Paris â€" Crédit Agricole, the big French bank, said on Tuesday that its second-quarter profit grew more than 12 times compared to the same period last year following its exit from Greek and Italian units that had weighed on its results.
The bank, based in Paris, reported a net profit of 696 million euros, or $922 million, for the April-June period, up from 56 million euros in the same three months a year ago and better than the roughly 500 million euros that analysts had been expecting. The year-earlier figure was restated from a previously reported 111 million euro profit. Revenue slipped 0.9 percent to 4.4 billion euros.
The latest quarterly showing marked a sharp contrast with the same period a year ago, when a loss of 370 million euros on its Emporiki Bank business in Greece and 427 million euros on its stake in Intesa Sanpaolo of Italy held back earnings. Those investments soured when the euro crisis led to a run on the bonds of “peripheral†euro zone governments.
Crédit Agricole’s shares, which have more than doubled over the last 12 months, rose 1.4 percent in Paris morning trading on Tuesday.
Jean-Paul Chifflet, Crédit Agricole’s chief exeuctive, said in a statement that the results confirmed that the bank “has changed its profile and is adapting to the prevailing context and the new regulations.â€
The corporate and investment banking unit’s net profit rose 38 percent, to 277 million euros, as it focused its efforts on debt markets. Crédit Agricole also said that its domestic retail business posted a 3.4 percent increase in revenue, despite the “persistently lackluster†French economy.
The bank also said that its capital position had improved. For the Crédit Agricole Group, which is larger than the Crédit Agricole S.A. business that trades on the stock exchange, the capital ratio, a measure of its financial resiliency, rose to 10 percent on a “fully loaded†basis by June 30 according to the Basel III Common Equity Tier 1 standard from 9.6 percent at the end of March. The group’s leverage ratio - capital divided by total assets - was 3.5 percent on that date, it said. The bank did not break out either figure for the listed company.
Jon Peace, an analyst with Nomura in London, wrote in a research note that the results would probably lead to a modestly positive reappraisal of the bank among investors, and he praised its “much improved risk profile.â€
The strong earnings follow Crédit Agricole’s sale of Emporiki and and its stake in Intesa Sanpaolo last year. The two units contributed to Crédit Agricole’s annual loss of 6.5 billion euros last year, its largest ever.
Continuing its retreat from the international expansion, the bank last week announced the sale of the remaining 80 percent of CLSA, its Asian investment banking business, to Citic Securities, the Chinese investment bank, for $841 million. The proceeds of that sale would be booked as part of third-quarter results, it said.
