higher than at the end of 2022 ( 247 % ). liquidity had been the big worry in early 2023 in the wake of the silicon valley bank crisis. here too, french banks demonstrated their soundness : at the end of 2023, their aggregate lcri stood at 147 %, and their nsfrii at 115 %, well above the minimum of 100 % [ slide 6 ]. image liquidity : french banks are also solid the supervisor's report does not highlight any specific vulnerability in terms of liquidity for the six main french banking groups. although deposits have shifted from sight deposits into interest - bearing deposits and regulated savings accounts, total deposits have continued to increase slightly. [ see slide 7 ] presentation of the annual report of the au … image total deposits have continued to rise consequently, there can be no doubt : french banks can be, and are in a credit - provider mind - set. this holds true for housing loans : low figures for new housing loans are now due to demand, which remains on hold but should gradually pick up again with average lending rates back down below 4 %. loans to businesses - including smes - continue to register positive growth in terms of outstandings. i now turn to the third vertex of the triangle, which is currently more of a specific challenge for french banks, namely profitability. until 2022, their return on equity ratio ( roe ) was comparable to that of other european and international banks, but since then, a gap has opened up, with a stable ratio in france but cyclically - driven increases elsewhere in europe. [ slide 8 ] presentation of the annual report of the au … image roe : a stable situation for the main french banks... indeed, during the interest rate hikes of 2023, french banks faced a steeper increase in their interest expense than in their interest income due to the specific features of our business model : i. e. the weight of regulated savings in liabilities and the predominance of fixed - rate housing loans on the asset side of the balance sheet. consequently, their net banking income ( nbi ) declined by 3 % in 2023. elsewhere in europe, a higher proportion of variable - rate loans resulted in a faster increase in returns on assets. nevertheless, french banks ’ net profit has remained stable thanks to both a diversified business model that combines substantial amounts of fees and income from market activities, and a low cost of risk : fixed - rate housing loans contribute to this

by protecting households from exposure to rising interest rates. spreads on senior debt reflect these fundamentals, which are rightly perceived as sound by the markets [ slide 9 ]. presentation of the annual report of the au … image but their fundamentals continue to be perceived as sound by the markets however, a number of factors suggest that this challenge in terms of profitability and net interest margin is largely temporary. since the summer of 2023, the interest rate on livret a passbook savings accounts has been stabilised at 3 % until january 2025, and the stock of fixed - rate loans is gradually being replenished at higher rates. the specific features of the french model could now prove more advantageous : the impact of future cuts in interest rates would be less marked. although french banks ’ net interest margins are tighter, they are also more stable. at the same time, the other activities of a resolutely diversified model ( investment banking, insurance, wealth and asset management ) could benefit from the normalisation of the interest rate environment as well as from a gradual economic recovery. the fact remains that the french banking model is structurally defined by intermediation margins that are among the lowest in europe, high lending volumes and a low cost of risk. this model is conducive to sound financing of the real economy and favourable to banks'customers ( households as well as businesses ) ; fortunately, it does not prevent france from having some of the largest and most resilient banks in europe – 4 out of 8 european global systemically important banks ( gsibs ) are french. but there is no excess profitability or super bank profits presentation of the annual report of the au … in france today and this justifies the government's decision to rule out a specific bank tax. the same goes for insurers, whose return on assets at end - 2022 stood at 0. 61 %, firmly aligned with the european average. ii. how to reconcile solidity and competitiveness? the competitiveness of insurers or banks is not part of regulators'formal mandate. however, this does not mean they are not concerned about it : the competitiveness of financial institutions is one of the underlying conditions of their soundness. more broadly, it is an essential lever for financing green and digital transition investments in europe. the emphasis that is thankfully placed on the " savings and investment union " - which combines the capital markets union and banking union projects - is key to accelerating our growth