Core Points - BNP Paribas has received notification from the European Central Bank regarding the 2025 Supervisory Review and Evaluation Process (SREP), which outlines the Group's capital requirements and leverage ratio on a consolidated basis [2][3] - The Pillar 2 Requirement (P2R) for BNP Paribas is set at 1.73% as of January 1, 2026, reflecting a decrease of 11 basis points compared to the 2024 SREP [3] - The Common Equity Tier 1 (CET1) requirement is 10.44% as of January 1, 2026, which includes various buffers [4] Capital Requirements - As of September 30, 2025, BNP Paribas exceeds the regulatory capital requirements with a CET1 ratio of 10.51%, a Tier 1 ratio of 12.31%, and a Total Capital ratio of 14.71% [5] - The Tier 1 Capital ratio requirement is 12.23%, while the Total Capital ratio requirement is 14.62% [7] - The leverage ratio remains unchanged at 3.85% [7] Stress Test Results - The results from the 2025 stress test conducted by the EBA and ECB place BNP Paribas in the first bucket of the ECB's Pillar 2 Guidance (P2G), with a range of 0 to 100 basis points, lower than the previous range of 50 to 200 basis points [5] Corporate Profile - BNP Paribas operates in 64 countries with nearly 178,000 employees, focusing on various banking and financial services [6] - The Group has a strong presence in Europe, the Americas, and Asia-Pacific, with key positions in commercial banking, investment services, and corporate banking [6] - The company has implemented a Corporate Social Responsibility approach to contribute to a sustainable future while ensuring performance and stability [8]

Financial Data and Key Metrics Changes - The company reported an adjusted EPS of $0.45 per share, reflecting a $0.03 increase from the prior quarter [8] - Pre-provision net revenue (PPNR) grew by $4 million from the first quarter, primarily driven by a $10 million increase in net interest income [8][9] - Total expenses, excluding deferred compensation, increased by only $4 million from the last quarter [16] Business Line Data and Key Metrics Changes - The loan portfolio increased by 2% quarter over quarter, with significant growth in loans to mortgage companies, which rose by $689 million [13] - Fee income decreased by $3 million from the prior quarter, with fixed income performance declining slightly [14] - Non-interest bearing deposits increased by $57 million, supported by successful seasonal marketing promotions [12] Market Data and Key Metrics Changes - Period end balances for both loans and deposits finished 2% higher quarter over quarter [10] - The average rate paid on interest-bearing deposits increased to 2.76%, up from 2.72% in the first quarter [12] - The charge-off ratio remained stable at 22 basis points, in line with expectations [17] Company Strategy and Development Direction - The company aims to achieve a 15% plus return on tangible common equity (ROTCE) over the next two to three years [20] - Focus remains on organic loan growth and enhancing client relationships to drive profitability [20][22] - The company is committed to maintaining capital levels in line with a near-term target of 11% CET1 [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic fundamentals in their southern footprint, expecting stability through 2025 and into 2026 [7] - There is a recognition of increased deposit pressure and competition, but the company remains focused on expense and pricing discipline [8] - Management noted that borrowers are showing resilience and optimism, with expectations for improved activity in the latter half of the year [28] Other Important Information - The company retained approximately 95% of balances associated with clients who had a repricing event in the quarter [12] - The company has a strong credit culture, with years of disciplined underwriting providing stability across economic cycles [17] - The company is exploring opportunities to grow PPNR by $100 million or more through synergies and deepening client relationships [20][78] Q&A Session Summary Question: Client health and loan growth outlook - Management noted that borrowers are resilient and optimistic, with expectations for improved activity as tariff questions settle [28] Question: CET1 target and buyback appetite - Management indicated that they are comfortable with the current CET1 target and will evaluate capital levels based on growth opportunities [30][32] Question: Deposit repricing opportunities - Management acknowledged potential deposit repricing opportunities but noted that competition is heating up, leading to a zigzag pattern in deposit pricing [38] Question: Signs of stress in credit sectors - Management highlighted consumer-facing industries like trucking and auto finance as areas to watch closely for stress [42] Question: Expectations for mortgage warehouse balances - Management expects mortgage warehouse balances to remain stable or increase, depending on the mortgage industry's trends [48] Question: Fee income trends and expense guidance - Management indicated that fee income is under pressure, but they do not expect expenses to exceed a 2% increase [66] Question: Regulatory developments and capital deployment - Management is optimistic about regulatory changes that may allow for greater capital flexibility in the future [100] Question: Trends in loan repricing and spread compression - Management noted increased competition on both deposit and lending sides, with expectations for continued competitive pressures [106]