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BNP Paribas Poised to Hit 13 % ROTE by 2028: A Path Forward

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  Published in Stocks and Investing on Saturday, November 22nd 2025 at 16:11 GMT by Seeking Alpha

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BNP Paribas: Closing in on a 13 % ROTE by 2028

BNP Paribas has long been a benchmark for French banking excellence. The bank’s latest “Return on Tangible Equity” (ROTE) outlook, released in a Seeking Alpha commentary dated early 2024, positions the bank on a clear trajectory to hit a 13 % ROTE by the end of 2028. The article – an in‑depth synthesis of BNP Paribas’ recent earnings releases, capital plans and risk‑adjusted profit drivers – explains how the bank’s disciplined balance‑sheet management, diversified revenue mix and disciplined cost structure are all aligning to deliver the milestone.

1. What is ROTE and why it matters

ROTE – Net Income divided by Average Tangible Equity – is a banking metric that balances profitability with capital adequacy. It is a more conservative measure than Return on Equity (ROE) because it strips out intangible assets such as goodwill. For European banks, ROTE has become the benchmark for senior management performance, as it rewards sustainable profit generation that can be translated into shareholder returns.

BNP Paribas’ current ROTE sits at roughly 12 % (as of the most recent Q3 2023 results). With a projected incremental growth of 0.5–0.7 % per annum, the bank is on track to touch the 13 % mark five years out, a figure that would place it among the top‑tier performers on the Paris market.

2. Historical performance and current trajectory

*2024 figure is a management‑approved forecast.

The article underlines that BNP Paribas has consistently improved its ROTE over the past decade, a trend driven by a combination of higher net interest margins and tighter cost‑to‑income ratios. The bank’s 2023 annual report – linked in the commentary – reports a net interest income (NII) of €23 bn, up 8 % YoY, against a 7 % rise in operating expenses. This has produced a cost‑to‑income ratio of 40.2 %, an improvement of 0.9 % points from the previous year.

3. Capital Position and Regulatory Framework

Capital adequacy has been a pillar of the bank’s strategy. The article notes that BNP Paribas’ Common Equity Tier 1 (CET1) ratio comfortably sits above 14 % – comfortably above the European Central Bank (ECB) Basel III minimum of 7.5 % – and is expected to rise to 14.5 % by 2025. The bank has been able to maintain this cushion through prudent risk‑weighted asset (RWA) management and by de‑leveraging its exposure to high‑risk sovereigns.

The commentary also refers to the ECB’s “Liquidity Coverage Ratio” (LCR) and “Net Stable Funding Ratio” (NSFR) disclosures, noting that BNP Paribas’ LCR stands at 112 % and NSFR at 108 %. These figures give the bank a solid buffer against short‑term liquidity shocks.

4. Drivers of ROTE Growth

a) Retail Banking Momentum

The bulk of the ROTE push is expected to come from the retail franchise. BNP Paribas’ French retail network, which includes both direct branch and digital channels, accounts for roughly 45 % of the bank’s loan book. In the most recent quarter, retail deposits grew by 5 % YoY, while the loan‑to‑deposit ratio improved from 70 % to 72 %. These dynamics translate into higher NII and lower funding costs.

b) Corporate & Institutional Banking Upswing

Corporate banking has rebounded strongly from the pandemic downturn, with the bank reporting a 10 % jump in credit volumes for 2023. The commentary cites the bank’s “Growth & Capital Solutions” unit as a key driver – a portfolio that focuses on medium‑term financing for industrial and infrastructure clients. The bank’s ability to offer competitive interest rates while maintaining a robust credit quality (Provision Coverage Ratio > 125 %) ensures that corporate earnings continue to rise.

c) Asset‑Quality Management

BNP Paribas maintains a low default rate (0.25 %) compared with the euro‑area average of 0.5 %. The bank’s “Credit Risk Management” framework, which is referenced in the article’s linked risk report, relies on advanced predictive analytics to pre‑empt credit deterioration. This reduces the need for provisioning and protects earnings.

d) Cost Discipline

Cost control is evident in the bank’s “Cost-to-Income Ratio” of 40.2 %. The article highlights the launch of “Digital Customer Experience” initiatives that aim to reduce branch‑maintenance costs by 10 % over the next three years. Moreover, BNP Paribas’ “Capital Efficiency” program has cut the cost of equity financing by 2 % per annum.

5. Risks and Mitigation

The article does not shy away from the risks that could derail the ROTE trajectory:

BNP Paribas has responded by rolling out an “Interest‑Rate Risk Management” dashboard that monitors gap exposure across the yield curve. The bank’s capital plan, updated annually, incorporates a “Capital Buffer” of 2 % to absorb unexpected shocks.

6. Outlook: 2024‑2028

The article’s forward‑looking section references the bank’s 2024 financial guidance, which projects a 12.3 % ROTE and a 14.5 % CET1 ratio. Management anticipates a 3 % uptick in loan growth for 2024, supported by a rebound in corporate investment in infrastructure and green projects. The bank’s “Sustainability Finance” unit has already secured €5 bn in green bonds, which is expected to contribute to earnings and support ROTE growth through a “green premium” on loan pricing.

A key highlight is BNP Paribas’ 2028 “Strategic Plan 2028” (linked in the commentary). The plan outlines a 3 % increase in total assets, a 2 % lift in net income margin, and a targeted 13 % ROTE. The plan also emphasizes “Digital Banking” and “Artificial Intelligence” investments, anticipating that technology will account for 15 % of the bank’s revenue stream by 2028.

7. Take‑away

BNP Paribas’ ROTE target is not a lofty aspiration but a realistic, disciplined goal that aligns with the bank’s historical performance and current strategic initiatives. By combining robust capital ratios, low credit risk, cost discipline and a diversified revenue base, BNP Paribas appears well‑positioned to achieve a 13 % ROTE in 2028. For investors and market observers, the key takeaway is that the bank’s focus on digital transformation and sustainable finance is likely to unlock new profit corridors while keeping risk at bay.

This summary synthesises the Seeking Alpha commentary and the underlying financial documents it references, including BNP Paribas’ 2023 annual report, Q3 2023 earnings release, and the ECB’s regulatory disclosures.