Credit Agricole's Earnings Surpass Expectations Fueled by CIB's Strength
French banking giant Credit Agricole SA reported a smaller-than-expected decline in net profit for the third quarter, thanks to strong performance in its investment banking division, compensating for weaker retail business segments. The bank’s net profit for the July-September period fell by 4.7% to €1.67 billion ($1.83 billion) compared to the same quarter last year. This decline was less than that of the previous year’s same period, which had inflated earnings due to an increase in provisions.
The bank's Corporate and Investment Banking (CIB) sector saw sales rise by 8.2%, reaching €1.53 billion, outperforming the growth rates of rivals SocGen and BNP Paribas (EPA:BNPP). While SocGen's shares rose after beating expectations, BNP Paribas experienced a drop in its stock value.
Credit Agricole's revenue from fixed income, currencies, and commodities (FICC) increased by 6.2%. Although this trailing BNP's 12% growth, it was in line with SocGen's performance. Xavier Musca, head of CIB at Credit Agricole, noted that despite facing some challenges in currency and linear activities, the bank possesses various strengths, particularly in securitization and bond issuance.
The bank's total revenue rose by 2.3% to €6.49 billion, but it slightly missed the average analyst estimate of €6.56 billion, impacted by declines in retail banking revenues in France and Italy. Additionally, the risk cost covering bad loans was reported at €433 million, significantly below analysts' estimates of €792 million.
Credit Agricole also emphasized progress toward achieving its financial targets for 2025, including a core net income goal of over €6 billion annually. Furthermore, the bank announced that its joint venture with the payment company Worldline, named CAWL, is expected to be operational by March 29, 2025. This announcement came in the wake of Worldline’s CEO recently departing and the company issuing a profit warning.
The bank's performance demonstrates resilience in its investment banking operations amid a vibrant global markets environment that stimulates investor trading and corporate debt issuance, positively contributing to capital markets activities. Credit Agricole's success in mitigating the effects of retail weakness through its CIB strength positions it advantageously in a competitive banking landscape.