Crédit Agricole reports highest-ever second-quarter profits

Credit Agricole SA updates

Crédit Agricole reported its highest-ever second-quarter profits as France’s second-biggest bank joined its peers in posting lower pandemic-related charges against bad loans as the economic outlook brightens.

Net income more than doubled to €1.97bn from a year earlier and was 60 per cent higher than pre-pandemic levels in the same quarter of 2019. It was also 60 per cent above analysts’ expectations of €1.2bn.

The bank’s cost of risk to cover possible defaults was down 67 per cent to €279m, substantially below both pre-pandemic levels and analysts’ forecasts closer to €491m.

Fearing the worst from the pandemic, Europe’s banks collectively set aside tens of billions of euros in July 202 to cover an anticipated wave of loan defaults as their shares tumbled.

But the nascent economic recovery this year — supported by generous government support packages, including furlough schemes and business loans — has enabled a rise in profits and a sharp drop in provisions across European banks. French rival Société Générale this week also reported a resurgence from last year’s steep trading losses, posting its best first-half performance in five years.

Philippe Brassac, chief executive of Crédit Agricole, said the state had taken action “efficiently”, creating a “safer risk paradigm for banks”. But he stopped short of providing guidance for the second half of the year.

As part of an emergency package of measures, the French state guaranteed €300bn of bank loans to businesses last year to ensure they did not collapse for want of liquidity.

Crédit Agricole’s revenues rose 19 per cent to €5.8bn, 9 per cent above consensus expectations, driven in large part by its insurance business and revenues at Amundi, Europe’s largest asset manager.

Crédit Agricole’s share price, which is up this year by 15 per cent and about double its level in April 2020, was flat in early morning trading on Thursday.

Amundi, which sells products through partner banks that take a fee, was formed in January 2010, bringing together the investment arms of SocGen and Crédit Agricole, which owns 70 per cent

Crédit Agricole announced it would spend €500m on its share buyback scheme in the fourth quarter of 2021. SocGen will start buying back €470m of shares in the fourth quarter and reinstate dividend payments, following the lifting of restrictions on European banks.

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