BNP Paribas announced on Thursday that it has raised its Common Equity Tier 1 (CET1) capital ratio target to 13% by 2027 and launched a EUR1.15 billion share buyback program, two moves that were met with enthusiasm by investors on the Paris stock exchange this morning.
Around 9:30 a.m., the stock surged by 5.6%, making it the top performer on the CAC 40 and one of the strongest risers on the pan-European STOXX Europe 600 index. By comparison, the STOXX Europe 600 Banks sector index was up 1.4% at the same time.
In a statement released early in the morning, the eurozone’s second-largest bank by market capitalization said it now aims for a financial strength ratio of 13% by 2027, up from the 12.5% target announced at its third-quarter results presentation last October.
For context, the analyst consensus had anticipated a figure of 12.8% for this timeframe.
The bank explained that it intends to reach this goal through a combination of three levers: (1) improving profitability with a positive impact on organic capital generation, (2) moderate growth in risk-weighted assets estimated at around 2% per year, and (3) accelerating the disposal of non-strategic assets.
The group also confirmed its forecast for a return on tangible equity (ROTE)–a key measure of profitability–of 13% in 2028, representing a 2.1 percentage point increase compared to 2024.
To achieve this, BNP Paribas plans to capitalize on strategic initiatives already underway in several business lines, maintain disciplined growth focused on operational efficiency, and keep tight control over costs.
At the same time, the bank plans to offer shareholders an “attractive and disciplined” distribution policy, which will include the launch this month of a EUR1.15 billion share buyback program, anticipating the distribution of 2025 results, as authorized by the European Central Bank.
In its statement, BNP Paribas indicated that its growth and profitability trajectory through 2028 will be detailed upon the publication of its full-year 2025 results early next year, noting that these announcements lay the groundwork for its 2027-2030 strategic plan, to be unveiled at the start of 2027.
In a reaction note, analysts at Jefferies welcomed these measures, describing them as a genuine “inflection point” likely to change investor perception.
“In our view, this is a clear demonstration of the group’s strength,” wrote the American broker, which maintains a “buy” rating on the stock with a target price of EUR95.
The teams at Oddo BHF also reiterated their “outperform” rating on the stock following these announcements.
“We continue to believe the stock is trading at very low multiples and that uncertainty related to the Sudan litigation is more than priced in at current levels,” the brokerage firm said.
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