CRÉDIT AGRICOLE SA EXCEEDS EXPECTATIONS IN Q2, RECORD ACTIVITY IN CIB
by Julien Pontus
PARIS (Reuters) – Crédit Agricole SA on Thursday announced better-than-expected second-quarter results, along with its major French rivals BNP Paribas and Societe Generale, thanks to a record level of investment banking activity.
Net profit reached 1.98 billion euros in the past quarter, while analysts had expected an average of 1.18 billion.
Net banking income also came in above expectations, rising nearly 9% to €6.33 billion versus an analysts’ consensus of €5.73 billion.
While activity was dynamic in all lines of business, the bank’s management emphasizes that activity in investment banking was particularly brisk.
With a 22% increase in underlying revenues, Corporate and Investment Banking (BFI) activity “reached record levels”, points out Crédit Agricole, who explains that market volatility has led to strong demand for cover from clients.
Interest, currency and commodity (FICC) activity saw its revenue rise 36.9%.
Crédit Agricole SA accounts also benefited from a fall in risk costs of more than 27% over the period, while in the first quarter provisions – of just over €1 billion – related to its exposure to Russia and Ukraine weighed on its results.
NO COMMENT ON ITALY
Also a source of first-quarter disappointment was the solvency of France’s second largest bank by market capitalization, which improved at the end of June with a Common Equity Tier One ratio up 30 basis points to 11.30%.
Last June, during the presentation of its new strategic roadmap, Crédit Agricole SA stated that it aims to achieve a net profit of more than 6 billion euros and a return on tangible equity of more than 12% by 2025.
The bank also noted on that occasion that in Italy – its second market after France – where Crédit Agricole recently bought Credito Valtellinese, it acquired a 9.2% stake in the third bank, Italy’s Banco BPM have a “very long development path”.
The latter said on Wednesday that it should make a decision by the end of the quarter on a possible insurance partnership, for which Crédit Agricole and Axa are candidates.
During a press conference, Crédit Agricole management said it intended to make the “best offer” for the partnership but declined to comment further.
Crédit Agricole SA announced on Wednesday the appointment of two new Deputy General Managers, alongside Xavier Musca, to strengthen its Executive Board.
Jérôme Grivet, currently Deputy General Manager of Crédit Agricole SA, will become Deputy General Manager from September 1st. Management and control functions are transferred to him.
Olivier Gavalda, CEO of Crédit Agricole d’Ile-de-France since April 2016, will become Deputy CEO as of November 1st. He will be responsible for development.
(Report Julien Ponthus, French version Matthieu Protard, edited by Jean Terzian and Kate Entringer)