Crédit Agricole: With its successes in the markets, Crédit Agricole SA is smashing expectations

(BFM Bourse) – The listed structure of the green bank published a profit of 1.23 billion euros in the first quarter, very much higher than analysts’ forecasts.

Crédit Agricole SA tops the bill this Wednesday and does not have to be ashamed of the comparison with BNP Paribas. The action of the listed structure of the mutual bank prances at the top of the CAC 40, taking 5.5% at the start of the afternoon thanks to quarterly accounts welcomed by the market.

Crédit Agricole SA unveiled financial results “impressively above expectations”, summarizes Jefferies in a note published on Wednesday. Over the first three months of the year, Crédit Agricole SA recorded a net profit of 1.23 billion euros, nearly 50% more than the consensus expected, notes Jefferies.

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A “record” performance for the CIB

Net banking income, equivalent to bank turnover, stood at 6.12 billion euros, up 9.6% over one year and 4% higher than expected. The green bank was carried by the corporate and investment bank, which recorded a “record performance”, according to the group over the first three months of the year.

Capital markets and investment banking thus generated growth of almost 37% in its underlying income. Analysts highlight the dynamics of the FICC division, i.e. fixed-rate products such as currencies, commodities and bonds, which grew by 42% in the first quarter. This business benefited from “the recovery of the primary credit market and the performance of hedging products”, explained Crédit Agricole SA.

An indicator followed by the market and analysts, the CET 1 solvency ratio also exceeded expectations, standing at 11.5% or 50 basis points (0.5 points) better than expected by the consensus, notes KBW bank.

Another source of satisfaction, the cost of risk, i.e. the provisions that a bank sets aside to deal with outstanding payments on commitments, fell by nearly 50% over one year to 378 million euros and turned out to be 28% weaker than expected by analysts, also notes KBW.

A possible slowdown for the future

The cost/income ratio (a ratio which divides operating expenses by net banking income) stood at 54.4% against 55.9% a year earlier. Crédit Agricole SA benefited from a positive jaws effect, with costs increasing much less sharply than revenues.

However, these excellent results cannot necessarily be reproduced in the coming quarters. Jefferies thus considers that part of the factors explaining the outperformance at the start of the year will not be considered “sustainable”, citing in particular the strength of the FICC division.

Crédit Agricole SA does not rule out a less buoyant momentum over the coming months. “I think there will obviously be a form of slowdown. (…) With market volatility decreasing, the hedging needs of our customers are also decreasing,” said Xavier Musca, Deputy CEO of Crédit Agricole SA in charge of of large customers, during a press conference, quoted by Reuters.

It should be noted that at the level of the Crédit Agricole group, and more precisely of the regional banks, the production of credit fell by 6.2% over one year with a marked drop in housing loans of 14.3% over one year. . The net banking income of the regional mutuals was compressed, in total, by 9.6% to 3.33 billion euros.

Julien Marion – ©2023 BFM Bourse