The second-largest public bank in France, Credit Agricole (CAGR.PA), exceeded third-quarter earnings forecasts on Wednesday thanks to robust results from its investment bank and retail businesses.
Its net income increased by 33% to 1.75 billion euros ($1.87 billion), surpassing the 1.37 billion analysts had predicted in a firm-conducted survey. Group sales exceeded analysts’ projections of 5.99 billion euros by 19%, reaching 6.34 billion euros.
Its bottom line benefited from lower-than-expected provisions of 429 million euros.
JP Morgan analysts praised a “solid Q3,” pointing out the lower-than-anticipated fees and increased income in investment banking, particularly from capital markets and securities services.
39 French mutual banks own the listed Credit Agricole Group, which said that its corporate and investment bank segment had revenue growth of over 9%, driven mainly by a 25.6% increase in trading in fixed income, currencies, and commodities (FICC).
Less volatile financial markets hurt investment banks’ profits. However, Credit Agricole fared better on that front than its two French competitors, Societe Generale (SOGN.PA) and BNP Paribas (BNPP.PA), as well as Deutsche Bank (DBKGn.DE) and Barclays (BARC.L).
Sales at its French retail banking sector increased by 0.4% as contracts for interest rate hedging somewhat offset a drop in the net interest margin interest (NIM), or earnings on loans less deposit charges, caused by rising deposit costs.
Its NIM increased by 48% in Italy, its second-largest market, as higher interest rates are passed on to consumers more quickly than in France, where nearly all mortgages are signed with fixed rates, and the government sets the interest rate on the most common savings account in the nation, thereby reducing bank margins.
Credit Agricole recently revealed plans to buy Belgian wealth management company Degroof Petercam. Credit Agricole already owns the largest fund manager in Europe, Amundi (AMUN.PA).
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