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Why the French are banking on a recovery
French banks are significantly undervalued, according to Saxo Bank’s Head of Equity Strategy Peter Garnry. After the financial crisis in 2008, stock in two of the largest banks; Societe Generale and BNP Paribas, fell by around 50 percent. Now the French banks are looking set to be in prime position to benefit from economic recovery in Europe. Both banks have been cleaning up their balance sheets and risk premium they’d carried, largely as a result of eastern European exposure, is beginning to taken off. As credit quality improves so is underlying profit.
Soc Gen is the top pick of the French banks according to Peter Garnry. Soc Gen had better earnings over all quarters last year and raised dividends. Meanwhile, BNP Paribas had flatlining dividends, a sign of weakness from a bank that’s also facing litigation issues.
02:00 minutes
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