🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Credit Agricole's Q1 earnings jump as investment banking beats rivals

Published 03/05/2024, 06:02
Updated 03/05/2024, 06:06
© Reuters. FILE PHOTO: A woman walks past a Credit Agricole logo as she enters a bank office in Reze, near Nantes, France, February 8, 2024.  REUTERS/Stephane Mahe/File Photo
BNPP
-
CAGR
-
SOGN
-

By Mathieu Rosemain

PARIS (Reuters) - Credit Agricole (EPA:CAGR) SA, France's second-biggest listed bank, posted a forecast-beating 55% jump in first-quarter net profit on Friday, helped by corporate and investment banking sales that outperformed rivals.

Net profit in the January to March period rose to 1.9 billion euros ($2.04 billion), above the 1.48 billion-euro average of 19 analyst estimates compiled by the company.

Sales climbed 11% to 6.81 billion euros, topping analyst expectations of 6.47 billion euros. The cost of risk, or money put aside for bad loans, was 400 million euros, 105 million euros less than expected.

European banks' first-quarter earnings have largely beaten expectations, with the boost from higher interest rates still supporting lenders' bottom line and sending their shares to multi-year highs.

Despite the overall rise in revenues, Credit Agricole said its retail sales in France grew by just 1.8% while its net interest margin, or the difference between what a bank earns on loans and pays out for deposits, was stable.

French banks have not benefited as much as peers from the rise in rates because they are required to pay more on deposits and a highly regulated mortgage market squeezes margins. Analysts expect them to perform better when rates fall.

Credit Agricole, which is controlled by 39 regional banks, said it was on track to meet its 2025 financial targets a year early. Targets include annual underlying net income of more than 6 billion euros and a return on tangible equity of more than 12%.

The lender said revenue at its corporate and investment banking businesses, which account for a quarter of overall revenue, rose 4% year-on-year, boosted by cash management and corporate leveraged finance.

Revenue from trading in fixed income, currencies and commodities (FICC) shrank 3%, in line with Wall Street banks but outperforming French rival BNP Paribas (EPA:BNPP), which reported a fall of 20%.

Societe Generale (EPA:SOGN), which also reported quarterly results on Friday, said sales from fixed income and currencies dropped by 17% over the period.

FICC trading across banks has been weaker than in 2023 as volatile markets have turned calmer.

© Reuters. FILE PHOTO: A woman walks past a Credit Agricole logo as she enters a bank office in Reze, near Nantes, France, February 8, 2024.  REUTERS/Stephane Mahe/File Photo

Credit Agricole also controls Europe's biggest fund manager Amundi, owns asset servicing businesses and is expanding into wealth management.

($1 = 0.9332 euros)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.