Good afternoon, ladies and gentlemen, and welcome to the presentation of the BNP Paribas fourth quarter and full year 2025 results with Jean-Laurent Bonnafé, Group Chief Executive Officer, and Lars Machenil, Group Chief Financial Officer. For your information, this conference call is being recorded. Supporting slides are available on BNP Paribas IR website: invest.bnpparibas.com. During today's presentation, you will be able to ask your questions by pressing star N1 on your telephone keypad. If you would like to ask a question, please make sure to be in a quiet area to maximize audio quality. I would like now to hand the call over to Jean-Laurent Bonnafé, Group Chief Executive Officer. Please go ahead, sir.
So good afternoon, ladies and gentlemen. We are pleased to present today our strong fourth quarter results, and we'll provide some elements on our 2024 trajectory, which we are revising upwards given the strong revenue momentum and the launch of a transformation plan of our support functions. We'll start with our results on slide 4.
Our fourth quarter results confirmed the sharp acceleration we had expected. Revenues posted a strong 8% growth. Jaws effect was high at 2.9 points and even reached 3.9 points when excluding AXA IM. Cost of risk stayed low at 34 basis points, well within our trajectory of below 40 basis points, and this led to a very strong 28% increase in net profit approaching EUR 3 billion, which is a record for our fourth quarter. Our CET1 reached 12.6%, up 10 basis points this quarter, and we remain committed to delivering on our target of 13%.
For 2025, we will have paid a total dividend per share of EUR 5.16, including the final dividend of EUR 2.57 to be paid in May. If we focus on our revenues, they are up 8% with well-balanced growth between the businesses. CIB revenues posted a strong performance up 1% from a high base or up 4.8% at constant exchange rate. CPBS revenues accelerated sharply, as expected, and were up 5.5%. Q4 is a pivotal quarter, largely helped by the seasonal trajectory and acceleration at Arval thanks to the end of the base effect related to used car prices. Finally, IPS generated double-digit organic growth but also benefited from the AXA IM integration, which led to transformational 40% increase in revenues. Now moving to Slide 5. The fourth quarter showed sharp acceleration of revenues at CPBS, up 5.5%.
Within CPBS, we show here the revenue trajectory of the business most sensitive to the interest rate scenarios, namely our Eurozone commercial banks and personal finance. The trajectory is expected to remain favorable throughout much of our next strategic plan. For personal finance, margin improvement is driven by the natural runoff of loans originated in 2022/2023, which were impacted by higher funding costs. In contrast, new business generates a margin in excess of 5%. This supports an outlook of more than 5% revenue growth per annum over 2024/2028. For our Eurozone commercial banks, the deposit mix that has been stabilizing since 2024 has enabled to continue the reinvesting of low-cost deposits at the longer end of the yield curve, aligning with the maturity of the assets. This will continue well into the next plan, providing a supportive environment for revenue growth.
CPBS will also be supported by strategic plans that are already underway or to be launched, aiming at increasing profitability on 80% of its risk weight. Moving on to slide 6, let me focus now on our 2026 targets.
After a strong end to 2025, we reconfirm our 2024/2026 trajectory. We expect above 7% earnings and 8% EPS CAGR over 2024/2026. This will lead to a return on tangible equity of 12% in 2026, a first step towards our target of more than 13% in 2028. Our strong Q4 reinforces our positive revenue outlook, and we will deliver our jaws effect of 1.5 points. Cost of risk is expected to remain below 40 basis points. We are making good progress towards our CET1 target of 13%. Let me now summarize the 2028 trajectory on slide 7. We have increased our 2028 return on tangible equity target from 13% to above 13%.
One of the key levers is an improved cost-income ratio outlook from around 58% to below 56%. This will be achieved thanks to the launch of our new structural transformation plan for our support functions. This will be a complete overhaul. I'll come back to this later. This initiative will lead to more than 10% net income and EPS CAGR over 2025/2028, a new target with a sharp acceleration when compared with our previous plan. It goes without saying, we obviously reconfirm our CET1 target of 13%, and the distribution in excess of that level will be decided annually. Moving to slide 8, let me elaborate on the key bricks behind this increased return on tangible equity target. As you can see on the left side, we have many strategy plans ongoing, notably within CPBS, to achieve levels of profitability in line with the group targets.
As you can see on the right chart, these plans alone will help us bridge the profitability gap to 13%, which means that the growth from the other businesses, including CIB, will enable the group to exceed 13%. 13% is only a first step in our profitability improvement. By 2028, we will be well on track for 2030 targets, which will be discussed at our Capital Market Day in early 2027. We have presented plans to improve the pretax return of CPBS and personal finance to above 17% in 2028. We have also presented the BNP Paribas Bank Polska Plan, which is already a very profitable entity. With this plan, we are looking to raise the profitability to the highest standards amongst Polish banks at 20% return on tangible equity in 2030.
In the next few months, we'll present the strategic vision for asset management with the AXA IM integration plan. We intend to generate 20% return on equity in 2029, which is the equivalent of over EUR 600 million of additional net earnings. CPBS will present its strategic plan targeting 20% pretax return in 2028. Subject to successful acquisition of Athlon, we will also present the integration plan with a target return on equity of 18% in 2028, adding about EUR 200 million to group earnings. Finally, we'll present the strategic vision for the next chapter at BNL, which has significantly improved its profitability already thanks to well-managed costs and a low cost of risk. I'd like now to discuss our cost-income trajectory on slide 9. We have now set out to lower our cost-income ratio from 58% to less than 56% in 2028.
Obviously, part of this journey will come from the strong revenue trajectory described earlier, but we will also be even more disciplined on costs. By the end of 2026, we will have completed our EUR 3.5 billion cost savings program, contributing to the sharp reduction of 6 points in cost-income ratio we have seen since 2021. These savings have allowed us to develop our platforms at marginal cost and are well balanced between divisions. We will continue to generate incremental savings going forward, but we want to go one step further. Today, we are announcing a new structural transformation plan for support functions, which I will discuss on the next slide. Why a new plan now? We are nearing the end of our GTS plan, and we are positioned to build on its momentum. Recent acquisitions have expanded our scale and created opportunities for optimization.
