BNP Paribas Reassures Investors With Upgraded Capital Target, New Buyback — Update

By Elena Vardon and Adam Whittaker

BNP Paribas's capital buffer target raise and announcement of a new share buyback sent a message of confidence to the market, providing a needed boost to its shares.

The French group sought to address investor concerns by nudging up its target for its common equity tier 1 ratio--which measures its capacity to absorb unexpected losses while continuing to operate--to align it more closely with those of its peers.

The market cheered the update, with shares around 5% higher in midday European trade.

BNP Paribas now expects its CET1 ratio to land at 13% by 2027, against previous guidance of 12.5%. Its ratio already stood at 12.5% at the end of September.

"This ambition is driven by three key factors: stronger group profitability supporting capital generation, moderate growth in risk-weighted assets of around 2% per year, and an accelerated disposal of non-strategic assets," it said. Trimming costs will also be key: The lender targets a cost-to-income ratio of 61% in 2026 which should improve further to 58% in 2028.

BNP Paribas also said that it received regulatory approval to launch a share buyback and will kick off a 1.15 billion-euro program by the end of the month. Going forward, the bank will distribute excess capital above the 13% CET1 threshold to shareholders, it added.

The stock, though having risen nearly 18% year to date, has lagged behind the European banking sector, which has been boosted by bumper earnings and shareholder returns. The banking subindex of the Stoxx Europe 600 is up 49% since the start of the year.

BNP Paribas's stock tracked some of the rally, with its shares hitting a 18-year high in August. But a series of setbacks since have taken the wind out of its sails. Shares sold off last month after a U.S. court decision sparked fears of potential costly settlements from a Sudan-related litigation. The disclosure of higher provisions for bad loans and cautious client sentiment at its third-quarter results also took a toll.

"The higher CET1 [ratio] target should go someway to resolving investor's capital concerns and subsequently allow for a re-rating over time, especially if litigation matters can also be resolved," Citi analysts wrote in a note to clients. The new capital target marks a significant turning point for investors' perceptions, Jefferies analysts said.

"These announcements are what the market has been saying it wants to see," UBS said in a note.

Despite aiming to hold more capital, the bank stuck with its guidance for a key profitability metric. Return on tangible equity should rise to 13% by 2028 from 10.9% in 2024, partly supported by initiatives already underway, it said.

The company intends to publish its outlook through to 2028 alongside its 2025 results in February, and will outline its mid-term plan for the three-year period to 2030 in early 2027.

Write to Adam Whittaker at adam.whittaker@wsj.com and to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

November 20, 2025 08:12 ET (13:12 GMT)