Credit Agricole Profit Plunges 67% on Retail Bank Write-Downs -- Update

By Noemie Bisserbe

PARIS--French bank Credit Agricole SA (ACA.FR) reported a sharp drop in fourth-quarter net profit Wednesday after booking write-downs at its domestic retail arm.

The Paris-based lender, France's second-largest listed bank by assets, said net profit fell 67% to 291 million euros ($308 million) in the three months through December from EUR882 million a year earlier, slightly below analysts' expectations of EUR301 million, according to data provider FactSet.

Excluding one-off items, however, Credit Agricole's profit was up 53% at EUR904 million, lifted by a strong investment banking and asset management business. Revenue rose 7% to EUR4.58 billion. Its shares were up 3.7% at EUR12.69 in early trading in Paris.

As with some other lenders, persistently low interest rates and loan renegotiations have eaten into the French bank's margins this year.

Credit Agricole booked a EUR491 million write-down at its LCL retail bank.

"There was a new wave of loan renegotiations in the second half of the year," Chief Executive Philippe Brassac told reporters. However, Mr. Brassac said there were "signs of improvement" in the fourth quarter.

LCL posted a 15% increase in net profit to EUR136 million in the quarter ended December, aided by a pickup in demand for new loans.

Net profit at its corporate and investment bank surged to EUR271 million from EUR76 million a year ago, buoyed by volatile markets.

Credit Agricole's insurance and asset management business reported a 14% increase in net profit to EUR448 million, while net profit for its specialized financial services business rose 15% to EUR170 million.

Amundi SA, Credit Agricole's fund manager, plans to carry out a capital increase in the first half of this year to help finance its EUR3.9 billion takeover of Pioneer Investments, the asset management unit of Italian lender UniCredit SpA (UCG.MI). Credit Agricole said it would retain a 70% stake in Amundi after the capital increase.

Net profit for its international retail banking business, which includes Italy, Poland and Egypt, fell 38% to EUR24 million.

Despite lower earnings in the quarter, Credit Agricole's core tier one ratio, which compares top quality capital such as equity and retained earnings with risk-weighted assets, stood at 12.1% in December, up from 12% in September.

The bank's leverage ratio, which measures capital held by the bank against its total assets, was 5% in December compared with 4.7% at the end of September.

The bank said it will pay shareholders a dividend of EUR0.60 a share for 2016.

-Write to Noemie Bisserbe at [e-mail]

(END) Dow Jones Newswires

February 15, 2017 03:46 ET (08:46 GMT)

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