Bnp Paribas Ord

Good afternoon, ladies and gentlemen, and welcome to the presentation of the BNP Paribas fourth quarter and full year 2025 results with Jean-Laurent Bonafé, Group Chief Executive Officer, and Lars Maschenil, Group Chief Financial Officer. For your information, this conference call has been 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 Bonafé, Group Chief Executive Officer. Please go ahead, sir.

Good afternoon, ladies and gentlemen. Good afternoon. We are pleased to present today our strong fourth quarter results, and we'll provide some elements on our 28 trajectory, which we are revising upwards given the strong revenue momentum at the launch of a transformation plan of our support functions. We'll start with our results on slide four. So our fourth quarter results confirmed a sharp acceleration we had expected. Revenues posted a strong 8% growth. Joe's effect was high at 2.8 points and even reaches 3.9 points when excluding AXA-IM. Cost of freeze stayed low at 34 bps, well within our trajectory of below 40 bps. And this led to a very strong 28% increase in net profit, approaching 3 billion euros, which is a record for our fourth quarter. Our CT1 reached 12.6%, up 10 bps 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 €5.16, including the final dividend of €2.57 to be paid in May. If we focus on our revenues, they are up 8%. with well-balanced growth between the businesses. CLB 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 private quarter, largely helped by the red 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 XRIM integration, which led to transformational 40% increase in revenues. Now moving to slide five, the fourth quarter showed sharp acceleration of revenues at CPBS of 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 strategy plan. For personal finance, Margin improvement is driven by the natural runoff of loan originated in 22-23, 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 24-28. For Eurozone commercial banks, the deposit mix that has been stabilizing since 24-28 as 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 rate. Moving on to slide 6, let me focus now on our 26 targets. After a strong end to 25, we reconfirm our 24-26 trajectory. We expect above 7% earnings and 8% EPS cargo over 24-26. This will lead to a return on tangible equity of 12% in 26, the first step towards our target of more than 13% in 28. 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 bps. We are making good progress towards our CT1 target of 13%. Let me now summarize the 28 trajectory on slide 7. We have increased our 28 return on tangible equity target from 13% to above 13%. One of the key levels 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 overall. I'll come back to this later. This initiative will lead to more than 10% net income and EPS CAGR over 2528, a new target, with a sharp acceleration when compared with our previous plan. It goes without saying, we obviously reconfirm our CT1 target of 13% and the distribution in excess of that level will be decided annually. Moving to slide eight, 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 strategic 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 are presenting plans to improve the pre-tax return of CPBF and personal finance to above 17% in 2028, We have also presented the BNP Paribas Bond Post-Cap 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 29, which is the equivalent of over 600 million of additional net earnings. CPBB will present its strategic plan targeting 20% pre-tax return in 28. Subject to successful acquisition of Athlon, we will also present the integration plan with a target return on equity of 18% in 28, adding about 200 million to group earnings. Finally, We present the strategic vision for the next chapter at BNL, which has significantly improved its profitability already thanks to well-managed loan costs and the low cost of risk. I'd like now to discuss our cost income trajectory on slide nine. We have now set out to lower our cost income ratio from 58% to less than 56% in 28. Part of this journey will come from the strong revenue trajectory described earlier, but we will also be even more disciplined on costs. At the end of 26, we will have completed our 3.5 billion cost savings program, contributing to the sharp prediction of six points in cost income ratio we have seen since 21. 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 overall our support functions means for the P&R. We will provide details at our CMD in early 27, but I can make the following comments. The initiative will optimize spendings on about half of our cost base, or 15 billion. First benefits, will start in 27 and will be amplified as the plan progresses. In contrast, the benefits are anticipated to be negligible in 26. We 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 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've already quantified benefits at approximately 600 million to date, and we anticipate reaching 750 by 26. According to the evident AI index, BIN PIPAEBA has emerged as the leading Eurozone bank in AI. I will now explain what this all means for shareholders on slide 12. We enter 26 in good shape with ambitious targets. We expect to generate more than 10% earning growth schedule over 2025-2028, and 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 that it will not be less than 60%. Let's now focus on our capital path on slide 13. We're progressing fast toward our new CT1 target of 13%. We've already announced disposal for 13 VIPs net of the proposed add-on acquisition. We'll continue to reassess our portfolio with a view to release at a total of 30-50 pips. Organic capital generation will benefit from accelerated earnings and control risk-weight growth at 2%, including securitization and credit insurance. Finally, we expect the re-regulation cycle to end with the FRTB implementation. We are hopeful that the European regulators will ensure a living playing field with banks in other jurisdictions, and we believe they are encouraging signs of possible watering down or delayed implementation, which would neutralize some of the impact. For now, the still factor of 30 bps impact in the trajectory, but it then to reach 13% by the end of 27 after FRTB and the distribution of the accessible 13 would be decided only starting in 27. Let me now hand over to Lars, We will present our Q4 results from slide 17 last.

