French banks accentuate positives for year ahead after strong Q1 revenues

France's largest lenders are confident of meeting or beating revenue and profit guidance for 2024 after posting strong revenues in the first quarter.

Aggregate revenues at France's three largest banks — BNP Paribas SA, Crédit Agricole SA (CASA) and Société Générale SA — increased by 4.5% year over year to €25.93 billion in the first three months of 2024, S&P Global Market Intelligence data shows.

BNP and CASA recorded their best-ever first quarter for revenues, while SocGen delivered its third-best start to the year.

"We take this opportunity based upon the strong quarterly results to confirm our 2024 guidance within an overall environment that we expect to be more favorable in the second half of 2024," BNP CEO Jean-Laurent Bonnafé said during the bank's first-quarter earnings call.

BNP's guidance for 2024 includes revenue growth of more than 2% and profits higher than €11.2 billion. The bank achieved a 3.7% annual rise in revenues to €12.48 billion in the first quarter.

CASA enjoyed the largest growth in revenues among the three banks at 11.3% to €6.81 billion. The result helped the lender announce a more than 55% year-over-year surge in first-quarter profits to €1.9 billion.

"According to the reassessments that we've been doing of our potential development for the rest of the year, we're pleased to say that we intend to reach all of the targets of the medium-term plan for 2025 as soon as this year," CASA Deputy CEO Jérôme Grivet said during the bank's first-quarter earnings call.

CASA will now hit its 2025 net profit target of €6 billion a year early, having already achieved its 2025 targets for cost-to-income and return on tangible equity — two key measures of profitability — in 2023, Grivet added.

Profit picture a 'mixed bag'

First-quarter profits for BNP and SocGen were more mixed as both banks recorded sharp year-over-year drops. BNP reported a 30% year-over-year fall in profits to €3.1 billion, the scale of which was largely due to the record result for the period the lender enjoyed in the first quarter of 2023.

SocGen's first-quarter profits slumped by almost 22% to €680 million, falling from a relatively high level in the first three months of 2023 when compared to recent years. SocGen's profit dip came off the back of the weakest growth in first-quarter revenues among the three banks at 0.3% to €6.65 billion.

SocGen's first-quarter profit picture was reflected in the results of their corporate and institutional banking (CIB) divisions, their largest income generators.

CASA's corporate and investment bank (CIB) delivered a 10.7% increase in revenues to €2.27 billion, a record for the bank.

BNP suffered an almost 4% dip in its i-bank revenues to €4.68 billion from a record performance a year earlier.

SocGen endured the largest fall in CIB revenues for the first three months of the year at more than 5% to €2.62 billion. Like BNP, the decline was from a record level in the same period a year earlier.

"[Our CIB is] tracking higher than the guidance for the year, even adjusted for seasonality," SocGen CEO Slawomir Krupa said during the bank's first-quarter earnings call. "Part of what the [CIB is] going to deliver in terms of overperformance versus that initial guidance is going to be offsetting some of the underperformance, some of the headwind elsewhere."

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