Crédit Agricole and Société Générale Profit Buoyed by Stake Sales
August 03 2016 - 4:35AM
Dow Jones News
By Noemie Bisserbe
PARIS--French banks Crédit Agricole SA and Société Générale SA
on Wednesday reported a bigger-than-expected jump in second-quarter
net profit, as the sale of their respective shares in Visa Europe
helped offset pressure from volatile markets and persistently low
interest rates.
Crédit Agricole's net profit rose 26% to EUR1.16 billion ($1.30
billion) in the three months to the end of June, while at Société
Générale it increased 8% to EUR1.46 billion. Revenue rose by 2% at
both banks, to EUR4.74 billion at Crédit Agricole and to EUR6.98
billion at Société Générale.
The Visa Europe stake sale gave Crédit Agricole a gain of EUR328
million and Société Générale EUR725 million.
The forecast-beating results cheered investors and In early
trading Wednesday Crédit Agricole were up 2.9% while Société
Générale's rose 3.1%.
Capital gains and a balanced business mix have helped French
banks navigate a difficult economy and choppy markets this quarter.
French lenders fared better than some of their European rivals such
as Credit Suisse Group and Deutsche Bank AG, that were badly hit by
a drop in equity trading and the impact of stricter financial
regulation.
Crédit Agricole said that insurance, asset management and a
strong specialized financial services business helped make up for a
lower net profit from its investment bank.
Its insurance and asset management business reported an 8%
increase in net profit to EUR415 million, while net profit for its
specialized financial services business rose 23% to EUR154
million.
Net profit at its corporate and investment bank fell 8% to
EUR365 million under pressure from volatile markets.
Crédit Agricole's domestic retail arm, LCL, also reported a 38%
drop in net profit to EUR108 million, hurt by persistently low
interest rates.
At Société Générale, international retail banking and financial
services helped offset sharply lower trading.
Its international retail banking and financial services division
posted a 36% jump in second-quarter net profit to EUR436 million,
while its global banking and investor solutions business--which
includes investment banking, security services and asset
management--posted a 36% drop in net profit to EUR448 million.
Net profit at Société Générale's retail bank in France was also
down 5% at EUR403 million.
The two banks said their capital buffers remained comfortably
above regulatory thresholds.
Société Générale's core tier one ratio, which compares top
quality capital such as equity and retained earnings with
risk-weighted assets, was stable at 11.1% in June while at Crédit
Agricole's it rose to 11.2% in June from 10.8% in March.
The sale of Crédit Agricole's 25% stake the bank holds in the
group's regional lenders should help lift its core tier one ratio
to 11.9%.
The bank, which is 56%-owned by the group's regional cooperative
lenders, said in February it would sell back the 25% stake it holds
in the group's regional lenders to ease concerns about its capital
strength.
Crédit Agricole said on Wednesday that it would book a EUR1.25
billion gain on the stake sale in the third quarter of 2016.
Write to Noemie Bisserbe at noemie.bisserbe@wsj.com
(END) Dow Jones Newswires
August 03, 2016 04:20 ET (08:20 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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