Reregulation, which brought in layers of complexity and costs, is now coming to an end, freeing up resources, and finally, many of our businesses are or will present transformation plans and are ready for the next step. What is the guiding principle of our plan? The plan will rely on mutualizing and standardization, as well as on new industrialization opportunities enabled by the widespread strategic development of AI in the group. The plan will cover all entities and all geographies. Efficiency gains will be greater in activities most affected by the regulatory wave of recent years, such as compliance and risk, as well as in IT that constitutes the largest proportion of the identified cost space. It will also include a transversal approach across the group through operational functions, HR, finance, procurement, communication, and facilities.
You will probably ask what this new plan to overhaul our support functions means for the P&L. We will provide details at our CMD in early 2027, but I can make the following comments. The initiative will optimize spending on about half of our cost base or EUR 15 billion. First benefits will start in 2027 and will be amplified as the plan progresses. In contrast, the benefits are anticipated to be negligible in 2026. We'll look to invest regularly throughout the plan as the initiatives are medium-term, ensuring that the investments are covered by the savings from inceptions. Ultimately, the plan will also help revenues as it will improve customer experience and refocus our employees on value-added tasks. Some, but obviously not all, of the savings will be reinvested to support our future growth.
This initiative will transform BNP Paribas into a more agile, efficient, and value-driven organization, better equipped to deliver long-term success and sustainable growth. Moving now to slide 11. Our transformation plan will be assisted by AI but will also facilitate its use, including generative AI. Indeed, having more standardized and mutualized platforms will facilitate its implementation with speed and scale. The value created by AI was focused so far on revenues for the most part, but now it will increasingly benefit costs and risks, including operational risk. We have already quantified benefits at approximately EUR 600 million to date, and we anticipate reaching EUR 750 million by 2026. According to the Evident AI Index, BNP Paribas has emerged as the leading Eurozone bank in AI. I will now explain what this all means for our shareholders on slide 12. With 2026 in good shape with ambitious targets.
We expect to generate more than 10% earning growth CAGR over 2025-2028. An acceleration from the previous plan, largely helped by much stronger revenue growth than cost growth, as explained earlier. EPS will obviously grow faster than earnings given the buybacks. Our current distribution policies confirm at 60% for 2026, and for the plan 2027-2030, we will announce a new policy at our CMD, but it will not be less than 60%. Let's now focus on our capital path on slide 13. We are progressing fast toward our new CET1 target of 13%. We have already announced disposal for 13 basis points net of the proposed Athlon acquisition. We'll continue to reassess our portfolio with a view to release at a total of 30-50 basis points. Our organic capital generation will benefit from accelerated earnings and controlled risk-weighted growth at 2%, including securitization and credit insurance.
Finally, we expect the reregulation cycle to end with the FRTB implementation. We are hopeful that the European regulators will ensure a level playing field with banks in other jurisdictions, and we believe there are encouraging signs of possible watering down or delayed implementation, which would neutralize some of the impact. For now, we still factor 30 basis points impact in the trajectory, but intend to reach 13% by the end of 2027 after FRTB, and the distribution of the excess above 13 will be decided only starting in 2027. Let me now hand over to Lars who will present our Q4 results from slide 17. Lars.
Thanks, Jean-Laurent. Before presenting our pivotal fourth-quarter results and 2028 trajectory, I just wanted to make a very short statement regarding our Sudan litigation.
As a reminder, in a decision made public on January 8, 2026, the court granted BNP Paribas' request to proceed with its appeal. We welcomed the court decision and announced yesterday that the appeal will be filed by February 9th. The proceedings are therefore progressing as expected, and we are thoroughly prepared and confident in the strength of our arguments. Let's now move to slide 17 on the solid and pivotal results. So on slide 17, you can see our revenue growth during the quarter. As you know, our business model is based on solid platforms that have a strong focus on cross-selling between these platforms, and those cross-sells are accounting for about a third of group revenues. So if you look at CIB revenues, they were up 1% or almost 5% at constant scope, given the USD evolution.
This is a very good performance given a high base a year ago in the fourth quarter 2024 that included a capital gain in FICC for almost EUR 80 million, which we mentioned at that time. It's nothing new. I just reminded. Of course, Global Banking was impacted by lower margins in transaction banking due to lower rates, but we had strong capital markets activities, particularly in the Americas. We also had very strong performance of Global Markets, both FICC and Equities and Prime Services, as well as Securities Services. We remained the number one European investment bank in India in 2025 in a very competitive market. That's CIB.
If you now look at the second division, CPBS, posted a sharp 5.5% revenue growth, helped on one hand by the strong performance of the Eurozone commercial banks and the margin improvements at personal finance, and all this consistent with the acceleration we had guided for last year in our deep dives. Next to those, there is also Arval, which is growing thanks to the now negligible headwinds from car sale results, which means that in 2026, the strong organic growth will become fully visible than it was compared to 2025. Moreover, as Jean-Laurent mentioned, it will be amplified if we successfully acquire Athlon. So that's the second. So if I end up thirdly with IPS, we generated a very high 11% revenue growth, and this is excluding AXA IM. And so if I included, well, it is included. It reached almost 40% of growth.
Now, we will present the asset management trajectory in more detail at our March deep dive, but the integration, I can already give you the heads up, is fully on track with the anticipated timeline. In IPS, all businesses posted top-line growth around the 10% mark to give a high fee level. They saw good inflow, and they saw very good market activity and levels. We also consolidated HSBC Wealth Management in Germany. So having looked at these strong revenues, let me now look on slide 18 on the costs. You see basically that all divisions have positive jaws. That's what you see at the top left. If you look at the bottom left, you can see that our growth grew with 5.2% in the last quarter, which you might consider high.
But if you look through it and you basically look at the cost evolution excluding AXA IM, you see it is 0.9%. So the difference is structuring cost, which should phase out over time. Now, this will be further accelerated through the review of our support functions as outlined by Jean-Laurent earlier. These functions represent approximately half of our total cost base and therefore provide a significant opportunity for optimization and efficiency gains. Let's remind I mean, coming out of a period of a lot of integrations, it is time to do this end-to-end review. We've done that in 2012 as well, and so this is a similar exercise. Now, if I look since 2021, we have generated EUR 2.9 billion of cost saving, equivalent to about 10% of our cost base, and helping our cost-income ratio fall 6 points over the period.
