(The following statement was released by the rating agency)
Apr 24 -
-- We don’t expect French banks’ creditworthiness to suffer from a potential 15% decline in residential property prices over 2012-2013.
-- We consider that the housing market remains a supportive factor in our ratings on the country’s banks, particularly owing to the good credit quality of the loan book.
-- Despite a likely contraction in lending from 2012 onward, we believe that this market will remain core to French banks’ retail activities, and that banks should contribute to an orderly correction in house prices.
-- Although we cannot rule out a more pronounced drop in house prices, we consider it unlikely at this time.
While housing loans are vital to France’s banks, Standard & Poor’s Ratings Services believes they will withstand a moderate correction in the domestic real estate market (see “French Banks Can Weather A Falling Housing Market,” published April 23, 2012 on RatingsDirect on the Global Credit Portal).