EARNINGS PREVIEW: French Financial Services Cos' 1Q Seen Steadier
May 05 2009 - 7:21AM
Dow Jones News
TAKING THE PULSE: French financial services companies are
expected to produce steadier first quarter numbers this week, a
first step toward putting the ugly end to 2008 behind them.
The corporate and investment bank divisions of BNP Paribas SA
(BNP.FR) and Societe Generale SA (GLE.FR) should post healthier
trading performances compared with the fourth quarter, driven by
their fixed-income businesses.
The deteriorating global economy is expected to continue to take
its toll on companies' assets, though.
Both BNP Paribas and Societe Generale are expected to book hefty
provisions as a result, putting a drag on profit. That said, French
retail banking "should provide more defensiveness than most other
European countries," Deutsche Bank notes.
COMPANIES TO WATCH
---BNP Paribas SA (BNP.FR)---(Wednesday May 6)
MARKET EXPECTATIONS: An improvement is expected at BNP Paribas'
corporate and investment bank division after the red ink it spilled
over the company's income statement in the last three months of
2008. The performance should be helped in particular by the bank's
strong position in fixed-income activities. The group's overall
earnings are still expected to suffer from further provisions and
monoline exposure, prompting a sharp year-on-year drop in net
profit.
MAIN FOCUS: Analysts will be hoping for more detail on synergies
from the Fortis acquisition after shareholders approved the deal
last week. Any details on the prospects for BNP Paribas' different
businesses during the second quarter and the rest of the year will
be closely followed, as the bank has so far said only that it is
"well positioned in the 2009 environment." Attention will also be
paid to trends at U.S. unit BancWest amid the weakening U.S.
economy.
---Societe Generale SA (GLE.FR)---(Thursday May 7)
MARKET EXPECTATIONS: A better showing in the corporate and
investment bank's fixed-income business is expected to contrast
with a mixed performance in equities. Provisions are seen eating
deeply into net profit compared with a year ago.
MAIN FOCUS: Analysts will be looking for more clarity on the
state of assets at Societe Generale's investment banking and asset
management activities after a report in the French press fueled
concern last week.
Eyes will also be trained on the quality of assets at Societe
Generale's international retail banking activities in central and
eastern Europe. Question marks continue to hover over the health of
businesses in countries like Russia.
---Axa SA (AXA)---(Thursday May 7)
MARKET EXPECTATIONS: Axa's first quarter report is not generally
seen as a major event, as the insurer only discloses key indicators
and not full earnings.
Axa's numbers are unlikely to enthuse investors, analysts
suggest. "We expect the news on trading, particularly life new
business and asset management revenues to be lackluster," said Bank
of America-Merrill Lynch.
MAIN FOCUS: Attention will be paid to how Axa's other asset
management activities are faring after AllianceBernstein last month
reported $20 billion in net outflows for the first quarter.
Analysts will also be listening out for comments on solvency and
the group's sensitivity to shifts in markets.
-By Jethro Mullen, Dow Jones Newswires; 33 1 4017 1738;
jethro.mullen@dowjones.com