Our three operating divisions posted positive Jaws effects during the quarter, as I mentioned before, and for the second half of 2025, we generated 2.7 points of Jaws exceeding the 2.5-point targets we had shared with you. So we enter 2026 with confidence about our ability to grow revenues and improve the cost-income ratio despite the integration efforts and costs at AXA IM. While we're at that, let's look at slide 19 and look at the asset quality. So we saw that during the quarter, cost of risk remained low at 34 basis points over outstanding, well within the guidance of being below 40 basis points, and this despite lower releases of Stage 1 and Stage 2 provisions compared to the fourth quarter of 2024.
We recorded lower Stage 3 provisions than the fourth quarter of 2024, which had been burdened by one-off specific file, but we remain confident that our cost of risk will stay amply below the 40 basis points threshold this year. You can see the breakdown by division on slide 20, but that's all basically variations on a theme of low or normalized levels. So, in a synthesis, our portfolio is well positioned in the current environment. Having looked at the elements of the P&L, let's now look at capital on slide 21. We reached 12.6% compared to what we announced at the beginning of 2025- 12.3%. And this 12.6% is up 10 basis points during the quarter last quarter of 2025, and this after the fact that during that quarter, we set aside 20 basis points for distribution to shareholders.
So Q4 confirms the trajectory we had indicated, that regulatory impacts are receding, and organic RWA growth net of SRTs is very well contained. Note that our CET1 is not sensitive to the US dollar weakness as its impact both the numerator and the denominator of this ratio. As you can see at the bottom, we continue to make good use of SRTs with a cumulative CET1 ratio benefit of 80 basis points built over the years. Moreover, in 2025, we set up 42 transactions for EUR 27 billion of growth savings, and most of our businesses were active with highlights, a significant expertise, and discipline. So a payout of at least 60% is confirmed. So in synthesis, you see that we generate free capital and are on track of stepping up our common equity T1 ratio. Finally, let me take you through the corporate center on slide 22.
In particular, given that the Corporate Center performance was below expectations in the second half of 2025, in particular in the third quarter, as we mentioned, we wanted to provide a more nuanced understanding of the factors at play and offer guidance for 2026, this to ensure to have a clear view of our prospects. As a quick reminder, the Corporate Center is basically made up of two parts. The first part, which you see on the top of the page, pertains to restatements related to insurance activities with basically revenues and costs broadly offsetting each other, and therefore, the gross operating income should be close to zero annually. That's the first thing.
The second part, which you see at the bottom, it basically pertains to restructuring cost, what we call central shareholder cost that cannot be allocated, and that involves then also liquidity costs and other volatile elements like the DVA. So we expect revenues to be around zero every year. In 2025, the outcome was a little worse, but we have taken measures to return towards the zero mark in 2026. So that's the top line. If you then look at the cost line, the first part is the restructuring charges. That should amount to EUR 800 million in 2026 after EUR 600 million in 2025. I remind you that on average, we had been having EUR 400 million restructuring, and they are impacted both in 2025 to get to EUR 600 and in 2026 to get to EUR 800 through the AXA IM integration costs.
Then there is the last part of the so-called central cost that well, shareholder cost that cannot for tax reasons be allocated are expected to be around EUR 600 million in 2026. So in a nutshell, we forecast a gross operating loss of approximately EUR 1.4 billion in 2026, and this is already factored into our overall expectation, and we remain comfortable with your current consensus forecast for gross operating income at group level. Now, this is the gross operating income line. If we look below that, we tend to book in that line in the corporate center the revaluation of stakes, which are intended to offset to a significant extent the restructuring charges. For 2026, we anticipate recognizing an EUR 800 million gain from the Ageas transaction, and in 2027, not in 2026, the EUR 400 million gain from Allfunds.
So if I can sum up my intervention with what you see on slide 27, where you see that BNP Paribas is driven by three powerful engines that are integrated as well. And so on one hand, you see a high-return CIB, which we will continue to grow. On the other hand, you see at the bottom a capital-light and scalable IPS, which will be transformed thanks to AXA IM, and thirdly, an accelerating CPBS where you saw the pivot and the step-up in the fourth quarter. Together, these businesses give the group visibility, resilience, and upside to deliver our targets. So having said that, I'll now hand it back to Jean-Laurent, who will offer some final remarks and conclude our presentation.
So thank you, Lars. To conclude, our fourth quarter 2025 was a pivotal moment for the group, and we are now entering our most attractive value creation cycle in more than a decade. Having built platforms that draw at particular costs, we will accelerate our progress through a comprehensive review of our support functions. This will enable us to implement AI on a larger scale, driving benefits for our clients, employees, and shareholders alike, while laying the groundwork for our 2027-2030 plan with the aim of building an even more efficient and value-creating group. By doing so, we will be well positioned to capitalize on emerging opportunities and drive long-term success. This concludes our presentation, and we are now happy to take your questions.
Ladies and gentlemen, if you would like to ask a question, please press star and one on your telephone keypad.
Please lift your handset, ensure that the mute function on your telephone is switched off, and that you are in a quiet area to maximize audio quality. I also would like to remind you to please limit yourself to a maximum of two questions. We will take questions as many as time permits. Again, please press star one to ask a question. First question is from Tarik El Mejjad, Bank of America.
Hi. Good morning, everyone. A couple of questions from my side, please. First, on your revenue guidance for the CPBS, I would like to understand a bit more the dynamics because you focus a lot on the better rate environment with steep curve and high rates, which fits better your business model. No mention on the volume growth, actually, in these geographies.
I mean, we've seen Q4, your loans have been still stable or even down a bit in France, where there is some dynamic of recovery. Can you just maybe explain a bit this guidance, if there is an upside from higher lending growth, or this is not something that you aim to push, and you rather focus on a good margin, more contained balance sheet expansion? Second question was on capital build. In December, it started very strong with some management actions to generate capital quickly, and I think there is still more room to do more. I mean, you already mentioned that Europe met some assets there and some JVs and private equity stakes and so on. Should we still expect you actively looking to get capital faster? I mean, you reiterate 2017 for 13%, but clearly, I think you have more ambitions to do it faster.
And this is the last one, just a very technical one on the DPS. Given the capital gains you'll have in 2026 and 2027, how should we think about the DPS you use? Are you distributing the capital gains as well, or are you assuming the investments will offset these capital gains, and then we just assume DPS on reported? Just want to hear you on that. Thank you.
So on the DPS, it's very simple. I mean, anything that is contributing to the net profit result is going to pay 60% return to shareholders. There is nothing that can be, I would say, handled away from the bottom line.
