BNP Paribas Lowers 2025 Profitability Target

BNP Paribas, the largest bank in the eurozone by market capitalization, has announced a cut to its 2025 profitability target following a decline in fourth-quarter net profit. The bank revealed that it now anticipates an annual average net profit growth of approximately 8% between 2022 and 2025, down from the previous target of over 9%.

In addition, BNP Paribas has revised its 2025 target for return on tangible equity, a crucial metric for measuring bank profitability. The new target range is set between 11.5% and 12%, as opposed to the previous range of around 12%. Nevertheless, the company remains confident that the original target will be attained in 2026.

The decision to lower the targets is attributed to mandatory reserve regulations imposed by the European Central Bank, a bank levy in Belgium, and an issuance of Belgian government bonds.

During the fourth quarter of last year, BNP Paribas reported a net profit of €1.07 billion ($1.16 billion), representing a decline from €2.14 billion recorded during the same period in 2022. The bank saw a marginal increase of 0.1% in revenue, reaching €10.90 billion.

These results fell short of analyst expectations, with consensus estimates provided by FactSet projecting a net profit of €1.77 billion and revenue of €11.42 billion.

The bank cited rising operating costs and an increased cost of risk due to provisions on nonperforming loan portfolios as factors contributing to the lower profits.

Looking ahead, BNP Paribas plans to initiate a share buyback program worth €1.05 billion in 2024. It also announced an 18% increase in the dividend for 2023, raising it to €4.60 per share.