Thanks, Jean-Laurent. Before presenting our pivotal fourth quarter results and 2020 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 a 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 CIV revenues, they were up 1% or almost 5% at constant scope. given the USD evolution. And so this is a very good performance given a high base a year ago in the fourth quarter of 2024 that included a capital gain in FICC for almost 80 million, which we mentioned at the time. It's nothing new, I just reminded. So, 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 equity and prime services, as well as security services. We remained the number one European investment bank in India in 2025 in a very competitive market. So that's CID. 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-Laure mentioned, it will be amplified if we successfully acquire Adlon. 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 include it, 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 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 jewels. That's what you see at the top left. If you look at the bottom left, you can see that August 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 XIM, you see it is 0.9%. So the different 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-of-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 $2.9 billion of cost savings, equivalent to about 10% of our cost base, and helping our cost-income ratio for six points over the period. Our three operating divisions posted positive JOLS effects during the quarter, as I mentioned before, and for the second half of 2025, we generated 2.7 points of JOLS, exceeding the 2.5 points 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-EM. 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 overall standing, 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. So, we recorded lower Stage 3 provisions than the fourth quarter of 2024, which have been burdened by a 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 the theme of low or normalized levels. So in a synthesis, our portfolio is well positioned in the current environment. So having looked at the elements of the P&L, let's now look at capital on slide 21. So we reached 12.6%. compared to what we announced at the beginning of 25, the 12.3. And so this 12.6% is up 10 basis points during the last quarter of 25. 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, An organic RWA growth net of SRTs is very well contained. Note that our CET is not sensitive to the U.S. dollar weakness, as it's in fact 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 the cumulative CAT1 ratio benefit of 80 basis points built over the years. Moreover, in 2025, we set up 42 transactions for 27 billion of gross savings, and most of our businesses were active with highlights of 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 D1 ratio. Finally, let me take you through the corporate center on slide 22. And in particular, given that the corporate center performance was below expectations in the second half of 25, and particularly 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 costs, what we call central shareholder costs 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 800 million in 2026, after 600 million in 2025. I remind you that, on average, we have been having 400 million restructuring, and they are impacted both in 2025 to get to 600 and in 2026 to get to 800 through the AXA-IM integration costs. And 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 600 million in 2026. So, in a nutshell, we forecast a gross operating loss of approximately 1.4 billion euros in 2026. And this is already factored in into our overall expectation and we remain comfortable with your current consensus forecast for gross operating income at group level. 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 800 million gain from the AGI transaction. And in 2027, not in 2026, the 400 million gain from orphans. 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 CID, which 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-IEM, 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 first quarter 25 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 27-2030 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 Tariq El-Majad, 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 is the more fits better your business model. No mention on the volume growth, actually, in these geographies. I mean, you'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? The second question was on capital build. In December, you 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 made 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 ammunition to do it faster. And this is the last one. It's just a very technical one on the DPS. Given the capital gains you'll have in 26 and 27, 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 the capital gains and then we just assume DPS unreported? 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, a way from the bottom line. So if you look at the AGI, AGI has, for example, capital GERM. 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 400 million euro capital gain. The other 400 are on top, and including those ones, we are paying 60%. It goes the same way for, as we said, the whole fund capital gain, for example, social 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're moving as fast as we can. Anytime we can find an opportunity, we move the right way. You can see that in 25. 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. Alas, we'll 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. And 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 CT1 and all, I would say, revenues, profits are paying the dividends. So this is the simple approach.

