French lenders expect resilient performance from i-banks after record 2023

France's largest listed lenders believe their investment banks have room for further growth after posting record results in 2023.

Aggregate revenues and pretax profit at the corporate and institutional banking divisions (CIBs) of BNP Paribas SA, Crédit Agricole SA and Société Générale SA improved from record levels in 2022, S&P Global Market Intelligence data shows. Aggregate revenues rose year on year by 1.2% to €33.93 billion while pretax profit increased more than 7% to €11.44 billion.

The three French lenders' CIBs have enjoyed several years of increased profits as volatile markets prompted by the COVID-19 pandemic, Russia's invasion of Ukraine and rapidly rising interest rates boosted demand for the banks' fixed-income, currency and commodity services.

"For the future, I'm very confident in our capacity to gain market share on the basis that the recipe and discipline we used in the past will still be powerful," Yann Gerardin, COO and head of corporate and institutional banking at BNP Paribas, said during the bank's full-year 2023 earnings call.

BNP's CIB, the largest of the three lenders, posted a marginal annual increase in revenues of 0.7% to €16.51 billion in 2023, Market Intelligence data shows. Still, the division recorded a much stronger year-on-year growth in pretax profit at 6.3% to €5.74 billion. BNP's CIB has grown revenue and pretax profit in each of the last four years.

Crédit Agricole (CASA) enjoyed the strongest growth in CIB revenues and pretax profit in 2023 of the three banks, the data shows. CASA reported an almost 11% annual rise in CIB revenues in 2023 to €7.78 billion, while the division's pretax profit increased 18.2% to €2.86 billion.

"The CIB activities posted a very high level of activity in the last quarter, very close to the one we had back in 2022, which was a record year," CASA deputy CEO Jérôme Grivet said.

CASA was the only one of the three banks whose CIB had a positive revenue performance in the fourth quarter of 2023, according to Market Intelligence data. Aggregate fourth-quarter revenues at the banks' CIBs fell by more than 2.8% annually to €7.86 billion.

SocGen was the sole bank whose CIB revenues and pretax profit fell in 2023, albeit from a record year in 2022, the data shows. The bank's CIB revenues fell 4.6% annually to €9.64 billion in 2023 while pretax profit dipped 1.4% year over year to €2.83 billion.

"We are still working on improving the cost base of the global markets business as well as the [CIB] in general," SocGen CEO Slawomir Krupa said. "So we're confident that it will be a resilient business, not only from a revenue perspective, but also structurally from [a return on equity] perspective."

– Access segment analysis data for BNP Paribas, SocGen and Crédit Agricole on CapIQ Pro. – View aggregate sector data for French banks. – Read the latest earnings transcripts of BNP Paribas, SocGen and Crédit Agricole.