(Boursier.com) — Following the announcement by Agricultural credit SA of its new Medium-Term Plan “Ambitions 2025” on 22 June 2022, Crédit Agricole SA draws the attention of investors to the following risk factors relating to the achievement of the objectives set in the 2025 Medium-Term Plan.
Crédit Agricole SA may not be able to achieve the objectives set in its 2025 Medium Term Plan.
On June 22, 2022, Crédit Agricole SA announced its new Medium-Term Plan for 2025: “Ambitions 2025” (the “2025 Medium-Term Plan”). The 2025 Medium-Term Plan is based on the strength of the Crédit Agricole Group’s development model, based on global and lasting relationships serving all customers, in all territories, and through all channels. This development is also based on businesses that are pursuing their own development dynamics and have become leaders and consolidators in their respective markets.
The 2025 Medium-Term Plan is also based on the Crédit Agricole Group’s organic growth strategy. The Group is thus aiming for one million additional customers in retail banking by 2025 and intends to increase the equipment of customers in protection insurance, savings solutions and real estate. It aims to expand and adapt its offers (more accessible, more responsible and more digital) in order to support new worlds of need. In addition, the strategy of partnerships and targeted acquisitions will continue, in compliance with profitability constraints (ROI of more than 10% in 3 years). Crédit Agricole SA thus aims to forge new distribution partnerships with financial players, as well as industrial and technological partnerships. As part of the 2025 Medium-Term Plan, Crédit Agricole SA also aims to develop its global businesses, accelerate its growth in cross-functional businesses such as payments, real estate, digital banks and technology as-a-service. , and accelerate technological, digital and human transformation.
The 2025 Medium-Term Plan includes a certain number of financial objectives relating in particular to the cost/income ratio, the net result, the return on equity and the equity adequacy ratios. These financial objectives were established primarily for internal planning and resource allocation purposes, and are based on a number of assumptions relating to the economic climate and the activity of Crédit Agricole SA’s business lines. These financial objectives do not constitute projections or forecasts of results. The current results of Crédit Agricole SA are likely to deviate (and could deviate significantly), in several respects, from these objectives, and in particular if one or more of the risk factors described in this section materialize.
For example, Crédit Agricole SA is pursuing the following objectives, presented in the 2025 Medium-Term Plan: to achieve net income, Group share, of more than €6 billion by the end of 2025; maintain a cap on the cost/income ratio over the entire duration of the 2025 Medium-Term Plan at 60%, which will be reduced to 59% when the IFRS17 reform has been implemented; achieve a return on tangible equity (ROTE) above 12% by the end of 2025; target throughout the 2025 Medium-Term Plan a CET1 ratio of 11% and a floor at all times of 250 basis points above the SREP requirements (pursuing a strategy of optimizing the AT1 capital compartment). The 2025 Medium-Term Plan also provides for a dividend distribution target for Crédit Agricole SA of 50% in cash, even if the CET1 ratio fluctuates around the target set in the 2025 Medium-Term Plan. In 2023 , Crédit Agricole SA also intends to submit for the approval of the General Meeting of its shareholders the additional payment of EUR 0.20 per share which had not been distributed as part of the 2019 dividend.
Furthermore, as a responsible and committed player, the Crédit Agricole Group is adopting an approach for a just climate transition that preserves social and territorial cohesion. This approach is based on three priorities: acting for the climate, strengthening social cohesion by acting in particular for equal access to healthcare, and making agricultural and agri-food transitions a success.
For the climate, the Group’s action is part of contributing to planetary carbon neutrality by 2050. At the end of 2021, Crédit Agricole initiated a major methodological project aimed at defining decarbonization trajectories for ten sectors of the economy financed by the bank, applicable to each business line and each entity. These ten sectors represent 75% of global carbon emissions and 60% of the Group’s assets. The work is based on the International Energy Agency’s Net Zero Emissions scenario and adopts the principles of the Glasgow Financial Sector Alliance aimed at charting a course for a gradual divestment from the assets with the highest CO2 emissions. This path is complex. It requires reinforced dialogue with the Group’s customers in order to enable the decarbonisation of the economy while avoiding a social shock.
The Crédit Agricole Group has already charted its course for gradual withdrawal from the Oil and Gas sector by setting a target for reducing CO2 emissions linked to the financing of this sector by 30% in absolute value between 2020 and 2030. We we are also committed to supporting the decarbonization of the automotive sector by reducing the carbon intensity of our sector portfolio by less than 50% over this same period (Crédit Agricole CIB, Crédit Agricole Consumer Finance and Crédit Agricole Leasing & Factoring portfolios).
With regard to the objective of reducing our own carbon footprint, scope 1 and 2 (energy, fleet and business travel) it has also been set at less than 50% by 2030.
“The sectoral trajectories which we will continue to define and publish in 2022 and 2023 will be accompanied by action plans intended to guarantee their implementation. With regard to the oil and gas sector, the action plan will notably involve the adoption of a new policy, in line with the recommendations of the Glasgow Financial Sector Alliance for NetZero.
At the same time, Crédit Agricole is accelerating its support for renewable energies by targeting a 60% growth in exposure to low-carbon energies for CACIB by 2025 and reaching 14 GW of installed capacity through Crédit Agricole Assurances’ investments. in 2025″.
To go further, the Crédit Agricole Group is structuring itself and launching two new businesses:
– Crédit Agricole Transitions & Energies, to make energy transitions accessible to all,
– Crédit Agricole Santé & Territoires to facilitate access to healthcare and aging well.
Failure to comply with these ESG commitments could damage the reputation of the Crédit Agricole Group and therefore that of Crédit Agricole SA, which could have a negative impact on its activities.
More generally, the success of the 2025 Medium-Term Plan is based on a large number of initiatives of varying scale, to be deployed within the various entities of the Crédit Agricole Group. Although many of the objectives set in the 2025 Medium Term Plan should be attainable, it is not possible to predict which will be achieved and which will not. The 2025 Medium-Term Plan also provides for significant investments, their return could however be lower than forecast if the objectives pursued under the 2025 Medium-Term Plan are not ultimately achieved. Thus, if Crédit Agricole SA were unable to achieve the objectives defined in the 2025 Medium-Term Plan (in whole or in part), its financial situation and its results could be adversely affected significantly.