Credit Agricole's Strategy to Protect Italian Banking Interests

By Mathieu Rosemain

PARIS (Reuters) -Credit Agricole has vowed to defend its interests in Italy, with outgoing CEO Philippe Brassac saying the French bank had no plans to buy Banco BPM, which is the target of an unsolicited bid from UniCredit.

"Our only motivation is to defend our own interests, we are not biased," Brassac said of Credit Agricole raising its stake in BPM, Italy's third-largest lender to 15.1% in December.

Credit Agricole on Wednesday exceeded quarterly earnings forecasts with a 27% jump in profit as France's second-biggest listed bank reported growth in it insurance, asset management and investment banking divisions.

Although investment banking lagged its rivals, Credit Agricole still reported record full-year sales and net income.

The bank is the latest to show the benefit of soaring demand from clients wanting to trade in global markets, particularly in the final three months of 2024, after rival BNP Paribas beat expectations on Tuesday.

For the three months ending in December, its net income rose 27% from a year earlier to 1.69 billion euros, beating the 1.32 billion euro average analyst estimate it had compiled. 

Revenue was 7.1 billion euros, up 17%, also above an average forecast of 6.53 billion euros.

Analysts at Royal Bank of Canada called it a "strong set of results" in a note to clients.

Credit Agricole's shares rose 1.4% in Paris trading, outperforming France's benchmark blue-chip index CAC 40. The stock has risen 11% year-to-date, slightly ahead of other European banks.

Its asset management arm, Amundi, Europe's largest fund manager, saw quarterly sales rise 14.5% year-on-year.

Credit Agricole's investment banking revenues reached a record 1.57 billion euros, but sales from trading in fixed income, currencies and commodities, while rising 17%, underperformed BNP and the average 26% year-on-year increase recorded by Wall Street banks, according to Jefferies.    

The listed entity of the larger Credit Agricole Group, composed of 39 regional banks, said the results meant it had reached its 2025 targets a year early, including a return on tangible equity of more than 12%.

Analysts said while the results were good, they awaited new targets and more about a future strategy under a new CEO.

ITALIAN BATTLES

Bumper profits have left European banks flush with cash and encouraged some CEOs to bid for rivals, including in Italy, where ongoing takeover battles have drawn in Credit Agricole. Italy is its biggest market outside France. 

"Key questions from here for Credit Agricole remain Italian development plans as well as new MTP (medium-term plan) targets and ambitions from the new CEO (Olivier Gavalda)," Barclays analysts said in a note.

Credit Agricole, which became BPM's main investor in 2022 shortly after an earlier aborted takeover attempt of BPM, partners with the Italian bank in consumer credit and insurance while Amundi has a distribution contract with UniCredit that runs out in 2027.

SAS Rue La Boetie, the controlling entity of Credit Agricole, said in a separate statement that it intended to buy up to 500 million euros worth of Credit Agricole shares by the end of the third quarter.

Credit Agricole also said it would propose a dividend of 1.10 euro per share, up 5% from a year earlier.

($1 = 0.9633 euros)

(Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes, Emelia Sithole-Matarise and Alexander Smith)