20th May 2024

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Business Industry and Financial

Credit Agricole beats forecasts on strong investment bank boost

  • Q3 group net income up 33%
  • Q3 FICC sales trading growth of 25.6%
  • Net interest margin stabilises in French retail

PARIS, Nov 8 (Reuters) – Credit Agricole (CAGR.PA), France’s second-largest listed bank, beat third-quarter earnings expectations on Wednesday driven by a strong performance by its investment bank and retail activities.

Its net income jumped 33% to 1.75 billion euros ($1.87 billion), above the 1.37 billion expected by analysts in a company-compiled poll.

Group revenue rose 19% to 6.34 billion euros, topping the 5.99 billion expected by analysts.

It reported lower-than-expected provisions of 429 million euros, helping its bottom line.

Analysts at JP Morgan saluted a “solid Q3”, noting the lower-than-expected provisions and higher revenue in investment banking, in particular from capital markets and securities services.

Credit Agricole’s shares were up by 0.4% at 0816 GMT while France’s benchmark CAC 40 (.FCHI) stock index was down 0.3%.

The listed entity of Credit Agricole Group, controlled by 39 French mutual banks, said revenue from its corporate and investment bank division rose by more than 9% propelled notably by a 25.6% jump in trading in fixed income, currencies and commodities (FICC).

Credit Agricole’s performance on that front was better than that of its two French rivals, Societe Generale (SOGN.PA) and BNP Paribas (BNPP.PA), as well as Deutsche Bank (DBKGn.DE) and Barclays (BARC.L), as less volatile financial markets dented investment banks’ earnings.

Sales at its French retail banking division edged up 0.4% as a decline in the net interest margin interest (NIM) — earnings on loans minus deposit costs — due to higher deposit costs was partially offset by hedging contracts against the risks tied to interest rates.

Its NIM in Italy, its second-biggest market, jumped by 48%, as higher interest rates are more quickly passed on to customers than in France, where almost all mortgages are signed on a fixed rate basis and where the government determines the remuneration of the country’s most popular savings account, thus squeezing margins for banks.

Credit Agricole controls Europe’s largest fund manager Amundi (AMUN.PA) and recently announced plans to acquire Belgian wealth management firm Degroof Petercam.

($1 = 0.9361 euros)

Reporting by Mathieu Rosemain;
Additional reporting by Augustin Turpin;
editing by Silvia Aloisi and Jason Neely

Our Standards: The Thomson Reuters Trust Principles.

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Mathieu is part of Reuters’ finance team, covering French banks and major M&A stories in the country and in Europe. A graduate of Sciences Po university, Mathieu previously covered the Tech beat at Reuters, following stints at Bloomberg News and French business daily Les Echos.