BPCE bonds – among the highest-yielding investment-grade bonds in SGD markets

BPCE SA (BPCE) is France’s third-largest banking group, formed in 2009 through the merger of two retail banking groups: Banque Populaire and Caisse d'Épargne. Today, BPCE operates a diversified business model spanning retail and commercial banking, corporate and investment banking, and wealth management.

BPCE recently reported solid FY25 results (ended 31 December 2025). We review its latest financial performance and discuss our top BPCE bond recommendations across the SGD and AUD space.

Strong top-line growth across all key business segments

BPCE delivered strong, broad-based revenue growth in FY25, with net banking income rising by +10% year-on-year (YoY) to a record €25.7b. Growth was observed across all major reporting segments (Chart 1), with multiple sub-segments also achieving double-digit growth.

Chart 1: BPCE delivered growth across its two main reporting segments

1. Retail Banking & Insurance (RB&I) – BPCE’s largest revenue engine

Retail Banking & Insurance (RB&I) remained BPCE’s largest revenue contributor in FY25 and was the primary driver of growth. RB&I revenues rose by +14% YoY to €17.5b, supported by broad-based momentum across its underlying business lines (Chart 2).

Both Banque Populaire and Caisse d'Épargne posted double-digit revenue growth. The main driver was net interest margin expansion (+22%), reflecting ongoing repricing amidst robust new mortgage production. Commission income also rose, albeit at a more moderate pace (Table 1).

The Financial Solutions & Expertise division stood out in FY25, with net banking income increasing by +33% to €1.5b. This was primarily driven by strong leasing demand, with total outstanding amounts up +82% and revenues more than doubling. Consumer credit revenues also contributed positively (+12%), underscoring the breadth of BPCE’s growth.

Chart 2: Broad-based momentum within RB&I, especially with its BP and CE divisions

2. Global Financial Services (GFS) – Slower growth but still steady

Global Financial Services (GFS) saw relatively muted but still positive revenue growth, with net banking income up +5% to €8.4b in FY25 (Chart 3).

Corporate & Investment Banking led this segment, with revenues up by +9% to €4.8b. BPCE observed strong commercial demand (double-digit revenue growth) within its ‘Global Markets’ sub-division, particularly for hedging and derivatives solutions. Meanwhile, Investment Banking recorded slower but still positive revenue growth.

Asset & Wealth Management delivered modest revenue growth of just +3%. While net inflows rose to a record €40b in 2025 and underlying fund performance broadly remained robust, average fee rates declined (down 1.2bps to 24.8bps) due to a shift in product mix toward lower-margin fixed income strategies.

Chart 3: GFS saw slower, but still positive revenue growth

Well-managed costs, particularly within RB&I

BPCE’s group operating expenses increased a moderate +6% YoY to €17.3b in FY25, despite continued investments across the business (e.g. in Corporate & Investment Banking). Meanwhile, revenue growth outpaced cost growth, resulting in a meaningful improvement in its underlying cost-to-income ratio to 65.6% in FY25 (FY24: 69.4%) (Table 1).

BPCE’s cost discipline was most evident in its RB&I franchise. Here, operating expenses grew by just +6% versus 14% revenue growth. RB&I cost-to-income ratio improved markedly to 58.8% (FY24: 63.6%), driven by sharp efficiency gains across both Banque Populaire and Caisse d'Épargne.

In contrast, cost dynamics in the GFS franchise were more mixed, as costs rose roughly in line with revenues. GFS operating expenses grew by +5%, in line with revenues (+5%), resulting in only a marginal improvement in its cost-to-income ratio to 70.9% (FY24: 71.1%). In particular, the Corporate & Investment Banking costs grew +10%, reflecting continued front-office and IT investments.

Table 1: Costs were well-managed, especially within RB&I

Profits led by RB&I again, a combination of strong revenue growth & cost management

Overall, BPCE’s gross operating income grew by a robust +22% to €8.4b, while net income grew by a solid +15% to €4.1b, underpinned by robust revenue growth alongside improving operating margins (Chart 4). RB&I drove earnings expansion, where operating income climbed +28% to €7.1b, reflecting strong revenue growth and improved cost-to-income ratios highlighted above. Meanwhile, GFS delivered relatively moderate operating income growth of just +5% to €2.4b.

Chart 4: Solid profit growth (+15%) driven by robust net banking income (+10%) and expense management (+6%)

Outlook: BPCE is well-positioned for further growth in 2026

Looking ahead, BPCE SA remains well-positioned for continued, albeit more moderate, growth in 2026, supported by its strong domestic franchises and diversified business mix.

