Crédit Agricole Shares Decline After Q3 Results

Shares of Crédit Agricole (EPA:CAGR) fell over 4% on Wednesday due to third-quarter results that slightly missed analysts' expectations.

The French banking group reported an adjusted profit before tax of €2,366 million for Q3 2024, which was 2% lower than the consensus forecast of €2,404 million.

This shortfall was attributed to factors such as softer operating income and higher operating expenses. While revenues were only 1% below consensus, operating expenses rose 1%, resulting in a 3% drop in pre-provision profit. This was partly offset by impairments being 12% lower than market forecasts.

The group's stated net income exceeded expectations, coming in at €1,666 million for the quarter, which was 4% above analysts’ estimates, primarily due to lower-than-anticipated tax charges. Capital ratios remained stable, with Crédit Agricole's CET1 ratio at 11.70%, reflecting a 10 basis point increase from the previous quarter.

Performance Breakdown

Breaking down the performance by division, the main contributors to the softer results were the Corporate Centre and Asset Gathering businesses. The Corporate Centre's larger-than-expected loss of €64 million accounted for around two-thirds of the overall gap in pre-provision profit, while Asset Gathering reported a 5% miss on consensus, contributing around €58 million.

In contrast, the French retail banking division outperformed expectations, posting a 6% increase in pre-provision profit. Analysts at UBS highlighted this performance amid broader industry trends, including comparisons with Société Générale (EPA:SOGN).

Other business lines, including Large Customers and International Retail, reported minor misses of approximately 2%, while Financial Services showed slight softening. UBS noted that the retail results were boosted by an equity revaluation of unspecified size, despite insurance operations facing higher-than-expected crop-related charges. These topics are anticipated to be discussed in more detail during the bank’s future earnings call.

Outlook

Despite the slightly weaker results, Crédit Agricole maintained its full-year targets, including a goal for underlying net income exceeding €6 billion. UBS analysts remain optimistic about the outlook for key divisions such as asset gathering, consumer finance, leasing, and corporate and investment banking, particularly as interest rates are expected to decline over the next year.