Tarek, I'll give some further color. So indeed, we are not growing volumes at any cost here. We are growing it at a profitable way. And 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 five to seven years, which basically means each year of the next five years, there will be 20 to 30 billion of non-reminerated 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 Bill Finley, 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 thought on Thais' question on volumes, please. So on deposit trends, I get the 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 accelerate the top line trends on top 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 3.5 billion already over 22 and 26. 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 balance. 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 an even higher than anticipated volumes, which we then can redeploy, as I mentioned just before. On the cost, Jean-Laurent?

So, if we go back to page... This is page 9. So, 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% to 15% that belongs to the local business-by-business support function. So in total, out of the 700 per year, you have roughly one-third, slightly more, meaning 250, 300 million euros 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 themselves, especially in the layer that is directly servicing the counterparts, the clients. So if you look at group functions, if you look at the 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're 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 those 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 40s, and a number of other, I would say, situations. We are doing that basically merging BNP by asset management and AXA investment measures. 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 250, but an additional typically 250. So this is 500. 250 is basically half a percentage point, half 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 3.5 in five years, we are going to deliver something close to 4 billion in four years. And you can see that on the page 10. Page 10, you can see that cumulatively we delivered 3.5 in five years. And the next phase is going to be the same momentum plus the add-on. And this is roughly 700 plus 250, 950 close to 1 billion. So this is roughly $4 billion. over four year period so this is the situation and we have already enough programs enough initiatives to to to deliver the 28 program the 20 the 56 below 56 cost income ratio we have already this uh in our pocket to some extent and this will continue beyond and uh probably we are not going to uh to extract the 100 percent uh potential in four years there will be something uh 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 probably change to some extent the design and the parameters of those different support functions. And 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 keying those overlaps, you are extracting additional efficiencies. So it's something we did already. It's something we already delivered in certain occasions. And this is the right moment to move. Why? Because of the regulations, reportings, the digitalization we pursued looking at the past seven, eight 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 the, 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. And 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 data within the group. Doing so, you are having more, I would say, integrated processes. So the internal service, the internal value sharing, the way you serve customers is being improved. The way you can, I would say, manage, leverage data 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. And also, you can refocus the teams, colleagues, to what can be considered value-added tasks. And 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 call.

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 CMV. And I was wondering if perhaps rebalancing away from cashing to 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. And then secondly, in the quarter, asset quality was basically non-eventful, but we're 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.

So 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% quotient 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 Paiba anymore. So France contributes to the total, but this is not on average BNP Paiba. BNP Paiba is much more a European platform. I've always said that we are focusing the company and the businesses on the The best part of the market, meaning the best, I would say, counterpart in terms of risk profile, we are very focused on that. It doesn't mean that from time to time we cannot bump into a certain situation, but on average, we are very focused on that. And if you take away personal finance, that is a slightly different type of business because in consumer lending, you're always structurally a higher cost of risk. Away from that, the cost of risk is below 20 bps 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're 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're not seeing currently any deterioration. And looking at the portfolio arriving, 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 28. We have the 5% revenue CAGR and the one and a half 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 $635 million and the $750 million of AI value creation on slide 11? Is that telling us that if AI wasn't a thing, that pre-tax profits for BNP Paribas would have been $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 26, we didn't put that in writing, but the cost income for 26 is 60%. We said 61 in November, but obviously improving the curve, we're also improving 26, so 26 is going to be 60%. On your second question, I will ask... Last one, sir.

Yeah, 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 like, 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 revenue, so it was stimulating the revenues, it was identifying the product for a 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 that 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 Goulard. Kepler Schubert.

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, you know, 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 go that 2% more, more the revenue evolution where you feel it's 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 minus 1.4 billion that is in the corporate center? That's the first question. And the second one, which is natural, if we get from that target of 61, 58, 56, And then why is the ROT only moving from 13% to more than 13? I guess the more than 13 is, is it 13.1, is it 14, is it 15? Thank you.

