French Banks: Double-digit distribution yields are now rare, still available in France.

Research evidence excerpt

French Banks: Double-digit distribution yields are now rare, still available in France.

Global Research

15 July 2026ab

French Banks Equities

Europe Ex. UKDouble-digit distribution yields are now rare, still

available in France. Banks, Ex-S&L

Jason Napier, CFA

Analyst

jason.napier@ubs.com

Cheap, growing, looking forward to rate cuts but with an eye on politics +44-20-7568 5037

We forecast strong EPS growth for the French banks as longer-duration assets reprice to Nicolas O'Sullivan

wider margins and, at BNP and SocGen, capital surpluses are partially deployed via Analyst

buybacks. Narrow margins, higher cost/income ratios and lower ROTEs mean even nicolas.o-sullivan@ubs.com

modest tailwinds imply substantial growth, underwriting double-digit forecast near- +44-20-7568 5364

term distributable yields, well above sector averages. French banks will also benefit from

lower ECB rates in 2027 if the UBS house view is right, key component to 12-month

portfolio construction. We retain a watching brief on French domestic politics into

2H26's budget and 1H27's presidential and parliamentary elections. We are Buyers of all

three: we think SocGen is best positioned into 2Q, BNP on a 12-month view, and CASA

very attractively valued, though without an obvious catalyst at present.

Strong cyclical tailwinds, available at a discount to the sector...

French banks generally run longer-duration retail and commercial books in fairly narrow

margin markets, which we expect to show strong profit growth in FY26 and FY27 as

revenues gradually catch up with the ECB hikes of 2022/23. We think the low risk nature

of that momentum and the growth we forecast for savings-side insurance and asset

management businesses - only partially offset by more subdued car finance and CIBs -