Corporate and institutional banking contributed €5.2 billion, up 16.6%, with its global markets business generating €2.67 billion. That was a 21.9% increase and approached the record reached in the first quarter of 2026.
Within global markets, equity and prime services revenue increased 50% to €1.46 billion. The business includes stock trading as well as lending and clearing services for hedge funds. Revenue from fixed income, currencies and commodities was unchanged at €1.22 billion: gains in Asia and foreign exchange counterbalanced weaker credit and interest rate activity.
CEO Jean-Laurent Bonnafé attributed the strong quarter to operating performance across all three divisions. For the first nine months of 2026, BNP reported a return on revalued tangible equity of 13.2%, compared with 11.4% a year earlier. Earnings per share over the same period rose 20.1% to €9.36.
Despite the earnings beat, BNP shares were about 1.5% lower at the start of trading in Paris on Wednesday.
Higher provisions weigh on consumer and business banking
The Commercial, Personal Banking & Services division increased revenue by 3.6%, helped by interest rates and higher fees. But pre-tax income fell 6.5% to €2.041 billion as its cost of risk climbed from €703 million a year earlier to €836 million.
Falling used-car prices hurt Arval and Leasing Solutions, where revenue declined 29.1%. Arval completed the Athlon acquisition on July 31, 2026, and its financed fleet reached 1.96 million vehicles, up 23.8% from a year earlier. Battery-electric vehicles make up 31% of Athlon's fleet, compared with 21% at Arval.
Management said approximately €170 million in Athlon integration costs remains ahead. It expects gross operating income at Arval and Leasing Solutions to be broadly unchanged in 2027 from 2026, followed by a recovery in 2028.
Across the group, the cost of risk—the amount set aside for loans that may go unpaid—rose to €964 million. At 39 basis points of customer loans, it remained just below BNP's 2026 guidance of less than 40 basis points.
As of September 30, provisions totaled €18.8 billion, including €3.9 billion in stages 1 and 2. Non-performing loans, classified as stage 3, represented 1.6% of gross outstanding loans and had a provision coverage rate of 67.3%.
Capital and shareholder distributions
BNP's CET1 ratio, a measure of financial strength, ended September at 12.9%. The bank expects it to exceed 13% by year-end, helped by the planned disposal of its Moroccan subsidiary, BMCI.
The BMCI transaction is scheduled to close in the fourth quarter of 2026 and is expected to add about 15 basis points to the group's CET1 ratio during that quarter. The subsidiary generated €358 million in annual revenue in 2025.
The European Central Bank has authorized the €1.3 billion buyback, which is due to begin in November in anticipation of the distribution of 2026 earnings. It follows an interim dividend of €3.23 per share paid on September 28, 2026.
Savings and ambitions through 2030
BNP reaffirmed its existing targets through 2028, including a return on tangible equity of 12% in 2026 and more than 13% in 2028. Management also outlined ambitions for the next plan: a 15% return on tangible equity in 2030 and a payout ratio of at least 70% over the period, compared with 60% under the current plan. The higher payout is expected to come mainly through share buybacks.
Cost savings reached €540 million in the first nine months of 2026, leaving the bank on track for its €700 million full-year target. Management expects savings to accelerate from 2027 to about €1 billion annually, equivalent to roughly 3% of the cost base, for a cumulative €4 billion over the 2027-2030 strategic plan.
BNP will present the new 2030 strategic plan on February 2, 2027.
