Credit Agricole shares fall as earnings disappoint

  • Q3 net income of 1.35 billion euros against 1.17 billion expected
  • Analysts say underlying revenue 2% lower than forecast
  • Stocks fall 5%

PARIS, Nov 10 (Reuters) – Shares of Credit Agricole SA (CAGR.PA) fell 5% on Thursday morning after the French bank reported lower-than-expected third-quarter earnings, due to weaker trading income and withdrawals from Amundi manager assets.

Net profit was 1.35 billion euros ($1.35 billion) in the three months to the end of September, down 3.6% from a year earlier, but at above an average of 1.17 billion euros forecast in a Refinitiv analyst poll, helped by lower provisions for loan sourness and one-off items like the sale of La Médicale’s insurance business .

However, underlying revenue came in at 5.59 billion euros, 2% below forecast, and the CET 1 ratio – a key measure of financial strength – also weakened more than expected to 10. .7%.

Crédit Agricole “continues to suffer from a less favorable revenue mix than its peers in the current environment, Jefferies analysts said, pointing to the fact that the bank is geared towards asset collection activities which are affected. by market volatility, while it more limited exposure to trading and car fleet management activities, which helped to increase the revenues of competitors BNP (BNPP.PA) and Société Générale (SOGN. PA).

Amundi, majority-owned by Crédit Agricole, recorded net outflows of 12.9 billion euros for the third quarter last month, penalized by weak markets and worries about the economic outlook due to the war in Ukraine .

Crédit Agricole, like most European banks, was able to take advantage of the rise in interest rates to post strong growth in corporate loans, up 15.4%, and consumer loans, up 12.6%.

However, capital markets and investment banking revenue, which boosted rivals as they took advantage of market volatility, fell 5.7% in the quarter.

“Overall, we have a lower risk profile than our competitors, which means we could benefit less from volatility,” said Xavier Musca, deputy chief executive of Credit Agricole.

At 08:36 GMT, the bank’s share fell 4.7% to 9.24 euros.

Crédit Agricole also indicated that it was continuing negotiations with the Italian Banco BPM SpA (BAMI.MI). It is competing with French insurer AXA SA (AXAF.PA) to distribute non-life products through branches of Italy’s third-largest bank in a deal worth around 300 million euros , said sources familiar with the matter.

In a separate statement, SAS La Boetie, Crédit Agricole’s largest shareholder, said it would buy up to €1 billion of bank shares by the end of the first half of 2023, which would likely help support the bank’s share price in the future. That would bring its stake to just over 60%, analysts said. The holding company indicated that it would not increase it beyond 65%.

($1 = 0.9996 euros)

Report by Matthieu Protard and Silvia Aloisi; Editing by Christopher Cushing and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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