BNP Paribas (BNPP.PA) has increased its 2028 profitability target and committed to further cost reductions after reporting better-than-expected fourth-quarter profits. Despite a disappointing performance from its investment bank, the results have been viewed positively by analysts. BNP Paribas is the Euro zone’s largest lender by assets, offering a range of financial services including retail banking, investment banking, and asset management. The bank is hoping that growth in its insurance and asset management division, along with an upswing in retail banking, will bolster performance amid concerns about ongoing U.S. litigation related to Sudan.
For the three months ending in December, BNP reported net income of 2.97 billion euros ($3.51 billion), a 28% year-on-year increase and exceeding the 2.84 billion euro average estimate compiled from 16 analysts. In response to the news, shares experienced an initial 3% increase. Analysts at Citi described the results as “decent” and “reassuring”, while Royal Bank of Canada analysts highlighted the “good revenue momentum across a number of divisions that had disappointed”.
The bank is now targeting a return on tangible equity (ROTE) of over 13% by 2028 and aims to reduce its cost-to-income ratio to below 56%, compared to the previous target of around 58% by the same year. BNP Paribas CEO Jean-Laurent Bonnafe indicated that there is still potential for increased cost savings, with plans for “additional measures” in 2026 amounting to approximately 600 million euros. This will bring total recurring cost savings for the period 2022-2026 to 3.5 billion euros, exceeding the initially projected 2.9 billion euros.
While the investment banking division saw revenues increase by 1% year-on-year to 4.58 billion euros, a record quarter, revenue from trading in fixed income, currencies, and commodities grew by only 0.8%, lagging behind Credit Agricole, Deutsche Bank, and Wall Street rivals. In contrast, net interest margin in retail rose by 6.3% in France and 17% in Belgium during the fourth quarter. The bank announced a cash dividend of 5.16 euros per share for 2025, with the final payment of 2.57 euros scheduled for distribution in May.
