Crédit Agricole Profit Jumps on Stake Sale Proceeds -- Update
November 08 2016 - 3:36AM
Dow Jones News
By Noemie Bisserbe
PARIS--French bank Crédit Agricole SA said 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 bank's shares opened 4.8% higher following the announcement
Tuesday.
The Paris-based lender, France's second-largest listed bank by
assets, said net profit rose to EUR1.86 billion ($2.05 billion) in
the three months to the end of September, from EUR930 million a
year ago, slightly above analysts' expectations. Revenue was down
5% at EUR3.74 billion.
Crédit Agricole booked a EUR1.25 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 Crédit 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. Crédit 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
EUR0.60 a share this year, and pay out 50% of its profit to
investors from 2017, Crédit Agricole said Tuesday.
Crédit 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.
Crédit Agricole's corporate and investment bank posted a 47%
jump in net profit to EUR458 million, lifted by its fixed income
business.
Net profit for its specialized financial services business rose
10% to EUR157 million, while Crédit Agricole's insurance and asset
management business reported a 37% net profit increase to EUR447
million.
Net profit for its international retail banking business, which
includes Italy, Poland and Egypt, rose 14% to EUR79 million.
In France, however, Crédit Agricole's own domestic retail arm,
LCL, reported a loss of EUR30 million compared with a EUR149
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 03:21 ET (08:21 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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