Investing.com -- French banks could face fresh earnings pressure if the government raises the Livret A savings rate to 2.4% from 1.7% in February, because a higher rate mechanically raises their funding costs, Jefferies analysts said on Thursday.
A 50 basis point change in the rate would cut an average 4% from 2027 pretax profit at the French retail units of lenders BNP Paribas, Société Générale and Crédit Agricole, and about 1% at group level, Jefferies said, based on consensus numbers.
That estimate excludes any hedging banks may use to offset higher savings rates.
A higher rate could also draw money into regulated savings accounts, taking it from other deposits and investment products, Jefferies said.
Livret A is a tax-free savings account with no fees. The government sets its rate twice a year, in February and August, using a formula based on the past 12 months' average short-term rates and inflation.
Jefferies' forecast assumes inflation excluding tobacco stays at about 3.1% and the European Central Bank raises rates by only 25 basis points in December.
The government could choose not to follow the formula because the decision is shaped by politics in an election year, it said.
The government raised the rate to 1.7% effective Aug 1. The LEP, a savings account with an income limit, will stay at 2.5%.
Regulated savings saw outflows of €5.3 billion in September, versus outflows of €2.6 billion a year earlier.
Balances stood at €687.1 billion, down 0.1% from a year earlier versus growth of 3.9% in September 2025. Outflows so far this year total €12 billion versus inflows of €2.2 billion over the same period in 2025.
Jefferies expects the second half to stay weak for seasonal reasons, and said the August rate rise is unlikely to reverse that pattern. It expects positive momentum for life insurance in the second half because inflows move opposite to the Livret A rate.
Original Article
Could French banks face fresh earnings pressure from a Livret A rate hike?
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