By Elena Vardon

France's BNP Paribas reported a smaller-than-expected rise in earnings for the third quarter, when higher costs dented its bottom line despite the continued recovery of its retail operations and growth in its investment banking activities.

The eurozone's largest lender in terms of assets on Tuesday reported a net profit of 3.04 billion euros ($3.54 billion) for the three-month period, 6.1% ahead of what it reported a year prior but behind a 3.09 billion-euro estimate taken from a company-compiled consensus.

Growth in trading within the global markets and securities services divisions of its investment bank--which it is building into a growth engine--helped total revenue for the quarter rise 5.3% to 12.57 billion euros, though the result fell short of consensus expectations of 12.80 billion euros.

Its retail and consumer arm also posted growth as it benefited from higher interest rates despite recent cuts or pauses. Compared with their European peers, French banks typically see a lag in loan repricing due to their prevalence of fixed-rate lending and regulated savings accounts, which is now turning into a tailwind.

The bank also reported a 5.5% increase in operating expenses to 7.61 billion euros as it began integrating AXA Investment Management following the closing of the 5.1 billion-euro transaction in early July.

The deal is central to BNP Paribas's strategy to boost its insurance and asset-management arm--a division it has been bulking up through acquisitions--and yield 550 million euros in revenue and cost synergies by 2029. Restructuring costs are estimated at 690 million euros.

The money the group set aside to cover sour loans rose by 24% compared with a year prior--roughly in line with market estimates--and included a provision for an unnamed specific credit situation in its global markets division.

"Our results are in line with our...2026 growth trajectory," Chief Executive Jean-Laurent Bonnafe said. BNP Paribas is on track to meet its target of more than 12.2 billion euros in net profit this year, the group added.

Its common equity Tier 1 ratio--a key measure of balance sheet strength--stood at 12.5% at the end of the period.

Beyond the quarterly results, BNP Paribas has been trying to reassure investors as it grapples with the fallout of a U.S. court decision earlier this month which triggered a selloff of its stock on fears of potential costly settlements. The case is linked to BNP Paribas's alleged role in providing banking services to the Sudanese government through its Geneva office during the Darfur genocide around two decades ago.

The bank, which was found liable for $20.75 million in civil damages to three plaintiffs, intends to fight the case and says it is confident that the verdict will be overturned on appeal. It didn't book any provisions for the matter in the third quarter.

"BNP Paribas believes that the verdict against it was legally and factually erroneous," it said in a separate statement on Tuesday. The transactions complied with European and Swiss laws that allowed activities that didn't involve military equipment, it said.

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

(END) Dow Jones Newswires

October 28, 2025 03:25 ET (07:25 GMT)

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