Wall St futures edge up after monthly gains; more earnings ahead
Investing.com -- Crédit Agricole S.A. (EPA:CAGR) shares slipped over 2% on Thursday after the French lender’s third-quarter profit missed expectations, as higher costs and weaker results in its French Retail and Asset Gathering divisions weighed on earnings.
Revenue for the French lender was 1% ahead of consensus, but operating expenses were 2% higher, leaving pre-tax profit 2% below market estimates on both a reported and underlying basis.
The group’s Common Equity Tier 1 (CET1) ratio held steady at 11.7%, matching consensus but declining about 20 basis points from the previous quarter.
The drop reflected retained earnings and a capital increase for employees that were outweighed by risk-weighted asset growth and the buyback of CACEIS minority interests.
Crédit Agricole’s overall performance was uneven across divisions. International Retail and the Corporate Centre exceeded forecasts, while French Retail and Asset Gathering fell short.
The Corporate Centre’s gains came from a higher valuation of its stake in Banco BPM, which Morgan Stanley said “analysts (had) not fully captured.”
French Retail missed estimates after costs rose 4% more than expected due to increased investments. Asset Gathering’s costs were 9% above expectations, partly reflecting €80 million in restructuring expenses booked entirely in the quarter.
Amundi, the asset management arm, reported a 28% year-on-year decline in gross operating income to €267 million, with revenues down 5% to €797 million.
Private Banking posted a 27% drop in gross operating income to €58 million. The Insurance unit’s gross operating income rose 4% from a year earlier to €572 million.
Loan-loss provisions were 2% worse than consensus, with the cost of risk rising to 35 basis points in the quarter, up slightly from the previous period.
Morgan Stanley said Stage 1 and 2 provisions saw small releases, while Stage 3 remained broadly flat.
Group net income was €1.84 billion, up 10% from a year earlier but down 23% from the second quarter. Revenue totaled €6.85 billion, while operating expenses climbed to €3.84 billion. Gross operating income was €3.01 billion, down 9% from the previous quarter.
Among major business lines, French Retail reported gross operating income of €345 million, down 7% year-on-year. International Retail rose 1% to €493 million, while Large Customers posted €853 million, 12% lower than the prior quarter.
Asset Gathering fell 10% to €897 million. The Corporate Centre recorded a gross operating loss of €11 million.
The bank’s CET1 capital stood at €48.2 billion, with risk-weighted assets of €413.6 billion. Deposits reached €877 billion, up 0.9% from the previous quarter, and gross loans were €559.8 billion.