Credit Agricole beats profit expectations, capital markets unit lags

Credit Agricole SA’s (CAGR.PA) third-quarter profit beat expectations on Wednesday, due to lower pandemic-related provisions for bad loans, but the French bank still lagged rivals in capital markets.

France’s second-biggest listed lender did not benefit from the rebound in equity trading in the quarter as it is less exposed to the equity derivatives market than European peers.

Revenue in capital markets was down 18.7%. That compares with a 8.4% rise in capital markets revenue at Societe Generale (SOGN.PA) and a 1.2% increase at BNP Paribas (BNPP.PA).

“It is a matter of long-term policy on our side,” Brassac told reporters.

Shares in Credit Agricole were down 1.75% by 0928 GMT, underperforming a rise of 0.30% in the Stoxx Europe 600 Banks index (.SX7P).

Analysts at JP Morgan and Jefferies said revenue in capital markets was below expectations as well as in insurance, but higher in financing activities, French retail banking and asset management.

Credit Agricole said net income rose 43.5% in the third quarter to 1.40 billion euros ($1.62 billion) and beat a mean forecast for 1.23 billion in a poll of analysts compiled by Refinitiv.

Revenue was up 7.4% at 5.53 billion euros, above analysts’ forecast of 5.46 billion, while its cost of risk, reflecting provisions against bad loans, fell by 56.1%.

Brassac confirmed the lender was on track to meet its 2022 targets, including a net profit of 5 billion euros.

“There is no reason today to change our target,” Brassac said.

In retail banking, revenue was up 5.1% in France and rose 32.6% in Italy, where the lender acquired local lender Creval this year.

In corporate and investment banking (CIB), revenue was down 3.7%, led by a drop of 23.7% in fixed income, currency and commodities trading.