Covid Crisis: Are efforts up to the mark? Optimisation vs turnaround of the French Retail Banking Industry
Alvarez & Marsal has been conducting a comprehensive analysis of French Retail Banks profitability for 3 years, confirming that the economic model is under pressure, emphasized by the effects of the Covid crisis. This study is based on the 2020 results of French Retail Banks (Crédit Agricole, Caisse d’Epargne, Banques Populaires, Crédit Mutuel, Société Générale, BNP Paribas, LCL).
Losses of revenues have continued and accelerated (- € 1.5 billion, down 3% compared to last year) with a cost of risk that more than doubled (+ € 3.8 billion additional provisions, +121%) ; in the same time, expenses have only decreased by €1 billion (-2%)… Cost out efforts are real, but still insufficient to maintain the profitability of French Retail Banks; as a result, the sector’s cost/income ratio stagnated at 70% and net operating income collapsed by 29%, down €4.4 billion from last year.
In this context, a key challenge for French Retail Banks is to move from a model optimisation to a turnaround logic, through four key points.
