Credit Agricole Second-Quarter Profit Jumps on Asset Management

Credit Agricole SA, France’s second-largest bank, reported a rebound in profit in the second quarter led by asset management and international consumer banking.

Net income rose to 920 million euros ($1.01 billion), the bank, based outside Paris, said in a statement Tuesday. Earnings compare with 77 million euros a year earlier and the 901 million-euro average estimate of five analysts surveyed by Bloomberg. Losses linked to the demise of Portugal’s Banco Espirito Santo SA hurt profit in the year-earlier period.

Chief Executive Officer Philippe Brassac, who took over in May, pledged to adapt to pressures from regulation and low interest rates and offer more digital services to clients. After selling assets in Greece and Spain, Credit Agricole is focusing on France, where it commands the biggest slice of the consumer-banking market and owns large fund-management and insurance units.

Brassac reiterated Credit Agricole’s 2016 financial targets and said the bank is working on steps to reduce costs going forward. Credit Agricole shares rose 34 percent this year, outpacing the STOXX 600 Banks Index’s 18 percent gain.

Profit from the savings unit, which includes asset management, private banking and insurance, rose 17 percent to 457 million euros in the second quarter from a year earlier. Amundi, the money-management unit, attracted a net 22.6 billion euros of new money, Credit Agricole said.

Amundi is planning an initial public offering this year, and its other main shareholder Societe Generale SA has said it’s considering the sale of its entire 20 percent stake. Credit Agricole has signaled it will remain Amundi’s largest investor.

International Banking

Profit from Credit Agricole’s international retail networks was 91 million euros following a year-earlier loss on the Portugal unit. The Italian consumer bank had net income of 54 million euros, up from 41 million euros a year ago.

Credit Agricole set aside 350 million euros in legal provisions in the quarter related to a U.S. investigation into sanctions violations, a case Brassac said will probably be resolved in coming months. Credit Agricole’s total litigation provisions now amount to 1.6 billion euros, he said.

Credit Agricole Group, the larger entity regulators and rating firms look at, had a common equity Tier 1 capital level of 13.2 percent by June 30, up from 13 percent at the end of March, it said. The listed bank’s capital ratio was stable at 10.2 percent.

Credit Agricole remains in discussions with regulators about a review of its group structure, Brassac said. While the bank can’t determine how long the talks will take, “at this stage there is no operation that would modify the scope of Credit Agricole SA,” he said.

The bank also announced a shuffling of senior managers on Tuesday, with deputy CEO Bruno de Laage retiring and Michel Mathieu assuming oversight of international retail banking units and the LCL French network.

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