Nov. 11 (Bloomberg) -- Credit Agricole SA, France’s third- largest bank by market value, reported a 21 percent decline in third-quarter profit, beating analysts’ estimates, and said Chief Executive Officer Georges Pauget will step down.

Net income fell to 289 million euros ($433 million) from 365 million euros a year earlier, the Paris-based bank said late yesterday. Earnings topped the 128 million-euro median estimate of seven analysts surveyed by Bloomberg. Pauget, 62, will leave on March 1, 2010, and be replaced by Jean-Paul Chifflet, 60, secretary general of the bank’s largest shareholder.

Pauget, who became CEO in September 2005, oversaw a buildup of the Calyon investment bank and an expansion in Italy and Greece before the global financial crisis led the company to scale back risk-taking. Credit Agricole was among the first European banks to increase capital last year because of writedowns tied to the U.S. subprime mortgage crisis.

“My mission at Credit Agricole SA, which entailed managing the group throughout the crisis period and reconfiguring the bank to prepare it for the post-crisis period, is nearing completion,” Pauget said in a statement.

Chifflet has been in his current role for three years at the Federation Nationale du Credit Agricole, a grouping of regional lenders that has a majority stake in the publicly traded bank. A 36-year veteran of the bank, he graduated from l’Institut de Hautes Finances de Paris. Chifflet, an amateur winemaker, is also head of a regional bank near Lyon.

Merger Studies

Speculation that Pauget might depart increased after French daily Le Monde reported last month that Credit Agricole had considered a three-way tie-up with Societe Generale SA and insurer Groupama, creating opposition from the regional banks.

Pauget told reporters on a conference call yesterday that Credit Agricole, like all banks, had carried out “strategic” studies related to competitors and that it was “regrettable” that the studies were made public.

Credit Agricole advanced 81 percent in Paris trading this year. That compares with a 94 percent gain in BNP Paribas SA, France’s largest bank, and a 44 percent increase in Societe Generale, the No. 2 French lender by market value.

Paris-based BNP Paribas reported a 45 percent jump in third-quarter earnings last week. Profit at Societe Generale more than doubled in the period.

The loss at Credit Agricole’s investment bank, including activities the bank is discontinuing, amounted to 99 million euros in the quarter. The results were hurt by writedowns on asset-backed securities, as well as collateralized debt and loan obligations. Fixed-income revenue amounted to 512 million euros in the quarter, and equity revenue totaled 386 million euros.

Revenue ‘Deterioration’

“Revenues from treasury, foreign exchange, commodities and plain vanilla derivatives, which were exceptionally profitable in the preceding quarters, returned to normal levels,” the bank said in the statement.

Capital market and investment-banking revenue declined 44 percent to 677 million euros in the third quarter, while financing activities’ sales fell 17 percent to 500 million euros, Credit Agricole said.

“There seems to be a large deterioration of investment- banking revenue even after writedowns,” Jaap Meijer, a London- based analyst at Evolution Securities, said by phone.

The loss from international retail banking amounted to 417 million euros, hurt by a 485 million-euro pretax goodwill charge at its Emporiki Bank of Greece SA unit. The bank plans to restore Emporiki to profitability by the end of 2011.

Earnings from the French retail network of regional banks rose 63 percent to 222 million euros, while profit at the French LCL consumer-banking unit fell 6.7 percent to 141 million euros.

Provisions for bad loans rose 61 percent from a year earlier to 1.19 billion euros in the third quarter. The tier 1 capital ratio, a gauge of a bank’s ability to absorb loan losses, stood at 9.7 percent on Sept. 30, and core tier 1 was at 9.1 percent.

Profit at the asset management, insurance and private banking unit rose 57 percent to 456 million euros, Credit Agricole said. Assets under management rose 4.5 percent to 811 billion euros during the third quarter. Net inflows amounted to 25.4 billion euros in the first nine months.

To contact the reporters on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net

Last Updated: November 10, 2009 18:00 EST