Credit Agricole Q1 Profit Misses Estimates as Loan Provisions Rise on Iran War Uncertainty
Credit Agricole First-Quarter 2024 Financial Results Overview
By Mathieu Rosemain
Q1 Earnings and Revenue Performance
PARIS, April 30 (Reuters) - Credit Agricole SA missed first‑quarter earnings forecasts on Thursday, as the French bank hiked the money set aside for potential bad loans including to cover the fallout of the Iran war.
The French lender also reported a dip in revenue at its investment bank.
Overall, first‑quarter net income rose 1.8% from a year earlier to 1.68 billion euros ($1.96 billion), the bank said, slightly below an analyst consensus of 1.72 billion euros.
Revenues edged up 0.9% to 6.99 billion euros, also missing expectations of 7.06 billion euros.
Loan Loss Provisions and Risk Management
The cost of risk – provisions for potential bad loans – jumped more than 32% to 547 million euros.
Of that amount, around 100 million euros relate to precautionary provisions, Chief Financial Officer Clotilde L’Angevin told reporters.
Impact of Middle East Uncertainty
The bank is bracing for a possible deterioration in the macroeconomic outlook, particularly due to risks stemming from the Middle East, rather than responding to a material increase in defaults, she told reporters.
“This is prudent provisioning, and the actual risk remains very contained; it is even down compared with the fourth quarter,” L’Angevin added.
“Within the 100 million euros, we have 28 million euros of sectoral and geographic provisions at CACIB,” Credit Agricole’s investment banking arm, “for example on petrochemicals and aviation,” she said.
Analyst and Industry Reactions
Analysts warn that a prolonged conflict and sustained high energy prices could force banks to bolster provisions, although assessing the impact of the war on the global economy and on banks so early on is hard.
Deutsche Bank and Lloyds are among other lenders to set aside more money this week due to the conflict.
Investment Banking and Strategic Developments
Credit Agricole’s investment banking unit reported a 4% decline in sales, with revenue from fixed income, currencies and commodities down 9%, underperforming Deutsche, French rival BNP Paribas and several Wall Street peers.
International Expansion and Share Buyback
Italy, the bank’s largest market outside France, remains a strategic priority. Credit Agricole recently increased its stake in Banco BPM to 22.9% and filed a slate of seven board candidates, stopping short of seeking management control.
Separately, SAS Rue La Boetie, the investment vehicle controlled by Credit Agricole’s 39 mutual banks, said it planned to buy up to 800 million euros of Credit Agricole shares by the first quarter of 2027, while keeping its stake below 65%.
($1 = 0.8565 euros)
(Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes)
