BNP Paribas Falls Behind Peers in Valuation Rankings Amid European Bank Rally

BNP Paribas has fallen to fifth place in EU bank valuations, with BBVA topping it at €91.8 billion. BNP Paribas has trailed peers due to lower gains from the end of negative interest rates and a focus on domestic retail business profitability. European bank stocks have surged this year, with BNP Paribas rising 35%, compared to 55% for the industry. BBVA is up 68%, with its shares rallying 17% since July after unveiling higher payout targets.

BNP Paribas SA, once the most valuable bank in the European Union, has slipped to fifth place in terms of market valuation. The Spanish bank BBVA SA has topped the list, with a market value of €91.8 billion ($107 billion) as of July 2, 2025. This significant shift underscores the differing performance of European banks in the current financial landscape.

The market value of BNP Paribas, which stood at €90.4 billion as of the same date, reflects a slower growth trajectory compared to its peers. The bank has benefited less from the end of negative interest rates in Europe, partly due to a higher share of fixed-rate loans in France. In contrast, Spanish and Italian banks have capitalized more effectively on the rising interest rates, contributing to their stronger performance.

Jean-Laurent Bonnafe, the long-time CEO of BNP Paribas, is focusing on boosting profitability at the lender’s large domestic retail business. This strategic shift aims to address the bank's valuation lag but may not be enough to propel it back to the top of the rankings.

European bank stocks have seen a significant surge this year, with many hitting their highest levels in over a decade. The increase is largely attributed to higher interest rates and prospects of a public sector investment spree across the region. BNP Paribas' stock has risen about 35% this year, compared to the industry average of 55%. BBVA, on the other hand, has seen its shares rally 68%, with a 17% surge since the end of July alone, following the announcement of higher payout targets.

The Spanish bank's performance is further bolstered by its plans to acquire Banco Sabadell SA, a smaller domestic rival. This acquisition is expected to enhance BBVA's market position and contribute to its valuation growth.

In another notable development, BNP Paribas has demonstrated resilience in its 2025 stress test, conducted in coordination with the European Central Bank (ECB) and the European Systemic Risk Board (ESRB). The bank posted a maximum loss in its fully loaded CET1 ratio of -235 basis points from the starting point, a significant improvement over the -398 basis points recorded in 2023. This robust performance has enabled BNP Paribas to be reclassified in the first compartment of the ECB's Pillar 2 guidance (P2G), indicating a lower maximum CET1 loss of between 0 and 300 basis points.

These developments highlight the varied fortunes of European banks, with BNP Paribas facing challenges in regaining its former valuation leadership despite its strong performance in stress tests.

References:
[1] https://www.bloomberg.com/news/articles/2025-08-08/bnp-paribas-falls-further-behind-on-valuation-as-bbva-tops-it
[2] https://www.marketscreener.com/quote/stock/BNP-PARIBAS-4618/news/BNP-Paribas-successful-2025-stress-test-50701652/