BNP Paribas vows more cost cuts after profit tops forecast
05/02/2026 06:01
BNP Paribas beats Q4 expectations with record net income Plans cost cuts to achieve 2028 profitability targets Bank faces US litigation concerns over Sudan case By Mathieu Rosemain PARIS, Feb 5 (Reuters) - BNP Paribas BNPP.PA nudged up its 2028 profitability target on Thursday and pledged more cost cuts, after reporting a better-than-expected fourth quarter profit despite a mediocre performance at its investment bank. The euro zone's largest lender by assets will be hoping the numbers, driven by growth in its insurance and asset management division and an uptick in retail banking, will revive investor confidence amid concerns about the impact of ongoing litigation in the United States related to Sudan. BNP reported net income of 2.97 billion euros ($3.51 billion) for the three months ending in December, up 28% year-on-year and beating the 2.84 billion euro average estimate of 16 analysts compiled by the company. The bank is targeting a return on tangible equity (ROTE), a key measure of profitability, of more than 13% by 2028, up from its previous target of 13%, although the new target is lower than at many European rivals. It also aims to lower its cost-to-income ratio to less than 56% versus an earlier target of around 58% by 2028. The bank expects average annual net income growth of more than 10% over the 2025-2028 period, with cost reduction as a key driver. It plans "additional measures" in 2026 of about 600 million euros this year, bringing total recurring cost savings for the 2022-2026 period to 3.5 billion euros, above the 2.9 billion euros initially projected. TRADING REVENUES DISAPPOINT The investment banking division saw revenues rise 1% year-on-year to 4.58 billion euros, marking a record quarter. Yet revenue from trading in fixed income, currencies and commodities grew just 0.8%, significantly lower than Credit Agricole, Deutsche Bank, and Wall Street giants. By contrast, net interest margin in retail rose 6.3% in France and 17% in Belgium in the fourth quarter. BNP's shares have recovered significantly since hitting lows of around 65 euros in early November, rebounding to approximately 91 euros, a roughly 40% increase. But the bank's shares have underperformed peers over the longer term, gaining about 110% in the past five years, less than half the wider European sector .SX7P, as CEO Jean-Laurent Bonnafe struggled to boost profitability. ($1 = 0.8473 euros) (Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes) ((Mathieu.Rosemain@thomsonreuters.com; +33 1 8098 1239; Reuters Messaging: mathieu.rosemain.thomsonreuters.com@reuters.net; Twitter: https://twitter.com/MathieuRosemain))