DBRS: Major French Banks’ Underlying Performance in 1H18 Pressured by Retail Banking and CIB
Improvements in the cost of risk and positive momentum in fee-generating businesses helped offset the pressure from low interest rates and challenging conditions in capital markets for major French banks in 1H18. Cost efficiency remains a key challenge, despite initiatives to reduce the cost base, as the banks have needed to make investments in core operations, digital and transformation.Key Trends:
• Aggregate underlying net income in 1H18 of the four major French banking groups down YoY on challenging CIB and margin pressure in retail despite cost of risk improvement
• Continued strong performance of international retail operations, domestic volume growth and momentum in fee-driven activities
• Operating expenses still on the rise despite previous cost savings initiatives
• Most banking groups maintained their capital cushions during 1H18
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