By William Horobin and Noemie Bisserbe

PARIS--Bank of France governor Christian Noyer said Tuesday that market volatility still poses a risk to the financial system, particularly as low interest rates weigh on banks' profits.

Presenting the annual report of France's banking supervisor ACPR, Mr. Noyer called for strengthened vigilance of the risks weighing on the banking sector.

"I'm thinking in particular of the volatility we've seen on markets in a context where there is limited liquidity in many cases, and in a context of very low market interest rates," Mr. Noyer said.

Mr. Noyer, who is also president of the ACPR, said low interest rates have a particularly negative impact on French banks' margins because rates banks pay on state regulated deposits haven't fallen enough. He also said a rise in borrowers renegotiating mortgages in France is weighing on banks' margins.

-Write to William Horobin and Noemie Bisserbe at william.horobin@wsj.com; noemie.bisserbe@wsj.com