By Silvia Aloisi and Matthieu Protard
PARIS (Reuters) – Shares in Credit Agricole SA fell 5% in early Thursday trading after the French bank reported lower-than-expected revenue in the third quarter, driven by weaker trading proceeds and withdrawals at asset manager Amundi.
Net income came in at 1.35 billion euros ($1.35 billion) in the three months to the end of September, down 3.6% from a year earlier but above a 1.17 billion euro average forecast in a Refinitiv poll of analysts, helped by lower provisions for souring loans and one-off items such as the sale of the La Medicale insurance business.
However, underlying revenues came in at 5.59 billion euros, 2% below forecast, and the CET 1 ratio – a key measure of financial strength – also weakening more than expected to 10.7%.
Credit Agricole “continues to suffer from a less favourable revenue mix than peers in the current context,” said Jefferies analysts, pointing to the fact that the bank is geared towards asset gathering activities that are being hit by market volatility, while it has more limited exposure to trading and car fleet management operations, which helped boost revenues at rivals BNP and Societe Generale.
Amundi, majority owned by Credit Agricole, last month posted net outflows of 12.9 billion euros for the third quarter, hurt by weak markets and concern about the economic outlook due to the war in Ukraine.
Credit Agricole, like most European banks, managed to take advantage of rising interest rates to post a strong increase in corporate loans, up by 15.4%, and consumer finance, which rose 12.6%.
However, capital markets and investment banking revenue, which have boosted rivals as they benefited from market volatility, fell by 5.7% in the quarter.
“Globally we have a lower risk profile than rivals, which means we may profit less from volatility,” said Credit Agricole Deputy Chief Executive Xavier Musca.
At 0836 GMT, the bank’s shares were down 4.7% at 9.24 euros.
Credit Agricole also said it was continuing negotiations with Italy’s Banco BPM SpA. It is competing with French insurer AXA SA to distribute non-life products through branches of Italy’s third-largest bank in a deal worth around 300 million euros, people familiar with the matter have said.
In a separate statement, SAS La Boetie, the main shareholder of Credit Agricole, said it would buy up to 1 billion euros of the bank’s shares by the end of the first half of 2023, likely helping support the bank’s share price going forward. That would take its stake to just over 60%, analysts said. The holding said it would not increase it beyond 65%.
($1 = 0.9996 euros)
(Reporting by Matthieu Protard and Silvia Aloisi; Editing by Christopher Cushing and Mark Potter)