Credit Agricole Reports Rising Revenue and Profit

08 Nov 2019, 08:06 PM IST

(Bloomberg) --

Credit Agricole SA benefited from record inflows at its asset-management unit and higher revenue at the investment bank in the first quarter since Chief Executive Officer Philippe Brassac unveiled his new targets.

Revenue in the three months through September rose 4.8% from a year earlier and net income jumped 8.9%, Credit Agricole said Friday. The large customers division, which houses the trading operations, led gains with higher underlying revenue from capital markets and investment banking. The one sore spot: Lower profit and stagnating revenue at the French retail unit.

Brassac, whose firm is the top performing of the large bank stocks in Europe this year, is betting on corporate banking and asset management for growth as rivals struggle in an extended era of low or negative interest rates and rising capital requirements. The CEO in June pledged to boost net income by more than 600 million euros ($663 million) over three years and drive down costs, after meeting previous key targets ahead of schedule.

Credit Agricole fell 3.3% at 10:56 a.m. in Paris trading, as investor focused on weakness in the French retail unit, where pretax profit declined 3%. The stock is still up 29% this year.

Key figures from Credit Agricole’s third-quarter results:

3Q revenue rises 4.8% to EU5.03 billion; analysts’ estimate was EU4.99 billion
Net income increases 8.9% to EU1.2 billion; analysts’ estimate was EU1.13 billion
CET1 ratio rises 0.1 point to 11.7%
3Q gross operating income rises 11% to EU2 billion
3Q income before tax rises 6.3% to EU1.77 billion

Operating expenses rose 0.9% from a year earlier, to 3.03 billion euros, and the cost-income ratio improved to 60.1%, from 62.4%.

Credit Agricole is less dependent than rivals BNP Paribas SA and Societe Generale SA on volatile trading, and has been able to turn to acquisitions to support growth, including at its giant asset manager Amundi SA.

Amundi attracted almost 43 billion euros in new client money last quarter, the most since it went public in 2015. Revenue in Credit Agricole’s asset-gathering business rose 3.8% in the quarter.

Amundi has grown into Europe’s largest asset manager, with almost 1.6 trillion euros under management, helped by deals such as the purchase of Pioneer Investments from UniCredit SpA in 2017.

Brassac has reorganized the bank’s structure and sold less-strategic holdings over the past four years while pledging to secure more partnerships with other companies. In April, Credit Agricole agreed to take over Banco Santander SA’s main custody and asset-servicing activities to scale up in a business dominated by U.S. firms.

--With assistance from James Regan.

To contact the reporters on this story: Christian Baumgaertel in Munich at cbaumgaertel@bloomberg.net;Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Dan Reichl, Josh Friedman