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Which banking professions have been boosted by the crisis?

Published on November 30, 2022 by Pierre Belhache - 3 mins reading time
Banks Companies Loans

In the current climate of inflation, war in Ukraine and soaring energy prices, bank customers are changing the way they consume. New financial needs are developing, leading some business lines to take advantage of the crisis.

Successful cash management activities

Rampant inflation, the energy crisis and the war in Ukraine are driving bank customers- be they households, institutions or businesses - to seek out new financial services.

Cash management, hedging against currency risk, fractional payment solutions to maintain consumption: these new needs are benefiting banks, which are seeing their revenues grow even as they are already taking advantage of rising interest rates for their lending activities.

Some of the banks' business lines are particularly in demand in the current climate. This is particularly true of cash management activities: Crédit Agricole CIB's International Trade & Transaction Banking division reported "record activity" in Q3 2022, according to the Group, as did Société Générale's Global Transaction & Payment Services (GTPS) division, whose revenues rose by 50% over the same period.

These businesses, which manage the flow of corporate transactions, also benefit from rising prices, as inflation increases the value of these transactions.

Crisis benefits currency hedging products and fractional payments

In addition, currency hedging products are on a roll: for several months now, they have been in great demand among institutions and companies seeking to protect themselves against exchange rate fluctuations.

Societe Generale saw revenues from its Fixed Income, Currencies & Commodities (FICC) businesses rise by 34.2% in Q3 2022, while at BNP Paribas the increase was 25.5%. The uncertain economic environment is leading customers to opt for extensive hedging, to protect them from greater variations. These hedges are more expensive, and can therefore bring in more money for the banks.

Fractional payments or "buy now pay later" (BNPL) are also benefiting from the crisis, and more specifically from inflation. Already booming, BNPL production increased again in 2022, as demonstrated by the results of Oney, a BPCE subsidiary and fractional payment specialist. Its overall credit production rose by 18% over the first 3 quarters of 2022, and its BNPL production by 13% over the same period.

However, while BNPL helps to boost consumption in inflationary times, the number of non-payments is rising, driving up the cost of risk and prompting banks to exercise caution.