Credit Agricole’s Profit Decline: Key Insights and Analysis

Credit Agricole’s Financial Performance Overview

By Mathieu Rosemain

PARIS, Feb 4 (Reuters) – Credit Agricole reported a 39% fall in fourth-quarter profit on Wednesday, hit by a one-off charge related to the French bank’s increased stake in Italy’s Banco BPM, rising costs and losses at its car-leasing business.

France’s third-largest listed lender said net income dropped to 1.03 billion euros ($1.22 billion), narrowly above analyst expectations of 996 million euros. Revenue fell 1.8% to 6.97 billion euros, beating the 6.78 billion euro consensus.

Impact of Banco BPM Stake Increase

The bank had to book a 607 million euro accounting charge after raising its stake in Banco BPM above 20%, triggering a change in how it accounts for the investment. The adjustment is non-recurring and does not involve any cash outflow.

Investment Banking Performance

Like several European lenders, Credit Agricole has benefited from higher interest rates and resilient loan demand, particularly in its international and corporate businesses, even as French retail margins have remained under pressure.

Credit Agricole is also focused on trying to protect and strengthen its position in Italy’s banking industry amid a wave of consolidation in a market crucial for the lender.

CEO Olivier Gavalda stated that the bank would seek greater influence at BPM. “We demand to have a position on the board that equals our 20%… so 20% representation on BPM’s board,” Gavalda told reporters.

Banco BPM is set to strengthen minority shareholders’ representation by doubling to six the maximum number of board seats they can secure, documents showed earlier this month.

INVESTMENT BANKERS UNDERPERFORM RIVALS

Credit Agricole’s investment banking unit posted record fourth-quarter, though growth in its fixed income, currencies and commodities business was weaker than at Deutsche Bank and Wall Street rivals JPMorgan and Goldman Sachs.

Operating Expenses and Future Outlook

Operating expenses rose 4.7% to 4.1 billion euros, exceeding analyst expectations of 3.9 billion euros. The increase was partly due to 65 million euros in restructuring costs in Italy aimed at boosting the bank’s “digital dimension,” Chief Financial Officer Clotilde L’Angevin said.

L’Angevin said the bank would eventually cut staff numbers in Italy by 500 to 11,500.

Credit Agricole’s car-leasing joint venture with automaker Stellantis, Leasys, recorded a 111 million euro loss in the fourth quarter after writing down the value of secondhand cars.

Credit Agricole proposed a dividend of 1.13 euros per share for 2025, up 3% year-on-year and in line with expectations.

($1 = 0.8462 euros)

(Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes)