French banks come across a serious hole of air in the markets after the publication of their results for the third quarter. "They had placed the bar very high in previous publications and courses had performance in recent months." "It was enough that they disappoint on some lines of business to unscrew in the stock market," summarizes an analyst. These disappointments come before any of the France retail bank, whose margins suffer in a less favourable interest rate environment.
Credit Agricole SA (Casa) has been the title more severely punished by investors. The Green Bank still lost 2.22 to 32.17 EUR yesterday, after having unscrewed of 4.03 the day before, the day of the presentation of its results. Citigroup analysts have degraded Casa, now advising the sale of the title.
The BNP Paribas share lost 2.03 the day of the publication of its quarterly accounts, the week passed. Yesterday, the title conveyed 0.59, to 83,70 euros on the Paris stock exchange, after a 0.18 gain the previous day. Finally, Société Générale, which had opened the ball of the publication of the quarterly results two weeks ago, is always displayed in slight decline since. The title still dropped 0.54, to 129,30 euros, yesterday, having lost 0.23 Wednesday. The respective prices of the securities of the three large French banks remain however on the rise since the beginning of the year 2006.
It is essentially the evolution of the margin in the networks in France which has displeased. The flattening of the curve of interest rates the short rate back while long rates remain at levels historically low in effect trims margin on deposits and processing.
Flattening of the curve
", The rise of the short rate penalizes the segment of the consumer credit, said an analyst. Actors impacts with an offset the increase in refinancing costs to their customers on a background of intense competition. "And observers fear that this situation lasts,"hence the importance of property master costs", complete an analyst.
The French market is not the only one affected by this phenomenon. Thus, it is visible in the United States, where BancWest, the American subsidiary of BNP Paribas, sees its seriously compressed margins. The evolution of the yield curve was also penalized certain activities of bank financing and investment (BFI). Finally, in asset management, the collection showed a slowdown in most networks, with the exception of BNP Paribas.
In this context, the growth of the French banks is widely drawn by international acquisitions. But, again, questions are emerging. BNP Paribas and Credit Agricole SA in Italy entries were very appreciated in view of the growth prospects of the banking sector in the peninsula. "But, with the merger of Banca Intesa-SanpaoloIMI and the connections between popular banks, one wonders if the French banks are unlikely to have a problem of critical size in Italy", is an analyst.
It will be difficult to the three institutions to repeat the excellent results of the first two quarters, which will provide a basis for comparison for the next publications of accounts. "The dynamics of the results a bit in the current slowing." French banks have received long bearings of results forecasts. "Some are now beginning to look downward revisions", concludes an analyst.
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