Assessment of Risks to the French Financial System (Banque de France)

Summary

• The Banque de France baseline scenario projects the French economy to grow by 2.3% in 2022, down from 3.6% at the start of the year.p.10
• Direct exposures of French banks to Russia stood at approximately EUR 29 billion in the first quarter of 2022, representing 0.3% of total consolidated exposures.p.13
• The aggregate Common Equity Tier 1 (CET1) solvency ratio of France's six main banking groups reached 15.5% at end-2021.p.13
• Net income of French banks rose by 60.5% in FY2021 to reach EUR 35.9 billion, supported by increased revenue and lower cost of risk.p.13
• Consolidated gross debt of French non-financial corporations reached 82.8% of GDP in the fourth quarter of 2021.p.23
• French insurers maintained a solid average solvency capital requirement (SCR) coverage ratio of 253% at the end of 2021.p.16

Key insights

1. The International Monetary Fund projects global economic growth to slow down to 3.6% in 2022.p.10
2. Hydrocarbon imports represented over 70% of total European imports originating from Russia in 2021.p.10
3. Loans granted to non-financial corporations in the most energy-intensive sectors account for over 20% of total NFC lending by the seven largest French banking groups.p.15
4. Outstanding leveraged loans at the five large French banking groups reached EUR 183 billion in the first quarter of 2022.p.15
5. Yields on French 10-year government bonds climbed from nearly zero at end-2021 to 2.08% on 27 June 2022.p.21
6. Global annual financial losses caused by cyber crime are estimated at USD 945 billion.p.39
7. Four cloud service providers account for around two-thirds of the global cloud market, creating potential financial stability concentration risks.p.47