French banks expected to record Q2 2024 slump in profits

France's largest banks are set to post annual and quarterly drops in aggregate profits for the second quarter of 2024, according to S&P Capital IQ consensus estimates data.

Aggregate net income at BNP Paribas SA, Crédit Agricole SA (CASA) and Société Générale SA is forecast to have fallen by almost 16% year over year to €5.27 billion when the banks announce their results in the coming weeks, based on consensus estimates. The result would represent an almost 5% quarterly decrease in profits for the banks.

SocGen is projected to have the largest annual slide in net income at almost a third to €795 million. CASA is projected to have a more than 13% year-over-year dip in profits to €1.61 billion, while BNP is estimated to report an almost 12% annual slip in net income to €2.87 billion.

France's largest lenders have struggled in recent quarters with revenue headwinds from their domestic retail banking businesses, which were affected by the recent sharp rise in interest rates due to the peculiarities of the French banking market. The banks' substantial auto-leasing businesses have also experienced a slowdown, while operating expenses remain high at the lenders relative to their European peers.

A base effect from relatively strong revenue and profit performance in the second quarter of 2023 may partially account for the expected contraction in net income in the same period this year.

Quarterly dip

The performance forecast for BNP and CASA in the three months to the end of June will also represent a quarter-over-quarter reduction in profits for the banks, at more than 7% and almost 17%, respectively. CASA enjoyed a particularly strong performance in recent quarters relative to its French peers.

SocGen's forecast profits in the second quarter would represent a more than 50% quarterly increase after a particularly weak result for the bank in the first three months of 2024.

The three banks' aggregate profits are expected to slump year over year despite an annual rise in aggregate revenue of almost 3% to €25.03 billion. BNP is forecast to generate the highest revenue growth of the three banks, at 5.4% to €11.97 billion.

SocGen is projected to have a more than 4% year-over-year expansion in revenues to €6.55 billion, while CASA is the only lender expected to have an annual fall in revenues, dropping almost 2.5% to €6.51 billion.

The expected revenue performance for the three banks in the second quarter means that all three should post quarterly decreases in turnover. Aggregate revenues among the banks are forecast to fall by almost 3.5% quarter over quarter.

France's three listed lenders experienced a tumultuous end to the second quarter following President Emmanuel Macron's surprise announcement June 10 of fresh parliamentary elections. The uncertainty generated by the poll and fears that it could give control of France's parliament to the far-right National Rally or a leftist coalition prompted a massive sell-off in French bank stocks and government bonds.