Credit Agricole Profit Rises 89%, Beating Estimates
Credit Agricole CEO Jean-Paul Chifflet
Antoine Antoniol/Bloomberg
Credit Agricole Chief Executive Officer Jean-Paul Chifflet speaking at a news conference in Paris.
Credit Agricole Chief Executive Officer Jean-Paul Chifflet speaking at a news conference in Paris. Photographer: Antoine Antoniol/Bloomberg
Credit Agricole SA, France’s second- largest bank, said profit rose 89 percent in the second quarter, more than analysts estimated, as earnings at the corporate- and investment-banking unit cushioned losses in Greece.
Credit Agricole rose 2.7 percent in Paris trading after saying net income climbed to 379 million euros ($482 million), topping the 318 million-euro average estimate of 11 analysts surveyed by Bloomberg News.
Chief Executive Officer Jean-Paul Chifflet, who took over in March, is seeking to trim losses at Credit Agricole’s Greek unit, where the bank booked a 418 million-euro writedown in the second quarter. The corporate and investment bank earned 330 million euros, rebounding from a loss a year earlier, as markdowns on holdings of risky assets declined.
“It shows that you can’t reduce Credit Agricole to its Greek problems,” said Benoit de Broissia, who helps manage $2 billion at KBL Richelieu Gestion in Paris. “The revenues were well oriented in almost all of the businesses.”
Credit Agricole rose 27 cents to 10.17 euros, valuing the company at 24.4 billion euros. The bank fell 18 percent this year, exceeding the 12 percent decline of BNP Paribas SA, France’s largest bank by assets.
Jump in Revenue
Credit Agricole’s revenue rose 20 percent to 5.47 billion euros, topping analysts’ estimates for 4.96 billion euros. Corporate and investment-banking revenue, excluding writedowns on risky assets, gained 4.2 percent, while sales at the asset- management, insurance and private banking division increased almost 40 percent.
Within the investment-banking unit, equities revenue rose 7 percent, while fixed-income sales were “adversely affected by macroeconomic conditions,” the bank said.
“The rather good surprise comes from CIB in the equity business” and from the asset-gathering unit, said Sabrina Blanc, a Paris-based analyst at Societe Generale SA with a “hold” rating on the stock. “This makes up for the losses in international retail, but there’s nothing to rejoice too much about.”
Credit Agricole’s consumer-banking business outside of France, including Athens-based Emporiki Bank of Greece SA, had a second-quarter net loss of 643 million euros, compared with a 51 million-euro loss a year earlier, the company said. Concern over Greece’s budget deficit led the government to implement austerity measures and prompted a European Union rescue package.
Stress Tests
Credit Agricole Group was among four French banks that underwent and passed stress tests carried out by EU regulators on 91 banks last month. Its net exposure to Greek sovereign debt was 854 million euros at the end of March, compared with 4.9 billion euros for BNP Paribas and 4 billion euros for Societe Generale SA, according to data released July 23.
“We can look at the future with confidence,” Chifflet told reporters today. Second-half earnings should be “solid, stable,” he said, declining to provide a forecast for the rest of the year. Credit Agricole will outline its three-year targets next March, he also said.
Chifflet today repeated that Credit Agricole can generate a “base” of quarterly profit between 700 million euros and 1 billion euros, excluding non-recurring items.
While suffering losses in Greece, Credit Agricole is expanding in Italy, its second-largest consumer-banking market after France. The bank agreed in June to purchase 172 outlets in the country from Intesa Sanpaolo SpA.
Credit Agricole is buying Intesa’s majority stake in Cassa di Risparmio della Spezia, a lender with 76 branches in the Liguria, Tuscany and Emilia Romagna regions. It will also purchase 96 branches located in Northern and Central Italy.
Asset Management
Earnings at the asset management, insurance and private banking unit rose to 392 million euros from 337 million euros. Profit from the regional banks’ French retail network was 181 million euros, up from 157 million euros a year earlier. The LCL French branch network had 188 million euros of profit, compared with 167 million euros a year earlier, the bank said.
Amundi, the asset-management venture that Credit Agricole started in January with Societe Generale, may look at UniCredit SpA’s Pioneer Global Asset Management as Milan-based UniCredit reviews its options for the unit, Amundi CEO Yves Perrier said.
Credit Agricole’s provisions for doubtful loans were at 980 million euros in the second quarter, down from 1.13 billion euros a year earlier. The bank expects a “slight” drop in bad- loan provisions in the second half, and fewer writedowns on risky assets, Chifflet said on a conference call today.
BNP Paribas said Aug. 2 that second-quarter profit rose 31 percent as bad-loan provisions dropped. Societe Generale said Aug. 4 that profit tripled in the quarter. BNP Paribas and Societe Generale have said bad-loan provisions will probably keep falling in the second half.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net.
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