AGRICULTURAL CREDIT: RUSSIA WEIGHTS ON FIRST TERM, DISAPPOINTMENT SOLVENT
by Julien Ponthus
PARIS (Reuters) – Crédit Agricole SA reported a sharp drop in profits in the first quarter on Thursday after it had set aside more than half a billion euros in provisions related to its exposure to Russia and Ukraine.
A lower-than-expected solvency ratio, higher-than-expected costs and favorable comparisons with its largest French competitors, BNP Paribas and Société Générale weighed on the group’s share price: it fell 2.13% to 10.18 euros in the middle of the morning. large 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 listed bank, said its net profit fell 47.2% year-on-year to 552 million euros after opting for “cautious” potential supply losses due to Russia’s invasion of Ukraine.
It has thus the full provision, ie for 195 million euros, the value of the equity of its Ukrainian subsidiaries, while the provisions on exposure to Russia amount to 389 million.
“The group has, financially, made a choice of prudence in the face of very low proven risk,” the general manager, Philippe Brassac, stated during a press briefing.
Without this choice, net profit for the quarter would increase by 10% and exceed one billion euros, he added, highlighting the increase in revenue across the group’s division and a reduction in the cost of risk outside Russia.
Some analysts point out, however, that costs were higher than estimated and are concerned about the 0.9 point decline in three months in the CET1 (core equity tier one) solvency ratio, to 11% at the end of March .
“We expect this to penalize the stock because that means excess capital is gone when there could be more wind against this year,” Jefferies said in a note, judging the overall quarterly results “not good enough”.
Exposure to Russia reduced by 20%
Crédit Agricole SA, which has suspended all activities in Russia, added that its exposure to this market has decreased by $ 1.1 billion since the beginning of the war and represents $ 4.4 billion at the end of March.
His chief financial officer, Jérôme Grivet, explained that given the financial strength of the group’s Russian counterpart, he was not particularly concerned about the risk of additional losses linked to residual exposure.
The group, which has set a goal of distributing half of its profits to its shareholders, has confirmed its intention to pay a dividend of 1.05 euros per share for 2021, which includes a redemption of 0.20 euros in dividends for 2019., the payment which was hindered by regulatory constraints.
In the first quarter, net banking income (NBI) increased by 8.1% to 5.938 billion euros, with the group’s entire business posting growing revenue.
Corporate banking and investment (BFI) activity posted a 4.3% growth in their hidden revenues to 1.425 billion euros despite a 2.8% decline in these market draws. Revenue from the Fixed Rate, Currency and Commodity (FICC) division fell 9.1%, a decline only partially offset by the 40.1% jump in equity activity.
Amundi, a listed asset management subsidiary, posted quarterly revenue of 835 million euros last month, an increase of 8.4% year-on-year, thanks to a 15% growth in assets under management.
The group’s leaders declined to give details of external growth strategies in Italy but said they hoped to develop the partnership with Banco BPM, in which Crédit Agricole took 9.2%, which fueled speculation about a possible control. .
They also declined to mention their medium- and long-term goals, which will be part of the strategic plan for 2025, the presentation of which is scheduled for June 22.
(Report by Julien Ponthus, French version by Marc Angrand, edited by Kate Entringer)