So if you look at the Ageas , for example, capital gain, as said by Lars, half of it, to some extent, is basically contributed to the guidance because year after year, we have a kind of EUR 400 million capital gain. The other EUR 400 million are on top, and including those one, we are paying 60%. And it goes the same way for, I would say, the Allfunds capital gain, for example. So nothing can escape, let's say, the return to shareholders. So this is the DPS capital build. This is a very high priority at BNP Paribas. We are moving as fast as we can. Anytime we can find an opportunity, we move the right way. You can see that in 2025. As you said, we prefer margins to volumes, but all the business are not just the same.
So if it's a French mortgage, we don't need that many volumes. If it's personal finance, it's a very different story. So it's difficult to give a kind of aggregate number. Lars will give more color on that, but we, in any case, favor profitability against volumes. And when it comes to disposal, disposal can take some time. So we have a number of situations. You have to negotiate. You have to sign. You have to close. I mean, so it can take time. So disposal cannot be accelerated that much if you want to get the right price. So we move as fast as we can for the CET1, and all, I would say, revenues, profits are paying a dividend. So this is the simple approach.
Tarik, and I'll give some further color. So indeed, we are not growing volumes at any cost, yeah?
We are growing it at a profitable way. So indeed, if you take France, we are growing our loans by 1%. So it is not that 1% loan growth that generates 5% growth in the top line. What generates the 5% in the top line is basically the redeployment of our deposits. So we have those non-remunerated deposits, which we redeploy on average 5-7 years, which basically means each year of the next 5 years, there will be EUR 20 billion-EUR 30 billion of non-remunerated deposits that we will reinvest on the longer end of the term. And that is basically the one that is generating the 5% and why we feel comfortable to say that it's going to be that lift over the longer duration.
Thank you.
Next question is from Delphine Lee, JP Morgan.
Yes. Good afternoon. Thank you for taking my call, my question, sorry.
Just two questions for me. So the first one is just a follow-up on Tarik's question on volumes, please. So on deposit trends, I get your questions on loans. On deposit trends, we are seeing some very encouraging signs in Belgium, but are you seeing anything sort of more positive in France and Italy, which could sort of accelerate the top line trends on top of sort of the dynamics on the swaps and the reinvestments that you just mentioned? My second question is just on your plan on support functions. It is very encouraging to see you focus on optimizing your cost base further from here. I'm just wondering a little bit sort of what are you doing a little bit differently compared to the past, and where is that acceleration coming from? You've had EUR 3.5 billion already over 2022 and 2026.
It doesn't look like AI, looking at the chart that you have, is contributing necessarily that much. So just wondering, what are you doing differently this time to really generate those additional cost savings? Thank you very much.
Delphine, thank you for your question. So now, when you're talking about the volumes on the other side of the balance sheet, I mean, as you know, if you look at our liquidity ratios and whatever, you see we have a very solid liquidity ratio. So again, here also, on the deposits, margin is key, not the volumes. And in particular, therefore, if there is a focus, it's on the non-remunerated ones. And so in the base that we took, we assumed that there would be stable non-remunerated. What we see at the moment, that actually it's in the core countries where we are, it's even picking up.
So we are getting more non-remunerated. So we don't go for the price as the liquidity, we don't need it, but we are attracting even higher than anticipated volumes, which we then can redeploy, as I mentioned just before. On the
cost, Jean-Laurent Bonnafé? So if we go back to page, this is page 9. So Belgium, as you mentioned, we are having currently a trend that is basically, in terms of efficiency, 700 per year. You have the split in between the different businesses. If we were to go for a more detailed split, you would see that central functions, group level, amounts to more than 20%. And within the remaining part, directly within the businesses, you would have something roughly around 13%-15% that belongs to the local business-by-business support function.
So in total, out of the 700 per year, you have roughly 1/3 , slightly more, meaning EUR 250 million, EUR 300 million of efficiency coming already from support functions, either at group level or within the businesses. The rest is very much, I would say, delivered by the businesses itself, especially in the layer that is directly servicing the counterparts, clients. So if you look at group functions, if you look at support functions, group level or within the businesses, as of today, we are very much looking at all that on a standalone basis, so one after one. All that, I would say, improvement comes from, I would say, a long list of improvements coming from any function, any platform. And we will continue that game.
But on top of that, we are going to move to a second level, meaning we can consider to have, I would say, either joint ventures in between those support functions or a different approach in between those support functions and the businesses, or we could have even potentially the possibility to merge some of those support functions. So we are moving from an approach that is being efficient function by function to an approach that is redesigning the whole setup. So this is a very different approach. Doing so, we can double what's coming from the support functions. We did that in a number of occasions at the moment of merging BNP and Paribas. We did that when we integrated BNL, the Fortis, and a number of other, I would say, situations. We are doing that basically merging BNP Paribas Asset Management and AXA Investment Managers.
So this will represent another layer that is going to be roughly of the same magnitude. We are extracting year after year from the current situation around support functions. So the support functions will provide not only the EUR 250 million, but an additional, typically, EUR 250 million. So this is EUR 500 million. EUR 250 million is basically 0.5 percentage point, 0.5 point of cost income, to be very simple. So we are moving from a trajectory where the cost income was going down 1.5 point every year to 2 point. This is the story. Said it in another word, instead of delivering EUR 3.5 billion in 5 years, we are going to deliver something close to EUR 4 billion in 4 years. And you can see that on page 10.
Page 10, you can see that cumulatively, we delivered EUR 3.5 billion in 5 years. And the next phase is going to be the same momentum plus the add-on.
This is roughly 700 + 250, 950 close to EUR 1 billion. So this is roughly EUR 4 billion over a 4-year period. So this is the situation. We have already enough programs, enough initiatives to deliver the 28 program, the below 56% cost-income ratio. We have already this in our pocket to some extent. And this will continue beyond. And probably, we are not going to extract the 100% potential in 4 years. There will be something on top of that in the plan after 2030 because you cannot change everything at the same moment. So the difference, again, is that not only we are going to improve the efficiency of any individual piece, but we are going to combine those different pieces so we can extract additional efficiency with the target to probably change, to some extent, the design and the perimeters of those different support functions.
