ACPR: banking and insurance remain healthy despite the crises

The annual statistical report of thePrudential Control and Resolution Authority (ACPR), supervisory body integrated into the Bank of Franceconstitutes a reference document presenting the main French banking and insurance market figures. It covers and summarizes the main prudential and accounting data collected from banking establishments and insurance organizations supervised by the Authority.

A strong financial system

The year 2021 was marked by a vigorous economic recovery, strongly supported by the measures taken by public authorities and central banks. In this buoyant context, the French financial sector, banks and insurance companies, achieved excellent results and increased its resilience, in the service of financing the economy. In the first half of 2022, the situation of banks and insurance companies followed in the wake of 2021, which should enable them to cope with the outlook for economic activity that is currently more deteriorated.

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The banking sector continues to grow

In 2021, the French banking sector saw its balance sheet total increase by 3% to reach €9,934 billion at the consolidated level at the end of the year. The net banking income (GNP) of the French banking sector progressed strongly, to settle at 164.2 billion euros (+9.4% compared to 2020), under the joint effect of the improvement in establishments’ revenues and the controlled rise in their operating costs. The prudential situation of the banking system, already solid, has strengthened: thus, the aggregate solvency ratio of French banks stood at 16.3% at the end of 2021, slightly up compared to 2020 (16.1%). .

Banks continued to assume their role of financing the economy, enabling the credit market to remain dynamic: +6.1% growth in loans to SMEs (on a consolidated basis) and +6.7% for loans to housing to resident households (on a social basis). Moreover, credit in France continues to grow faster than the economy, just as corporate and household debt is increasing.

Finally, the report emphasizes the “major economic weight at national, European and global level” of the banking sector, the first six groups of which account for 82% of the balance sheet total of the sector as a whole.

Insurance: growing business and consolidated solvency

The activity and results recorded in 2021 in the insurance sector are up sharply. Indeed, French insurers have seen their net premiums increase by +16% and exceed their pre-health crisis level. life insurance, in particular, experienced a strong rebound, benefiting from a buoyant market environment, abundant private savings and the economic recovery. In this context, unit-linked media recorded an unprecedented amount of annual inflows (30.6 billion) and now represents 44% of gross inflows on redeemable supports. The solvency of the entire sector rose by 11 points compared to 2020, to stand at 253%. Finally, in 2021, France consolidated its position as the leading insurance market in Europe with a total of assessment of French insurers of €3,156 billion.

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Resilience of the financial sector in the face of the current macroeconomic and geopolitical context

On the strength of its very solid levels of solvency and liquidity, the French banking and insurance sector was able to face the new macroeconomic environment affected by the increase in inflation and interest rateas well as by the Russian invasion in Ukraine. The repercussions of the latter in terms of financial stability are still limited. The direct exposures of the French financial sector to Russian assetss represent less than 1% of total international commitments for French banks, while investments of French insurers in Russian securities amount to less than 500 million euros, or 0.02% of their total exposure after transparency. On the liabilities side of their balance sheets, French insurers are also poorly exposed, their commitments in sectors directly affected by the conflict being limited.

The consequences of market movements have therefore for the moment been well controlled by the French financial sector.

“The results for 2021 and the first half of 2022 further confirm the resilience of the French financial system, characterized by solid solvency ratios, in the current context marked by the war in Ukraine, inflation and rising interest rates. Faced with the resurgence of risks, the ACPR remains vigilant and will continue in 2022 to regularly monitor banks and insurance companies in order to ensure the soundness of the financial system. “, commented Dominique LaboreixSecretary General of the ACPR.

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