BNP Paribas is considering a restructuring of its personal finance branch

(Boursier.com) — BNP Paribas could restructure its consumer credit branch while the deterioration of the economic outlook and galloping inflation weigh on the profitability of the activity. The bank is exploring ways to improve the unit’s returns given that profitability is expected to decline this year, according to people close to the facility quoted by ‘Bloomberg’. The lender could decide to sell parts of the division or start depleting some of its loan books. Job cuts could take place even if the number concerned has not leaked.

“In a fast-changing consumer credit sector, due to changing customer habits and the economic context, BNP Paribas Personal Finance presented to its trade unions its strategic thoughts regarding the refocusing of its activities and the ‘adapting its operating model,’ the bank said in a statement sent to the agency.

The division is important to BNP as it accounts for around 11% of the bank’s total revenue. It employs 20,000 people in around 30 countries, including Brazil, South Africa, China and most of Europe. It provides loans to more than 20 million customers through its own brands, such as Cetelem or Consors Finanz, as well as through partnerships with retailers, car manufacturers or other financial institutions.

As part of its plan to lower the risk profile of the branch, ‘Bloomberg’ recalls that BNP Paribas is now focusing more on car loans and moving away from personal loans and credit cards. Car loans are indeed generally less risky because they are backed by an asset. Nevertheless, personal loans and credit cards still represented more than half of the group’s total outstanding consumer loans at the end of September.

Companies active in retail financing are preparing for a difficult environment, with a possible recession and high inflation eroding the ability of households to obtain new loans or repay their debts.