By Mathieu Rosemain
PARIS (Reuters) – Shares of Credit Agricole (OTC:) SA fell almost 6% after the French bank reported mixed quarterly results, marked by record investment banking sales, a slightly smaller than expected decline in profit and a surprise drop in insurance revenue.
The bank’s revenue for the entire third quarter also fell short of expectations, driven by consumer finance and insurance activities. The latter reported a 1.2% drop in sales, which was linked to a change in claims related to policies aimed at protecting farmers from losses in crop production.
“Sales could have been better. We expected insurance revenues to be a particular highlight in CASA’s (Credit Agricole SA) third quarter results. This was not the case,” Jefferies analysts said in a note to clients.
Shares of Credit Agricole, which have lagged the STOXX Europe 600 index so far this year with a 3% gain compared to a 23% gain for the benchmark, lost more ground on Wednesday as other stocks recovered in the wake of Donald Trump’s victory in the US. presidential elections.
Pressed by analysts on a call on whether climate change could lead to higher insurance claims in the future, deputy CEO Jerome Grivet said they could rise further, but added that the group would “adjust prices accordingly”.
Net profit at France’s second-largest listed lender by market value fell 4.7% in the July-September quarter from a year earlier to 1.67 billion euros ($1.8 billion), after a increase in provisions in 2023, linked to French savings accounts, disappeared. It still came above the company’s analyst consensus of 1.58 billion euros.
Credit Agricole Group’s listed entity reiterated that it is on track to achieve its 2025 financial targets a year early, including annual underlying net income of more than 6 billion euros.
Credit Agricole’s results contrast with those of many European banks, including rival Societe Generale (OTC:), which beat quarterly forecasts thanks to solid net interest income and rising investment banking revenues.
The corporate and investment banking division was also a bright spot for Credit Agricole; revenue rose by a forecast increase of 8.2% to 1.53 billion euros, compared with an increase of 4.9% at rival Societe Generale and 9% at BNP Paribas (OTC:).
Credit Agricole’s revenues from fixed income, currency and commodity trading rose 6.2%, below GDP growth of 12% but close to Societe Generale’s 6.1%.
RETAIL DECLINE
The lender’s overall profit decline is related to the bank previously setting aside money to protect against higher interest rates on French savings accounts that customers use to buy homes.
The release of these provisions added more than 200 million euros to the figures for the third quarter of last year.
Quarterly turnover for the entire bank rose 2.3% to 6.49 billion euros, lagging the average analyst expectation of 6.56 billion euros after turnover fell at French and Italian retail banks.
Sales at Credit Agricole SA’s French retail activities fell by 1.7% in the third quarter. Excluding the effect of the 2023 provisions, they would have risen 3.7% year-on-year, the lender said.
Credit Agricole said its cost of risk – money set aside for bad loans – was 433 million euros, less than the 792 million euros expected by analysts.
A planned joint venture with payments company Worldline, CAWL, will be operational by the end of March 2025 and has not been delayed by the sudden departure of Worldline’s longtime CEO in September after he issued another profit warning, according to deputy CEO Olivier Gavalda.
($1 = 0.9145 euros)
