Cré dit Agricole Profit Hurt by Stake Sale
May 12 2016 - 1:50AM
Dow Jones News
PARIS—Cré dit Agricole SA said Thursday that its net profit
plunged in the first quarter, hit by the planned sale of its 25%
stake in the group's regional banks and debt restructuring.
The Paris-based lender, France's second-largest listed bank by
assets, said net profit fell by 71% to €227 million ($259 million)
in the three months to the end of March from €784 million a year
ago. Revenue was down 13% at €3.8 billion.
The bank said it booked a €448 million charge to restructure
part of its debt and help reduce future costs. Cré dit Agricole
also discounted the contribution from the group's regional lenders
in its first-quarter earnings .
Cré dit Agricole is 56%-owned by the group's regional
cooperative lenders and in turn controls 25% of those banks. It
warned earlier this year that the sale of the 25% stake back to
these regional lenders would cut the bank's annual earnings by
about €470 million.
Its earnings this quarter highlight the challenge faced by the
French bank in continuing to provide stable returns to investors
given its new revenue mix, particularly against a backdrop of
persistently low interest rates and volatile markets.
Higher revenue at its insurance, asset management and
specialized financial service units in the first quarter didn't
make up for a weak investment banking business, which was dented by
lower client demand and choppy markets.
Cré dit Agricole's insurance and asset management business
reported a 10% increase in net profit to €379 million, while net
profit for its specialized financial services business rose 89% to
€129 million.
Net profit at its corporate and investment bank plunged 54% to
€163 million from €334 million a year earlier.
Net profit for its international retail banking business, which
includes Italy, Poland and Egypt, nearly doubled to €53 million
from €27 million a year earlier.
However, Cré dit Agricole's own domestic retail arm, LCL,
reported a 32% drop in net profit to €85 million, pressured by low
interest rates despite a pickup in loan demand.
Excluding the impact of the stake sale and one-time items, Cré
dit Agricole's net profit still fell by 9% to €394 million from
€435 million a year earlier.
Despite its lower earnings, Cré dit Agricole's core tier-one
ratio, which compares top-quality capital such as equity and
retained earnings with risk-weighted assets, stood at 10.8%, up
from 10.7% in December.
The bank's leverage ratio, which measures capital held by the
bank against its total assets, was 4.4% compared with 4.6% at the
end of December.
Write to Noemie Bisserbe at noemie.bisserbe@wsj.com
(END) Dow Jones Newswires
May 12, 2016 01:35 ET (05:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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