Results of BNP Paribas, Société Générale, Crédit Agricole: so far, so good! – La Tribune.fr

In three months, the landscape of the world has changed dramatically. At a speed rarely seen in the past. A war of territorial conquest has sprung up in Europe, central banks are now running after inflation and growth prospects have darkened considerably. It is in this particular context that the first quarter results of the main listed French banks can deliver valuable lessons. The bank is indeed the reflection of economic life. First surprise, the results of BNP Paribas, Société Générale and Crédit Agricole SA are more than solid. Revenues and profits up sharply BNP Paribas thus opened the ball for publications with a bang, beating all forecasts. Revenues are thus up 12% year-on-year to 13.2 billion euros, and even 19% quarter-on-quarter. According to the broker Jefferies, 70% of this increase in income comes from investment banking, in particular market activities. Better still, the profits of the first bank in the euro zone exceeded analysts’ expectations by half at 2.1 billion. For its part, Societe Generale published just as solid results this morning. Its revenues, higher than expected, in all its businesses, are up 17% year-on-year to 7.3 billion euros, and the net profit posted of 842 million (+3% year-on-year) also exceeds the expectations. On the other hand, Crédit Agricole SA (CASA), the listed structure of the mutualist group, although renowned for the regularity of its results, is disappointing. Revenues are certainly good (+8 year-on-year) at nearly 6 billion euros, but less dynamic than the other two French banks. Above all, the group is seeing its cost/income ratio deteriorate, still remaining below the 60% threshold. In short, the banks are doing better than fine, but environmental degradation has especially accelerated since Russia’s invasion of Ukraine on February 24. The banks were able to take advantage of two months, certainly turbulent on the markets, but in the continuity of the dynamic of 2021, a year of record results for the sector. The Russian impact Obviously, the cost of the war in Ukraine and the cessation of the activities of French banks in Russia is the most feared element. We expected Societe Generale, the French bank most exposed to Russia, it is finally CASA which shows the strongest provisions. More than 600 million euros! “Cautious provisioning,” recalls Philippe Brassac, CEO of Crédit Agricole SA. As a result, the group’s net income fell by almost 50% to 552 million euros. In detail, the group has provisioned all of the net assets of its Ukrainian subsidiary (200 million) and set up nearly 350 million in provisions for “unproven” risks on its portfolio of loans or guarantees exposed to Russia and 43 million on proven risks. For the bank, this endowment should be “once and for all”, sufficient to cover all risks. Above all, it emphasizes that its exposure to Russia, onshore and offshore, is falling rapidly – the bank has stopped all new financing – by around 600 million compared to the end of 2022. “The deadlines have so far been honored”, specifies Jérôme Grivet, Deputy Managing Director of CASA. In total, the exposure, as of March 31, amounts to 700 million (onshore) and 3.7 billion offshore, ie a total of 4.4 billion. The group has also provisioned 200 million on its Ukrainian subsidiary. Sale of Rosbank in the second quarter For Societe Generale, the invoice is postponed to the second quarter. The bank has resolved to sell its Russian subsidiary Rosbank to its former owner, Vladimir Potanin, reputed to be close to Vladimir Putin who, curiously, escapes European and American (but not Canadian) sanctions. The bank confirmed a negative impact of 2 billion euros on the income statement. The sale should take place, “in the coming weeks”, according to Frédéric Oudéa, CEO of Societe Generale, who sees no legal risk in this transaction. At the same time, offshore exposure to Russian risk was reduced from 400 million to 2.8 billion euros over the quarter. According to the bank, the net exposure to risk is less than one billion euros, not counting the 218 million in provisions recorded in the first quarter. On the side of BNP Paribas, Russia seems to be a non-subject. The group simply depreciated 90% of the book value of its Ukrainian subsidiary (160 million), two-thirds closed due to the war. Excluding the Russian context, none of the three banks has observed a deterioration in risk. Provisions are close to zero at BNP Paribas, due to a significant reversal of provisions on its American subsidiary Bank of the West, in the process of being sold. Societe Generale has slightly increased its accuracy of the cost of risk in 2022, within a range of 30 to 35 basis points, compared to 30 basis points previously. This cost of risk came out at 39 basis points in the first quarter, including 31 basis points on the Russian file. So nothing to worry about. “SRF” effect Once again, the results of French banks were significantly burdened by their contribution to the Single Resolution Fund (SRF), a European mechanism set up to guarantee deposits in the event of bankruptcy. It’s not a new problem. For years, French banks have been contesting the method of calculating contributions, which puts them at a disadvantage. In fact, French banks alone contribute a large third of annual contributions And the explosion in deposits since the health crisis has not helped matters. Quite the contrary, because the contributions are precisely based on the deposits (1.35% in 2021). That is 11 billion euros in 2021. But today, the banks take care to carefully note this “injustice” in the presentation of the accounts. And that amounts to hundreds of millions every quarter! Thus, CASA saw its contribution explode this quarter by 25%, year-on-year, to 636 million! Hence this cry of anger from Frédéric Oudéa: “France has been well had! it is a fund that is paid for by the major banks in Europe, therefore essentially French. And when we take stock of what the French banks will have paid to this fund, it will be absolutely gigantic! Especially since instead of 55 billion euros, we will probably have raised a total of 75 or 80 billion euros which, in my opinion, will not be used for much. Even though banks need capital to finance the economy, the energy transition”. Unchanged outlook Despite the clouds gathering over the economic landscape, the three banks are confident for the year 2022 and confirm their financial objectives. This is the case of BNP Paribas, which underlines that “the good commercial momentum at the start of the year consolidates our trajectory for the year”, indicates the bank in a press release. Same message from Société Générale which confirms its financial objectives. “We are approaching this year with lucidity about the uncertainties but with confidence about the dynamics of our businesses”, suggests Frédéric Oudéa. Which emphasizes above all “that the next four quarters will see the establishment of a new business model”, with a “new” retail bank in France, a reinforced Boursorama and the constitution of a third pillar of businesses around the “new” ALD, the future world leader in car leasing. And, given the good figures for the first quarter, the bank even plans to revise its objectives in market activities upwards in 2022. Crédit Agricole does not like forecasts. The group relies on the recurrence of its performance on which the crises (Covid, Ukraine, etc.) seem to slip. “This is what makes the strength of our model”, says Philippe Brassac. Changes in consumer or business behavior, if they were to manifest themselves with the degradation of the environment, would probably be reflected in the beginning of 2023 rather than this year in the accounts of the banks, slipping moreover, in essence, the bankers. Eric Benhamou 05 May 2022, 17:56