Crédit Agricole falls after first quarter miss ahead of June strategy update

Crédit Agricole’s profits came in below expectations in the first quarter, despite a better than forecast performance in its investment banking arm, sending shares down as investors turned their eyes towards a strategy update due in June.

The French mutual bank saw shares in its listed vehicle fall close to 3.6 per cent by midday in Paris on Wednesday after it reported net profit of €763m, below a consensus estimate of €820m and 10.9 per cent down on the same period last year.

The miss by Crédit Agricole was, said analysts at Citi, “mainly due to higher costs and higher taxes, with revenues broadly in-line and better provisions”. It was also due in part to a higher than expected contribution to the EU’s Single Resolution Fund during the quarter.

Revenues in Italy dragged on the results, but analysts at Credit Suisse noted that the bank’s asset management division, Amundi, and its investment banking arm beat expectations. Fixed income, currencies and commodity trading saw revenues of €472m versus analyst consensus of €404m and equating to a 2 per cent increase over the previous year. That compared to a 10 per cent drop on average for the bank’s US peers.

Credit Suisse added that they “would expect limited changes to forecasts ahead of the investor day on 6 June” when a new strategic plan is expected to be unveiled. The bank achieved the goals laid out in its current plan ahead of schedule and its shares, despite Wednesday’s fall, are up 16.5 per cent this year.

The performance at Crédit Agricole’s investment bank follows that of French rival BNP Paribas which earlier this month saw revenues rebound at its corporate and investment banking business.

That contrasted with the final quarter of last year, when BNP Paribas suffered what it called “extreme market conditions” that hit its trading revenues and prompted both BNP and Société Générale to restructure their CIB operations.

Crédit Agricole’s core tier-one ratio, a key measure of financial strength, came in flat at 11.5 per cent. The bank is buttressed by its wide French retail network.