To do that, yes, AI is one of the technologies we will leverage, but this is not the only one. A bunch of that is just regular synergies and regular cascading because doing that, you are identifying overlaps, and killing those overlaps, you are extracting additional efficiency. So it's something we did already. It's something we already delivered in certain occasions. This is the right moment to move. Why? Because of the regulations, reportings, the digitalization, we pursued looking at the past 7, 8 years. We were very much focused on looking and servicing customers and answering anything that was reporting to the supervisor. We did a lot towards customers. We did a lot towards supervisors. And now we have some, I would say, ability to refocus on, I would say, the measure, the key basis of the company. And this is going to be the focus.
So it's an opportunity, it's a new phase. This will accelerate the efficiency program. As you can understand, the cost income will decrease slightly faster because of that. The goal of that program is not only to gain additional efficiency, meaning having a better, I would say, return, but it's also a way to have better datas within the group. Doing so, you are having more, I would say, integrated processes. So the internal service, the internal value shared, the way you serve customers is being improved. The way you can, I would say, manage, leverage datas to originate new services is also, I would say, improved. So to some extent, you improve the quality of service towards clients and also innovation. Also, you can refocus the teams, colleagues to what can be considered value-added tasks.
This is also very important to attract, I would say, the new colleagues and the younger generation. So this is what is being said in a very simple way on the right part of the slide. It's not only about efficiency. It's also about servicing better clients, giving a better prospect to colleagues, and ultimately giving additional, I would say, return to shareholders. So this is the spirit, and this is the way it goes.
Understood. Thank you very much for the color.
Next question is from Giulia Miotto, Morgan Stanley.
Hi. Good morning. Thank you for taking my questions. I have two. I'll start with one on the payout mix on slide 12. I think you say that you will communicate the new distribution policy basically at the next CMD.
I was wondering if perhaps rebalancing away from cash into buybacks is one of the options you're looking at. In the past, you weren't really open to this. Just wondering if that could change. Then secondly, in the quarter, asset quality was basically non-eventful, but we are seeing other banks in France perhaps having slightly higher cost of risk and mentioning some industries that are impacted or uncertainty is not helpful. What are you seeing on the ground, and do you expect a pickup in cost of risk, most notably with the French corporates? Thanks.
On the first question, we have different options. We can change the mix in between the cash dividend and the buyback. We can increase the 60% to, I don't know, 70%. We can opt for a different approach, keeping 60 and giving back everything above 13% CET1 ratio.
So this is part of the next plan. It's too early to say. But clearly, the group becoming more profitable, something will be changed in the best interest of the shareholders, obviously. So this is the first point. Looking at the asset quality, I mean, we are basically a European bank. The French part is a piece of the total. This is not typically BNP Paribas anymore. So France contributes to the total, but this is not, on average, BNP Paribas. BNP Paribas is much more a European platform. We have always said that we are focusing the company and the businesses on the best part of the market, meaning the best, I would say, counterpart in terms of risk profile. We are very focused on that. Doesn't mean that from time to time, we cannot bump into a certain situation. But on average, we are very focused on that.
If you take away personal finance, that is a slightly different type of business because in consumer lending, you have always structurally a higher cost of risk. Away from that, the cost of risk at BNP Paribas is below 20 basis points in terms of provisioning compared to outstanding. So it's a low level, and it will stay that way just because we focus. And this is correct. From time to time, I should say every day, we are giving up some revenues just to protect that approach when we believe a certain situation is not relevant or is not, I would say, aligned with our strategy. So looking at us, looking at our business model, we are not seeing currently any deterioration. And looking at the portfolio we're having, we do not forecast any deterioration.
So in that respect, yes, it's a confirmation of the quality of the balance sheet. But there is nothing new in that respect.
Thanks. Next question is from Chris Hallam, Goldman Sachs.
Hi. Thank you. Just two from me. So first, on cost. For 2026 specifically, you used to have a 61% cost-to-income ratio target, which I guess has now sort of been replaced by that three-year walk towards 56% in 2028. We have the 5% revenue CAGR and the 1.5 points of JAWS per year. But I guess just specifically, how should we think about the outlook for costs year-over-year in 2026? And then secondly, how should we think about the EUR 635 million and the EUR 750 million of AI value creation on slide 11?
Is that telling us that if AI wasn't a thing, that pre-tax profit for BNP Paribas would have been EUR 635 million lower in 2025? And I don't know if that's a net or a gross figure, i.e., whether the CapEx and OpEx spend on AI products and services is embedded in those numbers. Thank you.
For 2026, we didn't put that in writing, but the cost income for 2026 is 60%, 6-0. We said 61% in November. But obviously, improving the curve, we are also improving 2026. So 2026 is going to be 60%. On your second question, I will ask last answer. Yeah.
The thing is, if you look at the chart that you see, so we basically say with all the elements that we put in motion, let's say, in the run-of-the-mill activities, and if we identify the ones that we have on AI, if we look at what we have been doing in the last couple of years, the main effect that we have been doing, which was, let's say, more the machine learning AI effect, the main impact was in the light green, light blue, whatever you want to call it, was on the revenues. So it was stimulating the revenues. It was identifying the products for our customer and the likes.
What we see now in the work that we have been doing, the testing that we have been doing, and the end-to-end process that we identify is that we see that the next wave of this kind of using AI in our day-to-day improvements will also have a very material impact and a stepped-up impact when it comes to cost and cost of risk. So we will be able to be reducing the cost to serve, but also whenever it comes to risk activities, be it KYC, so you will see that in the cost, but it can also be in the workout. So in elements of cost of risk whereby the use of AI, we have more data available, and therefore, the impact of the total will be positive on the cost of risk. So that's the kind of thing. So we do the investments in our run-of-the-mill.
This is kind of the synergies that that aspect generates and how we intend to evolve it going forward.
Okay. Thank you.
Next question is from Jacques-Henri Gaulard, Kepler Cheuvreux.
Yes. Good afternoon. So two questions. The first one, coming back to the cost-income ratio, the one thing which is really spectacular is that we started from a target objective of 60%-61%. Then in November, we get to 58%, and now two months later, we get to 56%. So it's been really quite brutal in terms of effectively, I would say, evolution of mindset. What was there and what changed really? Was it really the transformation plan for support function that got you, "Okay. We're going to give that 2% more," or more the revenue evolution where you feel is a bit better? And linked to that, how much is it going to cost you?
Will it be part of this transformation plan? Will it be part of the -EUR 1.4 billion that is in the Corporate Center? That's the first question. The second one, which is natural, if we get from that target of 61, 58, 56, and then why is the ROTE only moving from 13% to more than 13%? I guess the more than 13%, is it 13.1%? Is it 14%? Is it 15%? Thank you.
