Crédit Agricole: no clear visibility at the “end of the tunnel” after the new blockages

Umeetings with the CEO, comments from the CFO

PARIS, November 4 (Reuters)Second listed bank in France Crédit Agricole CAGR.PA on Wednesday reported an 18.5% drop in third-quarter profits, in line with expectations, as a strong performance in capital markets offset higher provisions for bad debts.

Credit Agricole said the government’s stimulus measures helped stabilize the risk environment in the third quarter, when the bank set aside less money against future losses, compared to the April-June period.

While the second wave of lockdowns could lead to a change in economic assumptions, that wouldn’t necessarily mean an increase in provisions, the bank’s chief financial officer said.

“We will have a more difficult baseline scenario in Q4, but we cannot conclude that we will again have an explosion in the cost of risk,” Jérôme Grivet told reporters.

Managing Director Philippe Brassac said no one doubts the solid position of banks, especially French banks, to help the economy get through the crisis.

Earlier this year, European regulators called on banks to halt dividend payments because a deep recession caused by a pandemic would use up much of their available capital.

Brassac said banks could hope for a return to some “normalcy” where the regulator decides on a case-by-case basis whether banks can pay dividends next year.

Over the nine months of 2020, Crédit Agricole has provisioned € 0.40 in dividends per share.

Agricultural credit CAGR.PA said its net profit fell to 977 million euros (1.14 billion euros), while revenue was up 2.4% to 5.15 billion euros.

“The crisis is not resolved and with the second period of confinement we do not have clear visibility at the end of the tunnel,” said the bank in its presentation.

Analysts had expected a net profit of 980 million euros and a turnover of 5.05 billion, according to the IBES estimate of Refinitiv.

Income from capital markets rose 24.8% in the third quarter, “thanks to the continued good performance of the primary bond business,” the bank said.

($ 1 = € 0.8574)

(Reporting by Maya Nikolaeva and Matthieu Protard; Editing by Muralikumar Anantharaman and Stephen Coates)

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