Cré dit Agricole Profit Jumps on Stake Sale Proceeds
November 08 2016 - 2:00AM
Dow Jones News
PARIS—French bank Cré dit Agricole SA said Tuesday that net
profit doubled in the third quarter, bolstered by the sale of its
shares in the group's regional lenders and a rebound in bond
trading.
The Paris-based lender, France's second-largest listed bank by
assets, said net profit rose to €1.86 billion ($2.05 billion) in
the three months to the end of September, from €930 million a year
ago, slightly above analysts' expectations. Revenue was down 5% at
€3.74 billion.
Cré dit Agricole booked a €1.25 billion gain in the quarter
after selling its 25% holding in the group's regional banks back to
those lenders. The bank, which is 56%-owned by the group's regional
lenders, had disclosed its restructuring plan in February to ease
concerns about its capital strength.
The sale helped lift Cré dit Agricole's core tier one ratio,
which compares top-quality capital such as equity and retained
earnings with risk-weighted assets, to 12% in September, up from
11.2% in June, well above the regulatory threshold. Cré dit
Agricole said it expected European regulators to set a minimum core
tier-one ratio of 7.25% for the bank next year.
"The issue of capital is now behind us," Chief Executive
Philippe Brassac told reporters.
This should allow the bank to propose a dividend in cash of
€0.60 a share this year, and pay out 50% of its profit to investors
from 2017, Cré dit Agricole said Tuesday.
Cré dit Agricole's move to revise its structure reflects the
pressure on European lenders to fortify their balance sheets and
maintain returns to investors despite sluggish growth and
persistently low interest rates.
This quarter's results highlight the pickup in bond markets that
has boosted the earnings of lenders on both side of the Atlantic,
such as France's BNP Paribas SA or U.S. lender Morgan Stanley.
Cré dit Agricole's corporate and investment bank posted a 47%
jump in net profit to €458 million, lifted by its fixed income
business.
Net profit for its specialized financial services business rose
10% to €157 million, while Cré dit Agricole's insurance and asset
management business reported a 37% net profit increase to €447
million.
Net profit for its international retail banking business, which
includes Italy, Poland and Egypt, rose 14% to €79 million.
In France, however, Cré dit Agricole's own domestic retail arm,
LCL, reported a loss of €30 million compared with a €149 million
profit a year ago, hurt by loan renegotiation and low interest
rates.
Write to Noemie Bisserbe at noemie.bisserbe@wsj.com
(END) Dow Jones Newswires
November 08, 2016 01:45 ET (06:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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