So to be very simple, we started the so the program, the transformational program we are, I would say, presenting today, is something that will be up and running beginning of 2027. We decided to start, I would say, the early, I would say, work in September 2025. So we started the first, I would say, working group in September. So in November, we were not, I would say, confident enough.
I mean, there was something on top of the targets we were kind of corresponding to the natural, I would say, evolution. So we were not having already in our hands, I would say, a representation of what could that represent in 2028. So now we are much, much more advanced. We know better the program. And ultimately, we will give you the target for 2030 because this is a program that is for 2027, 2030, and the 20th level is just a kind of interim, I would say, projection. So 2030 is going to be much better, obviously. So this is the reason why in November, we were not prudent but communicating around, I would say, the regular trajectory, meaning kind of 2021, 2026 program continuing the same way. And now we are much more confident on the impact of the new program. So this is basically the situation.
The program is going to be funded by the company one way or the other, probably because this is the way we book the transformational cost. When we are having transformational cost, it's group level. So this is part of the EUR 1.4 billion, and we have no intention to grow that amount. It's probably something we'll try to diminish rather than to increase. But in any case, everything is factored in the projection. And it's what a part of the EUR 600 million because the other part is the restructuring cost. So that's what it is. So we will run it within that. And then when it comes to the ROTE, yes, we stepped it up over 13%, and that's basically it. Yeah. So we are always a bit prudent in what we share. So it is above 13%.
Thank you very much, gentlemen.
Next question is from Andrew Coombs, Citi.
If I could just have one follow-up on the cost income, and then I'll ask a separate one as well. On the cost income, just going through the math that you outlined earlier, you talked about how you're currently doing about EUR 700 million in saves a year, and that was contributing to the 1.5 points JAWS each year. And that by effectively now realizing an additional EUR 250 million on top in each of 2027 and 2028, that would get you to 2 points per year, which takes you from the 60%-56%. Just backing into that, implicitly, you're assuming similar revenue growth, therefore, in 2027 and 2028 as you have had over 2024, 2025, and 2026 in that case. Is that a fair assumption?
And then second question, and I appreciate you are going to give a deep dive on this later in the year, but perhaps you could just touch on the rationale for Athlon, the EUR 200 million net benefit to earnings that you expect. What to assume within that in terms of synergies and the underlying business trends? Thank you.
So you're correct. Basically, the cost income is based upon the evolution of the cost base as well as the evolution of the top line. To go through that computation, basically, yes, we are assuming the, I would say, revenues are going the same way, knowing that in the previous plan, we were to some extent handicapped by the rate effect. So on a standalone basis, the next plan should be stronger. But in the last plan, also, we had some external growth.
So it's fair to say that for that computation, we are taking basically the same kind of, I would say, top-line evolution. And in fact, the difference is very much the one you underline. I mean, EUR 250+ cost reduction a year is 0.5 point of cost income. So this is as simple as that. So you are going down by 1.5 per year, and then it becomes 2 points per year. So this is exactly the math. And if we can do a better job, we will do a better job. But again, the 2028 target we are giving is just a kind of interim target. This is not the representation of the strengths and the power of the new initiative. 2020-2030 will have to be better, clearly. On Athlon, we are having a very strong leader with Arval in car fleet leasing throughout Europe.
In terms of market share, it's the second player, Arval. Roughly, if you concentrate on the real car fleet leasing, which is the piece that is profitable because management of fleets is a very different story. I mean, the revenues are absolutely not of the same kind. So if you concentrate on the core business that is the real car fleet leasing, Arval is growing by net 100,000 vehicles per year. And progressively, the gap in between the leader and Arval is diminishing. And the platform is strong enough to deliver a bolt-on that is not that huge. This is not a merger of equals. This is something that is proportionate, quite easy to deliver, and a very good complement in terms of geographies.
Doing so and considering that Arval is the fast-growing platform within Europe, probably in the years to come, the new platform, I would say, based upon the aggregation of Arval and Athlon, will be at par with the leader. And in that business, volumes and size are relevant because it gives you a certain, I would say, traction in your conversations with car manufacturers. So it's important, and it makes a difference to be at 2 million or to be at 2.5 million per year. So this is the goal of that move, to become a co-leader, to complement the geographies, to deliver additional efficiency in a very simple way. I mean, we are going to integrate Athlon platform within the one of Arval. So we will extract a lot of cost synergies. And these cost synergies will, I would say, produce this additional efficiency and return.
So in terms of size, very reasonable move, quite easy to integrate, no disruption, fast-growing project. Ultimately, you are building the co-leader at par. And again, size is of essence in that business. So this is the strategy that is behind this move.
So basically leading to a 27% pre-tax return.
Right. Thank you.
Next question is from Flora Bocahut, Barclays.
Yes. Thank you. Good afternoon. The first question, I'd like to go back to the cost but to discuss a little more the potential for restructuring cost because you have the deep dive you're going to do in H1 on Belgium. You have the one you're going to do in H2 on BNL. Obviously, the Athlon acquisition you just mentioned, the situation at HSBC Wealth Business you acquired in Germany. So you've guided on the restructuring cost for 2026, especially from the AXA IM situation.
But should we expect potentially more restructuring costs coming in in 2026, 2027 from what I just mentioned, or is that already embedded in the cost income ratio that you present? And the second question is on the capital. Basically, on capital, the question would be the CET1 target of 13% is for by the end of 2027. I just wanted to understand what are the odds, how high are the chances that you can achieve that already in 2026? And actually, regarding that, what would be your expectation from today's standpoint on FRTB specifically? Thank you.
So in terms of cost, everything is covered. Nothing is being hidden somewhere. I mean, everything is covered in our trajectory, including, I would say, restructuring costs that could come from, I would say, aggregation, external growth, or internal programs. Again, everything is being covered. Nothing on top or on the side.
On equity, you never know. We do the, how do we say? We go as fast as we can to some extent. We were supposed to deliver 12.3 this year. We are delivering 12.6. So we saw some kind of accelerations. But I don't believe that 13% by year-end 2026 is reasonable. If it's a necessity, we can deliver that, but I don't believe this is reasonable. For the FRTB, not what we believe, but what we hear and what we understand, that there are a couple of initiatives that could end up ultimately with a kind either of postmortem of the FRTB for a certain number of years or a process that would implement the FRTB while neutralizing the impact. This is basically the two voices we are hearing. And why? Because obviously, the U.S. universe is not moving, implementing the FRTB so far.