So, to be very simple, we started, so the program, the transformational program we are, I would say, presenting today is something that will be up and running beginning of 27. We decided to start, I would say, the early, I would say, work in September 25. So we started the first, I would say, working group in September. So in November, we were not, I would say, confident enough. 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 28. So now we are 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 27, 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 21, 26 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, and probably because this is the way we book the transformational cost when we have having transformational cost is group level. So this is part of the 1.4 billion, and we have no intention to grow that amount. It's probably something we'll try to diminish rather to increase. But in any case, everything is factored in the projection.

And it's what a part of the 600 because the other part is a restructuring cost. So that's what it is. So we will run it within that. And then when it comes to the ROT, yes, we stepped it up over 13%. And that's basically it. So, you know, we are always a bit prudent in what we share. So it is above 13%. Thank you very much, Adam.

Next question is from Andrew Combs, C.T.

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 maths that you outlined earlier, you talked about how you were currently doing about 700 million in saves a year, and that was contributing to the one and a half points duels each year, and that by effectively now realising an additional 250 million on top in each of 27 and 28, that would get you to two points year, which takes you from the 60 to the 56%. Just back into that, implicitly, you're assuming similar revenue growth, therefore, in 27 and 28, as you have had over 24, 25, and 26 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. Perhaps you could just touch on the rationale for Athlon, the 200 million net benefit to earnings that you expect, what's assumed 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 and as well the evolution of the top line. to go through that computation, basically, yes, we are assuming the revenues are going the same way, knowing that in the previous period, 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're taking basically the same kind of, I would say, top-line evolution. And in fact, the difference is very much the one you underlined, Amy. 250 plus cost reduction per year is half a 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 two points per year. So this is exactly the mass. And if we can do a better job, we will do a better job. But again, the 28 target we are giving is just a kind of interim target. This is not the the representation of the strengths and the power of the new initiative. 2030 will have to be better, clearly. On Aslan, we're having a very strong leader with Arval in Catholic Leading throughout Europe. In terms of Markecha, it's the second player. behind the events. Roughly, if you concentrate on the real car fleet leasing, which is the piece that is profitable, because management of fleet is a very different story. 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 Bolton 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 Aval is the fast-growing platform within Europe, probably in the years to come, the new platform, I would say, based upon the aggregation of Aval and Aslon, 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. And in a very simple way, I mean, we are going to integrate the platform within the one of Aval. 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. Great.

Thank you.

Next question is from Flora Bukau, 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 know, 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 Atlon acquisition you just mentioned, the situation at HSBC, a wealth business you acquired in Germany. So you've got it, you know, on the restructuring cost for 26, especially from the AXA-EM situation. Should we expect potentially more restructuring costs coming in in 26, 27 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, you know, the CT1 target of 13% is for by the end of 27. I just wanted to understand what are the odds? How high are the chances that you can achieve that already in 26? 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. Everything is covered in our trajectory. including, I would say, restriction 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, I would 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 26 is reasonable. If it's a necessity, we can deliver that, but I don't believe this is reasonable. For the FRTB, what 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 post-mortem of the FRTB for a certain number of years or a process that would implement the FRTB while neutralizing the impact. This is basically a 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 pips, 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 BIPs headwinds 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 BIPs and we're prepared to operationally implement the FRTB.

And maybe to put a number on it, so as we said for the restructuring, we basically have foreseen that's what we announced, 800 million for 26, and that will basically go down to 550 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 the European Commission is having the hand on this. So whatever 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 27. 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 December.

Thank you. Next question is from Sarath Kumar, Deutsche Bank.

Good afternoon. Thank you for taking my questions. I have two questions, one on capital and one on R1. Looking at your capital buildup, I argue when you say the 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 the 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 R-Well to achieve a faster route to 13% CET1? That's the first one. Second, on R-Well, 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 the 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 the overall growth, we see that, and we also confirm the non-effect of the resale value of the cars. If you see the prices of both the EVs and the ICE, they basically don't deteriorate, so also that assumption is clocking in, and so that's why we feel comfortable with the outcome.

