AGRICULTURAL CREDIT: RUSSIA WEIGHES IN FIRST QUARTER, SOLVENCY DISAPPOINTS
by Julien Ponthus
PARIS (Reuters) – Crédit Agricole SA on Thursday reported a sharp decline in first-quarter profits after recording more than half a billion euros in provisions related to its exposure to Russia and Ukraine.
A below-expected solvency ratio, higher-than-expected costs and unfavorable comparisons with its major French competitors, BNP Paribas and Société Générale, weighed on the group’s share price: it fell by 2.13% to EUR 10.18 by mid-morning, the biggest drop in the CAC 40 index , then up 1.83%.
At the same time, Societe Generale won 1.72% and BNP Paribas 1.98%.
Crédit Agricole SA (CASA), France’s second-largest publicly traded bank, said its net profit fell 47.2% year-on-year to EUR 552 million after opting for “prudent” loss provisions due to Russia’s invasion of Ukraine .
It has thus made a full provision, ie EUR 195 million, of the equity value of its Ukrainian subsidiary, while the provisions for exposure to Russia amount to EUR 389 million.
“The group has made a prudent financial choice in light of very low proven risks,” said its general manager, Philippe Brassac, at a press conference.
Without this choice, net profit for the quarter would have increased by 10% to more than one billion euros, he added, focusing on the increase in revenues in all divisions of the group and a reduction in risk costs outside Russia. .
However, some analysts point out that costs were higher than budgeted and are concerned about the 0.9 point three-month drop in the CET1 (“core equity tier one”) solvency ratio, to 11% at the end of March.
“We expect this to hurt stocks because it means excess capital is gone if there could be even more headwinds this year,” Jefferies said in a note, assessing quarterly results overall. “not good enough”.
EXPOSURE TO RUSSIA REDUCED BY 20%
Crédit Agricole SA, which has ceased all its activities in Russia, added that its exposure to this market had decreased by 1.1 billion euros since the beginning of the war and stood at 4.4 billion euros at the end of March.
The chief financial officer, Jérôme Grivet, explained that given the financial strength of the group’s Russian counterparties, he was not particularly concerned about the risk of additional losses associated with residual exposure.
The group, which has set itself the goal of distributing half of its profits to its shareholders, has confirmed its intention to pay a dividend of EUR 1.05 per share for 2021, in which a catch-up of EUR 0.20 from the dividend for 2019 is included. , the payment of which was prevented by legal restrictions.
In the first quarter, net banking income (NBI) increased by 8.1% to EUR 5.938 billion, with all business units of the group posting rising revenues.
The corporate and investment banking (SFI) activities grew 4.3% of their underlying revenues to 1.425 billion euros, despite a 2.8% decrease in revenues from the markets. Fixed Rates, Currencies and Commodities (FICC) revenues declined 9.1%, only partially offset by the 40.1% increase in equity activity.
Listed asset management subsidiary Amundi last month reported quarterly revenue of 835 million euros, up 8.4% year over year, thanks to a 15% growth in assets under management.
The group’s leaders declined to provide details on their external growth strategy in Italy, but said they hoped to develop the partnership with Banco BPM, of which Crédit Agricole took 9.2%, fueling speculation about a possible acquisition.
They also declined to disclose their medium and long-term goals, which will be part of the 2025 strategic plan, which is scheduled to be presented on June 22.
(Report Julien Ponthus, French version Marc Angrand, edited by Kate Entringer)