TAKING THE PULSE: French financial services companies are set for a relatively subdued fourth-quarter reporting season against a backdrop of continued regulatory uncertainty.

Like many of their European rivals, French banks are expected to chalk up tamer corporate and investment banking revenue compared with the trading bonanza they benefitted from in earlier quarters. Meanwhile, the level of provisions for future loan losses across the banks' activities is likely to remain at a high level.

"This quarter is to be forgotten quite quickly since the main challenges are still ahead," analysts at Cheuvreux wrote in a note to investors, noting the likelihood of stricter capital requirements from regulators.

The prospect of higher capital demands may put pressure on the dividends banks pay out for 2009 and 2010, the Cheuvreux analysts noted. Insurer AXA SA's (AXA) dividend level will also be the focus of attention, with regulatory concerns lurking.

Some companies have specific issues that will color their earnings presentations. Credit Agricole SA (ACA.FR) is in the midst of a handover between chief executive officers while Societe Generale SA's (GLE.FR) risky asset portfolio will be under the microscope following its profit warning last month.

Banks will also have to tread carefully on the sensitive subject of corporate and investment banking bonuses, hoping to avoid a repeat of the media flare up on the topic in August.

COMPANIES TO WATCH

--- BNP Paribas SA. (BNP.FR) --- (Feb. 17)

MARKET EXPECTATIONS: France's largest bank by market value is expected to post a fourth consecutive quarter of strong profits a year after the financial crisis dragged it deep into the red. The group's smart acquisition of assets from Fortis is likely to once again provide a lift to results. BNP Paribas is unlikely to be exempt from the slowdown in investment bank revenues noted by many peers.

MAIN FOCUS: Comments on the outlook for loan-loss provisions in 2010 will be closely followed by analysts. Attention will also be paid to trends in investment banking revenue, notably for fixed-income activities.

--- Societe Generale SA (GLE.FR) --- (Feb. 18)

MARKET EXPECTATIONS: Investors already have a good idea of what to expect from France's second-largest bank by market value. Its mid-January warning that it would post a small profit for the fourth quarter, hit by provisions and write-downs on its portfolio of risky assets, forced analysts to slash their forecasts for the quarter.

MAIN FOCUS: Greater precision will be sought on the likely scale of future charges on hard-to-trade assets following the EUR1.4 billion blow the bank said it will take for the quarter ended Dec 31.

SocGen already flagged a quarter-on-quarter drop in CIB revenue, particularly for fixed-income operations. Analysts will pay attention to the steepness of that decline and how the start of 2010 is shaping up.

--- Axa SA (AXA) --- (Feb. 18)

MARKET EXPECTATIONS: The global insurance giant, which doesn't report profit on a quarterly basis, is expected to report vastly healthier full-year earnings than a year ago. Net profit is expected to be firmly back in the black for the second half of the year compared with the loss the group posted for the last six months of 2008.

MAIN FOCUS: Management is likely to get peppered with questions about how its plan to obtain full ownership of the Asian assets of AXA Asia Pacific Holdings (AXA.AU) will pan out.

The health of the group's balance sheet and, consequently, the size of the dividend it is planning to pay out will also be focal points.

"A stronger balance sheet and dividend increases in other insurers could lead to a higher payout," Thomas Jacquet, an analyst at Exane BNP Paribas, wrote in a report. "However, the recent capital increase and uncertainties regarding Solvency II clearly encourage prudence."

--- Credit Agricole SA (ACA.FR) --- (Feb. 25)

MARKET EXPECTATIONS: For outgoing Chief Executive Officer George Pauget's last earnings report at the helm analysts generally expect a steady quarter.

"We believe too small a profit would leave the dividend uncovered and would mark an unremarkable exit" for Pauget, analysts at Nomura said in a note to investors.

MAIN FOCUS: France's third-largest bank by market value has plenty of live issues. The Greek government's debt crisis will once again turn the spotlight on Agricole's loss-making Greek subsidiary Emporiki Bank of Greece SA (TEMP.AT). Meanwhile, the French bank is yet to find a solution to the long-running imbroglio in Italy over its stake in Intesa Sanpaolo SpA (ISP.MI).

Agricole's comments on the evolution of capital requirements will be carefully weighed, as the bank is seen as the most vulnerable of the big French banks to new regulatory proposals from the Basel Committee.

-By Jethro Mullen, Dow Jones Newswires; 33 1 4017 1738; jethro.mullen@dowjones.com
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