Credit Agricole Exceeds Q2 Forecasts, Dismisses Monte Paschi-Banco BPM Merger Rumors
Credit Agricole's Q2 Performance and Strategic Outlook
By Mathieu Rosemain
Strong Second-Quarter Earnings
PARIS, July 31 (Reuters) - France's Credit Agricole posted better-than-expected second-quarter earnings on Friday, driven by growth across its retail, asset management and investment banking businesses, while its CEO dismissed reports Italy's Monte dei Paschi and Banco BPM were in talks to combine as "false".
Key Financial Highlights
Net income attributable to shareholders inched up 1.4% year-on-year to €2.05 billion ($2.36 billion), excluding a one-off gain booked a year earlier, beating a company-compiled analyst consensus of around €1.9 billion.
Revenue increased 7.7% to €7.36 billion, also ahead of expectations, while operating expenses rose 4.6% to €3.87 billion.
Investment Banking and Trading Performance
Investment banking revenue rose 4.4%, supported by strong performance in its structured equity and equity businesses, while fixed income, currencies and commodities trading revenue was broadly stable.
That growth was far below the stellar numbers seen at most of its rivals including BNP Paribas, however, after conflict in the Middle East sparked a wave of trading activity.
Retail Banking Growth
In France, retail banking unit LCL benefited from a continued recovery in net interest income, while the group's Italian retail operations also posted a growth.
Expansion and Competitive Landscape
Strategic Acquisitions and Market Diversification
Credit Agricole has emerged as one of Europe's most acquisitive banks in recent years, expanding in wealth management, building its presence in Italy and pursuing growth opportunities in Germany as it seeks to diversify beyond its mature French retail market.
Cost Pressures and Competition
Like domestic rivals BNP and Societe Generale, however, it faces pressure to control costs while competing against U.S. investment banking giants and digital retail challengers.
Italy in Focus
Strategic Importance of the Italian Market
Italy, Credit Agricole's second-largest market, remains central to its strategy.
Banco BPM Stake and Sector Consolidation
The lender recently increased its stake in Banco BPM to 29.3%, strengthening its influence at a time when a wave of consolidation is reshaping Italy's banking sector.
Merger Rumors and Official Statements
Asked about a potential talks between Banco BPM and Monte dei Paschi di Siena, Chief Executive Olivier Gavalda said Credit Agricole had received no proposal or information regarding any possible deal.
"We have received no project, no information on a potential combination between MPS and BPM," Gavalda told reporters. "Everything that has been written in the press is completely false as of today."
MPS is also the subject of a takeover offer from Italy's biggest bank, Intesa Sanpaolo.
Credit Agricole's Position in Italian Banking
Credit Agricole Deputy Chief Executive Jerome Grivet said the bank's holding in BPM made it an unavoidable stakeholder.
"Nothing can happen against us or without us," Grivet said.
($1 = 0.8673 euros)
(Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes)
