BNP Paribas Sets Ambitious Cost-Cutting Targets

PARIS, 5 February – BNP Paribas, France’s largest bank, has pledged further cost reductions following a fourth-quarter profit that exceeded analysts’ expectations and prompted the lender to raise its medium-term profitability targets. The announcement buoyed shares, despite a muted performance in the investment banking division.

CEO Jean-Laurent Bonnafé highlighted artificial intelligence (AI) as a central tool for achieving these savings. “We’re investing where it actually makes sense, because it’s really expensive,” Bonnafé said. He described AI as a “diamond-tipped tool” to simplify processes and reduce operating costs across support functions, emphasising selective deployment rather than blanket implementation.

The bank posted a record net income of €2.97 billion ($3.51 billion) for the final quarter of 2025, marking a 28% increase year-on-year and surpassing the average analyst forecast of €2.84 billion. Analysts, including those at the Royal Bank of Canada, highlighted the strong revenue momentum as a positive sign for the lender’s broader business.

BNP shares rose almost 5% at 11:23 GMT, extending a rally that has seen the stock climb approximately 40% since early November. Over five years, however, BNP’s shares have gained around 110%, less than half the growth of the wider European banking sector.

The bank updated its strategic targets, now aiming for a return on tangible equity of more than 13% by 2028, up from the previous 13% goal, and a cost-to-income ratio below 56%, compared with around 58% previously. Bonnafé indicated additional cost-saving measures worth around €600 million are planned for 2026, bringing total projected recurring savings for 2022–2026 to €3.5 billion, exceeding the initial €2.9 billion target. BNP expects average annual net income growth of over 10% between 2025 and 2028.

The investment banking arm posted revenues of €4.58 billion, up 1% year-on-year, with modest growth in fixed income, currencies, and commodities trading of 0.8%, trailing competitors such as Deutsche Bank and Wall Street peers. In contrast, net interest margins rose 6.3% in French retail banking and 17% in Belgium.

BNP also confirmed it will appeal a New York jury ruling linking the bank to alleged complicity in Sudanese government crimes, emphasising that it will not pay “abnormal sums” to settle the long-running case. Additionally, the bank declared a 2025 cash dividend of €5.16 per share, with a final payment of €2.57 per share due in May.

Key Financial Metrics (Q4 2025)

BNP Paribas’ results underscore the bank’s focus on efficiency, technological investment, and selective growth, even as it navigates legal challenges abroad.