Credit Agricole SA, France’s third-largest bank by market value, said profit surged in the second quarter after the sale of its unprofitable Greek unit.
Credit Agricole is recovering from two consecutive annual losses after selling its Athens-based Emporiki unit, a business that cut earnings by about 370 million euros in the second quarter of 2012. The bank, led by Chief Executive Officer Jean-Paul Chifflet, also sold its brokerage units and boosted profit at its corporate and investment bank.
The bank rose 2.5% to 7.84 euros in Paris trading yesterday, bringing the gain this year to 29% and giving the company a market value of 19.6 billion euros. BNP Paribas SA, France’s largest bank, has climbed 16% this year, while Societe Generale SA advanced 21%.
Credit Agricole SA will comply this year with a 100% Basel III 30-day liquidity ratio designed to force banks to hold enough easy-to-sell assets to resist a credit squeeze, the bank said on its website. The Credit Agricole Group will comply with the 30-day liquidity ratio next year.
Credit Agricole, is pushing through cost cuts as weak economic growth slows lending. The bank said in February that it expects to reduce expenses by 650 million euros by 2016 as it plans to do changes in information technology, real estate and procurement.
French President Francois Hollande was calling for the banks to help businesses as he sees lending as the right path to recovery. French banks were spared a split of investment-banking businesses as lawmakers passed a bill this month to divide proprietary trading, the first such move in Europe. New French regulations are also giving the lenders a liquidity boost of 30 billion euros by letting them keep additional client deposits in tax-free accounts on their balance sheets.
Profit from Credit Agricole’s corporate and investment bank climbed as revenue from capital markets and investment-banking activities jumped 24%, after successful cutting cost efforts, according to the presentation. Credit Agricole has no proprietary trading and has stopped most of its equity-derivatives business, it said in September.
Credit Agricole is seeking a 12% return on equity, a profitability measure, at the corporate and investment bank over the “medium term” by cutting fixed costs by about 15% compared with 2011, the firm said in March. At the savings-management division, which includes asset management, insurance, private banking and custody, earnings fell to 410 million euros from 413 million euros, the presentation cited by Bloomberg shows.
Credit Agricole is up 3.69% today while adding more than 35% on a year to date basis.
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