European groups still in ‘wait-and-see’ mode on deals, BNP Paribas says

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European companies were still in a “wait and see” mode in the third quarter because of Donald Trump’s trade war and other geopolitical uncertainties, BNP Paribas said on Tuesday, weighing on their appetite for deals in contrast to a merger frenzy in the US.

The French lender reported a record earnings quarter in its corporate and investment bank, helped by gains in equities and debt trading, like its Wall Street rivals.

But while revenues grew 4.5 per cent overall in the division to €4.5bn, they slipped 2.6 per cent year on year in the deal-advisory part of the business. They had been stable in the second quarter.

BNP flagged a “more challenging context than last year’s, with tariff announcements, geopolitical uncertainties, the ‘wait and see’ attitude of corporate clients”.

BNP Paribas, one of the Eurozone’s biggest lenders, posted a 6.1 per cent year-on-year rise in net income across the group to €3bn, a touch below analysts’ averaged forecasts of €3.1bn. 

It reported a 24 per cent rise in loan loss provisions to €905mn, including due to a “specific credit situation” in its global markets unit, which finance chief Lars Machenil suggested was not linked to the recent collapse of Tricolor Holdings and First Brands Group in the US.

“We had one specific file in global markets,” Machenil told Bloomberg TV. “But it is not a usual suspect, it is in the sphere of payment.”

The bank also had restructuring costs from integrating its €5.1bn purchase of investment manager Axa IM from insurer Axa, its biggest acquisition of recent years. It flagged new annual cost savings and pre-tax revenue forecasts on Tuesday of €550mn by 2029, thanks to the Axa IM purchase, which it said had made it the third-biggest European player in the industry by assets under management.

BNP Paribas shares fell more than 3 per cent in morning trading. Its stock has already been under pressure from the political turmoil in France this year, and took a big knock in the past week after a New York court found it liable for damages to three Sudanese refugees for providing banking services to people and businesses in Sudan under its former ruler.

The bank plans to appeal. The ruling wiped more than €7bn off BNP’s market value last Monday as investors worried about its implications.

France is on its third prime minister this year and the government faces a struggle to pass its 2026 budget in a fragmented parliament, with companies becoming more reticent about signing off on transactions, investment bankers have said. 

Across Europe, corporate bosses have also flagged concerns over US President Donald Trump’s unpredictable policymaking, saying they were holding back on investments in the US in sectors such as energy, with everything from tariffs to changing visa schemes affecting their outlook.

Within the US, however, Trump’s openness to deals and deregulation has spurred a wave of consolidation.

In other parts of its business, BNP Paribas said banking revenue had grown just over 3 per cent in its commercial and personal banking unit, as the outlook improves for its French mortgage book due to borrowers taking out loans at higher fixed rates than a few years ago.

The French bank’s core capital ratio of 12.5 per cent — a focus for analysts — was unchanged from last quarter despite the Axa integration.

This story has been corrected to say that BNP was found liable in relation to providing banking services to people and businesses in Sudan under its former ruler.