Crédit Agricole SA’s third-quarter financial results showed a smaller decline in net profit than expected, reporting 1.67 billion euros, down 4.7% year-on-year. Strong performance from its investment and financing bank contributed significantly, with record revenues of 1.53 billion euros. However, retail banking and insurance sectors lagged. The bank’s net profit benefited from lower-than-expected risk costs, and it remains optimistic about reaching its 2025 financial goals early.
Crédit Agricole SA’s Q3 Financial Performance Exceeds Expectations
PARIS – Crédit Agricole SA reported a decline in net profit for the third quarter that was less severe than analysts had anticipated. This was largely due to the remarkable results from the investment and financing bank (BFI), despite some underperformance in retail banking and insurance sectors.
Initially, Crédit Agricole SA shares opened down 2.5% on Wednesday, eventually dropping 5.5% around 08:10 GMT, placing the bank at the bottom of the CAC 40 index.
The second-largest bank in France by market capitalization declared a group net profit of 1.67 billion euros, reflecting a 4.7% year-on-year decrease. This quarter’s profit was bolstered by the reversal of provisions for Housing Savings, which had been set aside to address potential interest rate hikes in housing savings plans (PEL). Notably, this outcome surpassed analyst expectations, which had forecasted a profit of 1.58 billion euros.
Strong Performance from Investment Banking
Crédit Agricole’s investment and financing bank (BFI) achieved record revenues in the third quarter, climbing 8.2% to 1.53 billion euros. This performance stands in contrast to Société Générale’s 4.9% growth and BNP Paribas’s 9% increase.
In a note to clients, the Royal Bank of Canada emphasized that “Crédit Agricole delivered solid results for the third quarter, largely in line with the pre-tax consensus,” while also noting “mixed trends in the different divisions.”
Trading activities in rates, currencies, and commodities (FICC) saw a 6.2% increase during the quarter, slightly lagging behind BNP Paribas’s 12% rise but on par with Société Générale’s 6.1% growth. Xavier Musca, CEO of Crédit Agricole CIB, elaborated on the mixed performance, stating, “While currency and linear activities are under pressure, we are experiencing strong momentum in areas such as securitizations and bond issuances.”
Net banking income increased by 2.3% to 6.49 billion euros, falling short of the average analyst estimate of 6.56 billion euros, primarily due to a contraction in proximity banking operations in France and Italy. The proximity banking income in France dipped slightly by 1.7%, although excluding the impact of reversals in 2023, revenues would have risen by 3.7% compared to the previous year.
Insurance-related net banking income also saw a decline of 1.2% during the quarter. Analysts from Jefferies expressed disappointment, stating, “We expected insurance revenues to be a strong point of CASA’s third-quarter results, but that was not the case,” referencing claims associated with crop insurance.
Additionally, Crédit Agricole’s net profit benefitted from a lower-than-anticipated cost of risk, totaling 433 million euros in the third quarter, a significant drop from the 792 million euros analysts had predicted.
The bank remains optimistic about achieving its 2025 financial targets a year ahead of schedule, aiming for an underlying annual net profit exceeding 6 billion euros. Furthermore, the joint venture with French payment company Worldline, CAWL, is projected to become operational by the end of the first quarter of 2025, according to Olivier Gavalda, deputy CEO.