Credit Agricole Update
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Crédit Agricole reported its highest-ever second-quarter profit because the second-largest bank in France, along with its peers, reduced the cost of non-performing loans related to the pandemic as the economic outlook improves.
Net income more than doubled from the same period last year to 1.97 billion euros, 60% higher than the pre-pandemic level in the same quarter of 2019. It is also 60% higher than the 1.2 billion euros expected by analysts.
The bank’s cost of paying the risk of a possible default dropped by 67% to 279 million euros, far below the pre-pandemic level and analyst estimates of close to 491 million euros.
Fearing the worst consequences of the pandemic, European banks collectively allocated tens of billions of euros in July 202 to deal with the expected wave of loan defaults following the collapse of their stock prices.
But the economic recovery that has just begun this year-thanks to the government’s generous package of support, including vacation plans and commercial loans-has increased the profits of European banks and sharply reduced their provisions. French competitor Societe Generale also reported this week that it recovered from last year’s large trading losses and set its best first-half performance in five years.
Crédit Agricole CEO Philip Brasac said the state has taken “effective” actions to create a “safer risk paradigm” for banks. But he did not provide guidance for the second half of the year.
As part of a package of emergency measures, the French government last year provided 300 billion euros in bank loans to companies to ensure that they would not fail due to lack of liquidity.
Crédit Agricole’s revenue increased by 19% to 5.8 billion euros, 9% higher than market consensus. This was largely due to the income of its insurance business and Europe’s largest asset management company Amundi.
Crédit Agricole’s share price has risen by 15% this year, roughly twice the amount in April 2020, and was flat in early trading on Thursday.
Amundi sells products through a fee-based cooperative bank. Founded in January 2010, it brings together the investment departments of SocGen and Crédit Agricole, the latter owns 70% of the shares.
Crédit Agricole announced that it will spend 500 million euros in its share repurchase program in the fourth quarter of 2021. Societe Generale will repurchase 470 million euros in stocks and resume dividends in the fourth quarter. Lift restrictions In European banks.