NPL Chart of the Week: 04 June 2019
The total non-performing loan volume of the five largest French banks, BNP Paribas, Crédit Agricole Group, Société Générale, BPCE Group, and Groupe Crédit Mutuel -CIC, is EUR 129.5bn as of June 2018, according to a Debtwire analysis using data from the EBA EU-Wide Transparency Exercise. Despite French banks’ 3% NPL ratio being substantially below the 5% standard recommended by the ECB, they had the second largest NPL stock in the EU, at EUR 134.5bn, according to the EBA.
The market remains “immature and is characterised by opportunistic transactions”, according to a Deloitte report, Deleveraging Europe 2018: Focus on France. Still, the regulatory framework is changing, with the ECB shifting its focus from countries with a high NPL ratio to those with a high volume, the report stated. NPLs also threaten the sustainable profitability of banks.
Société Générale is now preparing the sale of a portfolio of NPLs with a GBV up to EUR 500m, as Debtwire reported this week. The so-called Project Stone is a rarity in the French market, which has not seen many sizeable sales.
Company debt contributes just over half of the total NPL stock of the five largest banks, with non-financial corporates and SMEs making up 26% and 26.5% of the total respectively, according to Debtwire's analysis of the EBA data. Household debt makes up a significant portion, 44%.
The NPL exposure of French banks is roughly split between France and other countries, with 51% of it domestic, according to Deloitte. In France, unsecured consumer loans are dominant, representing 60% of the total.