By Elena Vardon


Shares in BNP Paribas slipped after the French lender set aside more than $1 billion in provisions, overshadowing a first-quarter profit beat.

The stock fell as much as 5% in midday European trade Thursday, weighing on a broader basket of European bank stocks already pressured by oil volatility and mixed corporate earnings.

The eurozone's largest bank by assets booked 922 million euros ($1.08 billion) to cover the risk of customers defaulting on their loans, a fifth more than a year prior and higher than the 901 million euros analysts had expected, according to a company-compiled consensus. Like some of its European peers this week, BNP Paribas is taking a prudent approach to potential credit losses, bracing for macroeconomic uncertainties tied to the Middle East conflict and its potential to dampen economic growth.

Despite headline beats from its operating divisions, investor sentiment soured on a quarter flattered by one-off items in its corporate center. A 372 million-euro gain from revaluing its stake in wealth manager Allfunds--following a takeover offer by Deutsche Boerse--helped mask a series of legal and regulatory hits. These included a charge for an industrywide U.K. car-loan redress plan and a smaller hit tied to longstanding issues with Swiss franc mortgages in Poland.

Underneath the noise, net profit for the first three months of the year rose 9% to 3.22 billion euros, topping expectations.

Revenue climbed 8.5% to 14.06 billion euros, also beating forecasts. The top line was helped by the integration of the investment manager of French insurer AXA--acquired last year--and growth in fee-generating products, which pushed income at the insurance and asset-management arm up by nearly one-third.

The bank saw strong momentum in its recovering retail arm, particularly in France and Belgium. However, client caution amid a challenging geopolitical environment led to a softer performance at its global banking division, as the corporations and institutions it serves held off on making decisions on deals.

Meanwhile, the equities desk saw a slight boost from market volatility triggered by the U.S. and Israel's attack on Iran in late February but lagged the windfalls seen by Wall Street trading units and Switzerland's UBS. Fixed income, currencies, and commodities reported a flat performance. A weaker dollar also dented results.

"The group has delivered a record first quarter, driven by very good momentum in our operating divisions and implementation of our strategic plans," Chief Executive Jean-Laurent Bonnafe said, confirming the bank's outlook through 2028. Earlier this year, BNP Paribas upgraded its midterm targets as it banks on cost-cutting and profit-boosting initiatives already underway to drive growth.

The bank's common equity tier 1 ratio--a key measure of balance-sheet strength--stood at 12.8%, up 20 basis points from the prior quarter and inching toward its 13% target for 2027.

Separately, BNP Paribas agreed to sell its majority stake in Moroccan bank BMCI to Holmarcom Finance Company. The deal, expected to close in the fourth quarter, should strengthen the bank's capital ratio by another 15 basis points.


Write to Elena Vardon at elena.vardon@wsj.com


(END) Dow Jones Newswires

04-30-26 0714ET