So it's a question of global competition for the banking system in Europe, in the Eurozone. So there's a certain probability that ultimately, the impact is not going to be 30 basis points, but you don't know. And in any case, we are prepared to deliver the implementation of the FRTB because there is an operational dimension. So we are, I would say, full speed on that dimension. So we will deliver, in any case, the implementation. And we are preparing the trajectory in terms of CT1 to be able to absorb that potential 30 basis points advance or add-ons. I don't know how to say that. So yes, there are scenarios. It's very difficult to give a probability, let's say, 50% chance that ultimately, this could be watered down.
But in any case, we are prepared to, I would say, to deliver those 30 basis points, and we are prepared to operationally implement the FRTB.
Yeah. And maybe, Flora, to put a number on it. So as we said, for the restructuring, we basically have foreseen that's what we announced, EUR 800 million for 2026, and that will basically go down to EUR 550 million the year thereafter. And that is the cost base within which we will deliver the things that we mentioned.
Okay. Thank you. Can I just follow up with a very quick one on the timing on FRTB? Do you think we will know in H1 this year?
What we hear is that so the European Commission is having the hand on this. So whatever Jean-Laurent said, that they are looking at options, it's basically the Commission.
And so therefore, if the Commission wants or cannot postpone it but needs to implement something with an effect which is neutral, then it has to be ready by 2027. And so that is why they are working on it now. And so yes, it's not impossible that we will have a view by the summer.
Thank you.
Next question is from Sharath Kumar, Deutsche Bank.
Good afternoon. Thank you for taking my questions. I have two questions, one on capital and one on Arval. Looking at your capital buildup, I hear you when you say disposals cannot be accelerated that much in the near term if you want to get the right price.
But given what we have seen happen to your share price with a faster buildup of CET1, would you be open to exploring a minority stake sale, perhaps through an IPO for more scaled assets like your asset management business or Arval, to achieve a faster route to 13% CET1? That's the first one. Second, on Arval, again, would it be a fair conclusion to say that consensus underestimates your strength by factoring in only 5% revenue growth for 2026? Given your organic revenues grew by 11% in the fourth quarter, your fleet is growing very well, and you would face extremely negligible impacts from used car revenues for 2027. In that context, can you also confirm that you'll continue to grow fleet around 5% in 2026? Thank you.
Listen, on capital, as you know, we are intrinsically generating capital.
As I mentioned earlier, you see that with the 10 basis points that we generated in the fourth quarter, on average, on a year, we generate 30 basis points. We assume that there could be some supervisory regulatory overhang, so we generate 20 basis points. So we're already at 12.6. So that's the speed at which we go. And then some sales will further step it up. So we're really on track. And so having a setup with joint ventures with those key activities like Arval and asset management that we consider key in the cross-sell and in the integration that we do, that is an option we do not consider. So we consider we have very fast organic growth, and then we will dispose things, which are the fast track on which we go.
And so with respect to the rest on Arval, yes, we have guided the growth that we have on the fleet. And whatever we see at this stage is that growth we are hanging. If you look at so the overall growth, we see that. And we also confirm the non-effect of the resale value of the cars. Now, if you see the prices of both the EVs and the ICEs, they basically don't deteriorate. So also, that assumption is clocking in. And so that's why we feel comfortable with the outlook.
Thank you.
Next question is from Pierre Chédeville, CIC Market Solutions.
Yes. Good afternoon. One remark question, I would say, on slide 8 regarding BNL because I noticed that for every business above, you mentioned Roni and precise deadline, I would say. But not for BNL. We have nothing.
I was wondering why this uncertainty in BNL that you don't feel for Belgium or Arval, for instance. More globally, I think we all have seen clearly your new trajectory for 2028, 2030. But at the end of the day, if we take one of your best peers in Italy and I know that you know very well this banking market, you remain, I would say, 20 points above in cost-income and more than 10 points below in terms of profitability. I was wondering, in the past, we could say it was because of the high interest rates, variable rates, etc. But this is normalizing. I don't understand this gap remains so high with this type of peers. I was wondering if I would say we miss something in France in terms of IT.
I don't know, something which is not very clear for me. And my second question, in your trajectory, we also see that many players are pushing very hard in their retail businesses on the digitalization, not only AI but also digitalization with online banks, things like that. And I was wondering, in your cost income improvement, what do you see as which could be the part of the digitalization, for instance, Hello bank! development, etc., but not only in France but more generally in your CPBS business? Thank you very much.
On that second question, I mean, if you look at the efficiency program, we talked about support function, but you have all the rest that is much more, I would say, the part that is servicing directly customers. So it could be commercial banks, could be CIB, could be insurance.
All the good progress we are delivering are coming from, to some extent, digitalization. So this will continue. If you look closely at the plan, we already communicated that personal finance or CPBS France, and you will see just the same with Belgium and again with BNL. Digitalization is of essence in that part when it comes to improving the efficiency of a business platform. The layer that is directly servicing customers is moving that way. So it's something that started in the previous plan that expanded in the current plan and that will continue to, I would say, to expand in the next plan because remember that you have the new program, but anything that is optimizing the efficiency of the businesses will stay. This is very important.
And again, part of it is digitalization, which ultimately has good, strong impact in terms of FTEs, efficiency, quality of service, and so on and so on. For your first question on BNL, BNL, they are going to deliver the plan. We have a good vision of the plan as of today, obviously. This will be communicated in the second part of 2026. And remember that those plans, they are for the 2027, 2030 plans, so nobody is late. On the contrary, you have a bunch of businesses that are moving ahead of the plan, and BNL will communicate in due time. And there is no specific, I would say, complexity with BNL. It's a different market. It's a different positioning. And you will see the result.
Then comparing our group to, I would say, more domestic players, let's say, that are operating in one market where margins on loans are much higher than in Belgium or France because this is a reality and that are having the floating rate, I would say, type of balance sheet, it creates a large gap in terms of return on asset. Because the situation we are in today, we are back to a normal growth, let's say, more than 5% in those commercial banks we're having at BNP Paribas. But this is the beginning. When you have a floating rate balance sheet, I would say what took place in 2022, 2023 with the rates was all of a sudden violent, very rapid increase of the intrinsic margin of the old book. For us, this will be much more progressive.
