December 8, 2014 / 11:33 AM / 3 years ago

Fitch: Stable Outlook for Most Large French Banks In 2015

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: 2015 Outlook: Major French Banks here PARIS, December 08 (Fitch) Fitch Ratings says large French banks will continue to benefit in 2015 from balance sheet strengthening and a reduction in funding and operating costs, balanced by a weak economy and the associated pressure on revenue and asset quality. As a result, the Outlook on four of the five largest French banks is Stable. The four banks are BNP Paribas, CM11-CIC, Credit Agricole and Groupe BPCE, whose Long-term Issuer Default Ratings (IDRs) reflect standalone creditworthiness. The fifth large French bank is Societe Generale, whose Long-term IDR is at its Support Rating Floor and is therefore based on potential support from France. Its Negative Outlook reflects Fitch's view that legislative, regulatory and policy initiatives are reaching a point where a systemically important EU bank can be resolved without excessive disruption to financial markets, and it is probable that creditors will incur losses ahead of the state should a resolution scenario arise. We expect to downgrade Societe Generale's IDR to the level of its Viability Rating (currently 'a-') during 1H15. The lack of economic growth, low interest rates and weak demand for credit will weigh on revenue in 2015. However, the banks' focus on deposits and the impact on a full-year basis of the recent decline in the cost of deposits should partially offset margin pressure. The banks' control over costs should also help earnings. Fitch expects loan impairment charges to be roughly stable, although prolonged weak economic growth would weigh on banks' asset quality. Fitch views continued balance-sheet strengthening by the large French banks as a positive rating factor. We expect banks to continue to improve their funding and liquidity profiles by attracting retail deposits and reducing the use of short-term funding. Banks will also likely increase capital ratios, through internal capital generation and limited growth in risk-weighted assets, and keep Basel III leverage ratios over 3.5%, taking into account gradual phase-out of legacy hybrid capital. Strategic plans published in 2014 confirm the banks' focus on core clients and franchises as well as balance-sheet strengthening. Banks will also be working to develop synergies from cross-selling and the integration of some of their business lines. The report, '2015 Outlook: Major French Bank', is available on www.fitchratings.com or by clicking the link above. Contact: Eric Dupont Senior Director + 33 1 44 29 91 31 Fitch France S.A.S. 60 Rue de Monceau 75008 Paris Francois-Xavier Marchand Associate Director + 33 1 44 29 91 46 Solena Gloaguen Director + 44 20 3530 1126 Olivia Perney-Guillot Senior Director + 33 1 44 29 91 74 Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email: francoise.alos@fitchratings.com; Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available on www.fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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