Thank you.

Next question is from Pierre Chedeville, CSE, Market Solutions.

Yes, good afternoon. One remark question I would say on slide eight 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 no think, and I was wondering why. this uncertainty and BNL that you don't feel for Belgium or Harvard, for instance. And more globally, I think we all have seen clearly your new trajectory for 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, at 20 points above in cost income and more than 10 pounds below in terms of profitability. And I was wondering in the past we could say it was because of the high interest rates, viable rates, et cetera, but this is normalizing and I don't understand this gap remains so high with this type of peers. And I was wondering if I would say we missed 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, yellow bond development, et cetera, 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. And if you look closely at the plan, we already communicated that personal finance or CPBF funds, and you will see just the same with Belgium and again with D&L. 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 forward. that way. So it's something that started in the previous plan, that expanded in the current plan, and that will continue 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're 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 26. And remember that those plans, They are for the 27-20-30 plan, so nobody is late. On the contrary, you have a bunch of businesses that are moving ahead of the plan, and BLN will communicate in due time, and there is no specific, I would say, complexity with Binair. It's a different market. It's a different positioning, and you will see the result. And 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 who are having a BNP 5 bar. But this is the beginning. When you have a floating rate balance sheet, I would say what took place in 22-23 with the rates was all of a sudden a violent, very rapid increase of the intrinsic margin of the whole book. This will be much more progressive. And 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're progressing well. Return on tangible equity used to be at 10% in 21, will be at 12% in 26, we're going to be at more than 13% in 28, and clearly will be a 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. and 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. So this is our business model. And again, it 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 Wengen, RBC.

Thank you for taking my questions. The first is just on the below 56% cost-income ratio, and listening to the call, you seem much more comfortable 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 is Are you potentially even doing better on costs than you're currently envisaging? Or is it basically a revenue function? And then secondly, on the corporate and investment bank, on your slide eight, where you show us the different moving parts, we are above 13% ROTE. And I guess if FIPB 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 outside of FRTB 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 world, 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 27-2030 program, if you go down by two points of cost income again in 29 and 30, you're 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 27, 2030 plan, but probably 2030 quite close to 50% in terms of cost income. 28 is just the beginning of the program. For CIB, CIB will continue to grow at marginal cost. It has an excellent trajectory. This year, CAB 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 being pipaiba, 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 25. Good reasons to believe that this will be rebalanced, rapidly looking ahead. And in any case, again, the CAB 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 a reserve position at the European level. And based on this, we will... 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 regulation, if it's a new regulation, is stable or not stable. You never know. You have to be very cautious in that type of situation. We are prepared to deliver those 30 BIPs on top. We prefer, obviously, not to have to deliver those 30 BIPs 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 mean that there is relief from FRTV 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, Mediobanker.

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, in a chart maybe a bit smaller, but that could just be I'm reading it wrong. And then second question or two and a half 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, are our revenues and Belgian NII, were they clean in the fourth quarter? Thanks.

Mathieu, 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 like around a rounded seven, which basically means that on a yearly basis, we generate 30 basis points. And then we guided that we assumed that there would be 10 basis points next year of capital regulatory supervisory overhang. And so that leads to the 20 basis points that you add, and that's why the 12.6 should become 12.8 at year end. Then on the pickups that you said, so 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 redeployed 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 reval, valuations effects that were present that you basically do not have in this quarter comparison so the comparison quarter on the fourth quarter did was not impacted by the residual car value which the third quarter still was so so that is the intrinsic reads of what you see is indeed the intrinsic growth just just to check there on that what was the negative uh revaluation uh used car sales result or however you describe it in the third quarter

I thought it was zero-ish for both third quarter and fourth quarter.

No, no, no, no, no, no. It is zero in the... Yeah, so the effect was zero in the fourth quarter of 25, right? And it was nine in the third quarter in that. But let's not forget that, indeed, Arval intrinsically, independent of that, has a kind of seasonal effect in the fourth quarter. Okay, thank you.

Thank you.

No more questions?

No more questions registered at this time, sir.

Okay, so 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