In any case, in some countries, you are having for certain assets a better margin. This is linked to a number of local factors. This is not linked to the business model of the bank in the country. So again, we are progressing well. Return on tangible equity used to be at 10% in 2021, will be at 12% in 2026, we're going to be at more than 13% and 28%, and clearly, we'll be at a much higher level in 2030. This is the situation. And again, that business model is very diversified. And in terms of risk profile over the cycle, not short-term period, but the cycle, the long way, is an excellent, I would say, dimension of the company.
It gives, I would say, additional security to something that is much more concentrated on a certain market that could be at a certain moment in the cycle in a different position because of a different level of diversification. This is our business model. Again, can be compared just that way to other domestic banks that, to some extent, are much more mass market compared to the type of, I would say, franchise we're having in our different commercial banks.
Next question is from Anke Reingen, RBC.
Yeah. Thank you for taking my questions. The first is just on the below 56% cost-income ratio. And listening to the call, you obviously seem much more I mean, not confident, but it seems more visibility on getting to the 56% and below.
I just want to confirm, is that because you think you basically have more visibility on the cost levers and the revenues is more underpinned because of the trends in the retail operations from the NII benefit? And when you think about the below 56%, do you think where you stand now, are you potentially even doing better on costs than you're currently envisaging, or is it, yeah, basically a revenue function? And then secondly, on the corporate and investment bank, on your slide 8 where you show us the different moving parts, we are above 13% ROTE. And I guess if FRTB wouldn't be coming in, then you could free up the capital, and we have 30 basis points more. But also, in terms of operational trends, 2025 was quite a good year.
How do you think about the different revenue drivers to keep that profitability, yeah, outside of FICC at around the same level or potentially even higher? Thank you very much.
So the cost-income evolution is very much if you compare the target we are giving to them, the one we gave in November, the difference is basically just the level of cost. It has nothing to do with, I would say, the revenue strategy. So this is one. If you imagine that for the entirety of the 2027, 2030 program, if you go down by two points of cost-income again in 2029 and 2030, you are down to 52%. And then you are still left with some marginal cost growth model. And well, so you are becoming quite close to the 50% level. So let us see what will be the result of the 2027, 2030 plan.
But we are probably in 2030 quite close to 50% in terms of cost income. 2028 is just the beginning of the program. For CIB, CIB will continue to grow at marginal cost. It has an excellent trajectory. This year, CIB was, to some extent, a bit handicapped by, let's say, the corporate bank. I mean, we saw, because of geopolitical issues, a bit lack of momentum in Europe, globally, not because of BNP Paribas. We saw a number of, I would say, programs, investments, aggregation, M&A a bit postponed. So well, the corporate bank was just stable, resilient, but didn't grow. So that was the situation in 2025. We have good reasons to believe that this will be rebalanced rapidly looking ahead. And in any case, again, the CIB platform will continue to grow at a marginal cost.
So this will contribute to the increase of the return on tangible equity. Looking at the FRTB or not the FRTB, it's too early to discuss this. We'll see probably in the coming months, maybe before summer or autumn, end of that year, we'll probably have, I would say, a position at the European level. And based on this, we will consider which direction is the right one for the company. I mean, we have to be very careful. We have to be very sure that the new, I would say, the new regulation, if it's a new regulation, is stable or not stable. You never know. I mean, you have to be very cautious in that type of situation. We are prepared to deliver those 30 basis points on top. We prefer, obviously, not to have to deliver those 30 basis points on top because it's simple.
But we have to be very cautious about that. So the day we know, we can comment in a more precise way.
But to give some color, right, the way what we hear is that Europe wants to align with what other authorities are doing. So imagine that those other authorities are taking a decision in a couple of years. It might be that there is relief from FRTB for a couple of years, but then it will come. So that's why, I mean, we prepare to be ready for it.
Thank you. Next question is from Matthew Clark, Mediobanca.
Hi. A couple of questions. Firstly, you used to have, I think, a 20 basis point placeholder regulatory headwind penciled in for 2026. I just wanted to check whether that's still the case.
It looks, I think, on your chart maybe a bit smaller, but that could just be I'm reading it wrong. Then the second question or 2.5-question is on Belgian NII and Arval revenues in the fourth quarter versus the third quarter. There was quite a strong increase for both those line items. Just wondering whether the fourth quarter was clean or there were any lumpy items. We've seen disposals or dividends or revaluation of stakes, etc., muddy the waters there in the past. So just to check, Arval revenues and Belgian NII, were they clean in the fourth quarter? Thanks.
Matthew, just to clarify on the capital. So what we assumed, as I said, take the 10 basis points that we saw of capital creation the fourth quarter is around at 7, which basically means that on a yearly basis, we generate 30 basis points.
And then we've guided that we assumed that there would be 10 basis points next year of regulatory supervisory overhang. And so that leads to the 20 basis points that you had, and that's why the 12.6 should become 12.8 at year-end. Then on the pickups that you said. So both, if we start with Belgium, Belgium, the pickup that you saw in the fourth quarter is the one we announced also for France a quarter earlier. So it is the mechanical effect, as I mentioned, of having all the windfalls being the bizarre product in the Belgian environment, which is basically gone, and therefore the fact that we redeploy those non-remunerated deposits at the longer end. So that is the pickup that you saw, and it's the pivot that we announced.
And when you look at Arval compared to the third quarter, in the third quarter, we still had some revaluation effects that were present that you basically do not have in this quarter comparison. So the comparison quarter on the fourth quarter was not impacted by the residual car value, which the third quarter still was. So that is the intrinsic reads of what you see is indeed the intrinsic growth.
Just to check there on that, what was the negative revaluation used car sales result, however you describe it, in the third quarter? Because I thought it was zero-ish for both third quarter and fourth quarter.
No, no, no, no, no, no, no. It is zero in the year. So the effect was zero in the fourth quarter of 2025, right? And it was 9% in the third quarter in that.
Let's not forget that, indeed, Arval intrinsically, independent of that, has a kind of seasonal effect in the fourth quarter.
Okay. Thank you.
We have no more questions.
Thank you. No more questions?
No more questions registered at this time, sir.
Okay. You can very much count on us. We'll deliver. Thank you so much. Take care.
Thank you so much. Have a good day.
Ladies and gentlemen, this concludes the call of BNP Paribas Fourth Quarter and Full Year 2025 Results. Thank you for participating. You may now disconnect.