French major banks BNP Paribas, Société Générale and Crédit Agricole are expected to face increased scrutiny as they present their quarterly reports this week. Investors are concerned about the banks’ holdings of French government bonds and the risk of an economic slowdown as a result of political instability and social protests, Bloomberg reports.
The banks together hold around 54 billion euros in French government bonds, equivalent to approximately 60 billion dollars. Including their insurance operations, the holdings amount to around 104 billion euros. The direct risk is considered limited, but rising bond yields and weaker economic activity could affect the banks’ earnings and lending.
Analysts expect BNP Paribas to increase profit by 3.5 percent in the third quarter, while Société Générale and Crédit Agricole are expected to report profit increases of 9 percent each. At the same time, the three bank stocks have been among the weakest performers in the European banking sector since mid-year.
