The just-released annual report of the French bank and insurance supervisor ACPR provides an update on the status of major French banking groups at the end of 2016 and on the sector’s major challenges.
For 2016, the report emphasised the strength of French banks in a low-interest-rate environment, noting that they doing well and compare favourably to their European peers. Their profitably improved, with their net income up 3.1% vs. 2015, to 24.3 billion euros, and their cost of risk still extremely low (at 10.6 billion euros, down 20% vs. 2015). Their Tier 1 ratios are now at 13.2%, up 60 basis points vs. 2015, hence an increase in capital of 164 billion euros since 2008 in the case of the main banks, or an increase of more than 120% in less than 10 years.
The French banking sector has managed to build up better quality capital, while continuing to finance the economy. In 2016, lending to the economy remained strong, with outstanding loans to non-financial companies up 4.9% and to households up 4.5%. This pace, which was already Europe’s strongest, sped up even more in late March, at +5.3% for non-financial companies and +5.6% for households.
The report also highlighted the major challenges facing the French banking sector: