Credit Agricole Boosts Profit Goal as Rivals Pare Targets
Credit Agricole Boosts Profit Targets as Rivals Pare Back Goals
(Bloomberg) -- Credit Agricole SA pledged to boost net income by more than 600 million euros ($673 million) over the next three years and drive down costs as Chief Executive Officer Philippe Brassac bets on corporate banking and asset management to bolster revenue.
The French lender -- unveiling its 2022 strategic plan after meeting previous key targets ahead of schedule -- is seeking to drive net income to 5 billion euros in the coming period and increase its return on tangible equity, a key measure of profitability. Other goals were left unchanged or dropped, with the bank citing tougher future regulatory requirements.
Brassac, who has reorganized the bank’s structure and sold less-strategic holdings over the past four years, is less dependent than crosstown rivals BNP Paribas SA and Societe Generale SA on trading, allowing him to boost some targets while they have cut or reviewed some of theirs in recent months. European banks are facing an extended era of low or negative interest rates and ever-rising capital requirements.
It’s also one of the few banks in Europe that has also grown through deal-making. In April, it 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. The bank’s asset manager Amundi SA, which reinforced its European leadership after the 3.5 billion-euro purchase of Pioneer Investments from UniCredit SpA in 2017, has said recently that it remains a “natural consolidator in Europe.”
The stock declined 0.2%to 10.4 euros at 9:40 a.m. in Paris after earlier falling as much as 1.7%. The stock is up about 10% this year.
Corporate Clients
The bank is seeking to drive more revenue from large corporate clients in cash management and target more small- and medium-sized businesses. It’s also seeking to a 20 billion euros increase in yearly net inflows, in particular targeting so-called mass affluent customers. The main pillars of the new plan are growing in all its markets, boosting cost savings and investing in technology.
Mirroring similar comments made by UniCredit CEO Jean-Pierre Mustier last month, Brassac has downplayed the possibility that his bank could play a role into any large-scale banking consolidation developments.
In the first quarter, Credit Agricole’s capital-markets revenue rose 1.7% from the previous year, the bank said on May 15. That beat analyst estimates and bucked the trend of lower trading results seen at many rivals. Credit Agricole’s revenue from corporate financing rose 7% in the first quarter, partly thanks to “brisk business in structured finance.”
Some targets were new, some unchanged and some dropped:
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Deputy CEO Xavier Musca has ruled out any “big violent”’ restructuring at Credit Agricole’s corporate and investment bank. The unit will improve its cost base “at its own rhythm, patiently,” the executive said in May.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Dan Reichl
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