RB&I net banking income should continue growing, but at a slower pace than in FY25. New loan and mortgage production should remain supported by continued refinancing activity, assuming a resilient macroeconomic backdrop. Meanwhile, net interest margins could benefit from the pass-through of lower policy rates into deposit pricing, including the recent cut in regulated savings rates from 1.7% to 1.5% in February 2026. That said, with the ECB expected to hold policy rates for much of 2026, we expect this margin uplift to moderate in the latter part of 2026.

(Note: BPCE does not disclose a precise geographical breakdown of its business. However, expect a significant majority of RB&I should be based in France, while GFS may have a little more international [ex-France] exposure.)

The outlook for BPCE’s GFS segment also remains constructive. Demand for hedging solutions (under Corporate & Investment Banking) could moderate as interest rates stabilise (with ECB holding rates), and assuming market volatility normalises from 2025 levels. Meanwhile, BPCE’s wealth management business should benefit from continued net inflows and a potential rotation from fixed income into higher-fee strategies.

More generally, BPCE has outlined several group-wide initiatives aimed at strengthening its long-term profitability. These include: (i) a continued focus on cost discipline; (ii) standardisation of IT systems and shared platforms; (iii) selective international expansion (e.g. Portugal & Japan); and (iv) partnerships supporting strategic sectors like defence-related SMEs. While exact quantitative guidance is limited, these initiatives should incrementally enhance earnings resilience over the medium term.

Steady credit profile throughout history

BPCE’s asset quality remains stable. Its non-performing loan (NPL) ratio edged up moderately to 2.7% but remains low (Chart 5). BPCE’s loan book remains well-diversified across retail customers (29%), business and corporate segments (39%), and other segments, with no meaningful sector concentration. Meanwhile, BPCE has also increased its loan provisioning (including in Stage 3); it did not disclose the exact reasons behind this in FY25, but note that management previously implied some of this provisioning was pre-emptive in nature.

In addition, BPCE benefits from a robust capital buffer. Its CET1 ratio stood at 16.3%, comfortably above its regulatory requirement (10.59%) (Chart 6); similarly, its total capital ratio of 19.2% also remains comfortably above requirements. Overall, it maintains a sizeable buffer of over €20b over its multiple regulatory requirements.

BPCE’s funding profile is well diversified, and we think it will have no trouble tapping into additional funding if required. It has a strong domestic deposit franchise and has established access to wholesale markets with a diversified range of issuances (e.g. both covered and unsecured bonds, both senior and Tier-2 bonds). Its strong issuer rating of A+ (or equivalent) supports continued market access at competitive funding costs.

Chart 5: Non-performing loans ratio has crept up, but remains low

Chart 6: Healthy CET1 ratio maintained over time

Recommendations - SGD & AUD bonds

To summarise, BPCE delivered a strong performance in FY25, and we expect it to maintain decent growth alongside a solid credit profile in the years ahead.

Within the SGD bond space, BPCE’s bonds stand out as among the highest-yielding investment-grade options available (excluding perpetuals) (Table 2). Yields crucially sit around the 3% mark, offering yield pickups over many of its peers due to its slightly lower credit rating (typically by about 1 notch).

(Note: Tier-2 bonds, including our two BPCE recommendations, typically include loss-absorption clauses. Investors should be comfortable with said risks before investing, though we think the risk of loss-absorption looks very remote at this point for BPCE.)

Within the AUD bond space, BPCE has issued bonds across its capital structure, which can suit investors of different risk tolerances (Table 3). More conservative investors can consider their senior unsecured papers yielding over 5%, or their senior non-preferred bonds (slightly lower rating) offering a slight yield pickup. Alternatively, those willing to invest in Tier-2 bonds and are comfortable with a longer maturity profile may consider their 2040 bonds, which are yielding over 6%.

Table 2: SGD Tier-2 Bank bonds (BPCE bonds bolded)

Table 3: AUD Bank bonds (BPCE bonds bolded)

Declaration: At the time of publication of this report, IFPL (via its connected and associated entities) holds positions in BNP 4.750% 15Feb2034 Corp (SGD), CMZB 6.500% 24Apr2034 Corp (SGD), HSBC 5.300% 26Mar2034 Corp (SGD), and BPCEGP 6.5618% 12Jun2040 Corp (AUD). The analyst who produced this report holds NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.