Credit Agricole Profit Plunges 67% on Retail Bank Write-Downs -- Update
February 15 2017 - 4:01AM
Dow Jones News
By Noemie Bisserbe
PARIS--French bank Credit Agricole SA (ACA.FR) reported a sharp
drop in fourth-quarter net profit Wednesday after booking
write-downs at its domestic retail arm.
The Paris-based lender, France's second-largest listed bank by
assets, said net profit fell 67% to 291 million euros ($308
million) in the three months through December from EUR882 million a
year earlier, slightly below analysts' expectations of EUR301
million, according to data provider FactSet.
Excluding one-off items, however, Credit Agricole's profit was
up 53% at EUR904 million, lifted by a strong investment banking and
asset management business. Revenue rose 7% to EUR4.58 billion. Its
shares were up 3.7% at EUR12.69 in early trading in Paris.
As with some other lenders, persistently low interest rates and
loan renegotiations have eaten into the French bank's margins this
year.
Credit Agricole booked a EUR491 million write-down at its LCL
retail bank.
"There was a new wave of loan renegotiations in the second half
of the year," Chief Executive Philippe Brassac told reporters.
However, Mr. Brassac said there were "signs of improvement" in the
fourth quarter.
LCL posted a 15% increase in net profit to EUR136 million in the
quarter ended December, aided by a pickup in demand for new
loans.
Net profit at its corporate and investment bank surged to EUR271
million from EUR76 million a year ago, buoyed by volatile
markets.
Credit Agricole's insurance and asset management business
reported a 14% increase in net profit to EUR448 million, while net
profit for its specialized financial services business rose 15% to
EUR170 million.
Amundi SA, Credit Agricole's fund manager, plans to carry out a
capital increase in the first half of this year to help finance its
EUR3.9 billion takeover of Pioneer Investments, the asset
management unit of Italian lender UniCredit SpA (UCG.MI). Credit
Agricole said it would retain a 70% stake in Amundi after the
capital increase.
Net profit for its international retail banking business, which
includes Italy, Poland and Egypt, fell 38% to EUR24 million.
Despite lower earnings in the quarter, Credit Agricole's core
tier one ratio, which compares top quality capital such as equity
and retained earnings with risk-weighted assets, stood at 12.1% in
December, up from 12% in September.
The bank's leverage ratio, which measures capital held by the
bank against its total assets, was 5% in December compared with
4.7% at the end of September.
The bank said it will pay shareholders a dividend of EUR0.60 a
share for 2016.
-Write to Noemie Bisserbe at noemie.bisserbe@wsj.com
(END) Dow Jones Newswires
February 15, 2017 03:46 ET (08:46 GMT)
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