(AOF) – Crédit Agricole Immobilier has completed the acquisition of Sudeco announced on March 14, 2023. Its subsidiary, CAI Corporate et Promotion (CAICP), has signed the final deed of acquisition of Sudeco, a Property Management player (trustee, rental and technical management) and specialist in commercial real estate, with Casino Immobilier. This signature comes after consultation with the Sudeco staff representative bodies.
With this operation, Crédit Agricole Immobilier becomes the fourth player in institutional Property Management in France in terms of turnover, enabling it to accelerate its strategic ambition to join the top three in the sector by 2025.
This transaction will have a negligible negative impact on the core capital ratio (CET1) of Crédit Agricole SA and the Crédit Agricole Group.
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Key points
– Listed vehicle of the mutualist group of the same name, 1st French bank and 8th worldwide;
– Net banking income of €22.7 billion, generated by retail banking at 65%, by specialized financial services at 12%, by wholesale banking at 14% and by savings management and insurance ;
– Business model in 3 points – relational excellence by becoming the preferred bank for individuals, entrepreneurs and institutions, local responsibility to support digitalisation and societal commitment by amplifying mutualist commitment;
– Capital held at 55.3% by the regional mutuals, hence the strong presence of their representatives on the Board of Directors (10 out of 21 members) chaired by Dominique Lefebvre, Philippe Brassac being Chief Executive Officer;
– Solid financial position: CET 1 ratio of 11.2%, leverage ratio of 3.6% and cash reserves of €467bn.
Challenges
– New “Ambitions 2025” plan:
– net income above €6 billion and return on tangible equity above 12%,
– acceleration of technological and digital transformation with a €20 billion budget for IT and digital, including €1 billion for technological transformation,
– distribution in cash of 50% of the result;
– Innovation strategy, one of the 3 levers of the business model:
– internally: 90% of Group entities having a “data-centric” architecture in 2022, and €300 million in IT efficiency gains, 100% of IT employees trained in new technologies in the University of the ‘Information and 100% of emerging technologies tested on new business services,
– towards customers: expansion of the range of leading applications (Ma banque Pro, Pro&Entreprises LCL, etc.), offer of digital and mobile checkout solutions for small/medium-sized merchants, European electronic banking offer for large brands and complete range -trade ;
– Environmental strategy aiming for carbon neutrality in 2050 for own footprint and investment and financing portfolios.
Challenges
– Integration of Italian CreVal and Lyxor;
– High impact of provisions and the rise in the cost of risk in the Ukraine and Russia zone, resulting in a 16.1% decline in net profit in the 1st half;
– Difficult market outlook for the 2nd half, excluding the United States: sharp fall in growth and rise in inflation in Europe, stagflation in emerging countries and rise in key rates.
– Share buyback programs.
The negative effects of rising interest rates
The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects an average increase of 18% in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.