Boosting Profitability Across BNP Paribas' French Divisions: A Forward-Thinking Strategy
Metropolis of Love: Paris
Journalist: Gesche Wüpper (Paris)
Increased Domestic Profit Earnings for the BNP Group
Prepare for fatter bank accounts, both personal and business! BNP Paribas, the most significant player in the French banking scene, has revealed its blueprint to heighten the profitability of its domestic activities. Covering retail and business banking, the online bank Hello Bank, and private banking in France, this strategy encompasses revenue growth, digital transformation, cost control, and customer base expansion.
You might ask, "Is the French retail banking sector disappointing analyst Delphine Lee of J.P. Morgan?" Apparently, yes, but the bank has big plans to change that.
Retail and Business Banking (Commercial & Personal Banking in France)
The goal? Reach a pre-tax return on normative equity (RONE) of above 17% by 2028, compared to 9.8% in 2024. How will they do it? By aiming for an average annual revenue growth of over 5% between 2024 and 2028, with a significant portion from a net interest income (NII) recovery, estimated to add between €1 billion to €1.5 billion in revenues through deposits investment.
To rein in costs, expect a 2.2% to 2.5% reduction in full-time equivalent staff annually from 2026 to 2030, mainly through natural attrition. additionally, streamlining central functions, decreasing real estate footprint, and trimming external expenses will help manage costs.
BNP Paribas intends to maintain a modest cost of risk below 25 basis points, and growth in risk-weighted assets will be controlled to ensure profitability. The bank anticipates that cost savings will outpace cost inflation by 3-4 percentage points on average, leading to a positive jaws effect.
Online Bank Hello Bank!
With over one million customers in 2024, the bank aims to double that number to two million by 2030. Efforts will focus on digital client acquisition across France.
Private Banking Division
BNP Paribas aims to stay the number one private bank in France, with a focus on high and ultra-high net worth clients. The strategy includes a digital client acquisition drive using the e-Private model, emphasizing autonomy, digital journeys, and on-demand expertise. Investments in technology, data, and AI platforms will pave the way for conversational marketing, personalized advisory, and automated client reports.
Expect growth in asset and wealth management, leveraging new platforms for specialized investment and financing solutions, discretionary portfolio management, ESG investments, structured investment products, private assets, and real estate. Target segment expansion includes acquiring external clients in the upper affluent, family office, and entrepreneur markets. BNP targets a 37% increase in Assets Under Management (AuM) by 2030, aiming to remain the leader in the field.
Overall, BNP Paribas' French strategy includes revenue growth through interest income recovery, digital client acquisition, technological innovation, cost reduction through operational efficiencies, and broad customer base expansion across all divisions. This comprehensive approach aims to create strong profitability improvements through 2028 and beyond.
In the wake of the strategic plan revealed by BNP Paribas, it's anticipated that revenue growth, particularly from net interest income recovery, will drive profitability growth in retail and business banking. By aiming for a two million strong customer base for their online bank, Hello Bank!, the bank intends to bolster its digital presence and expand its business in the French market.
