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UPDATE 2-Credit Agricole profit falls less than forecast after retail writedown
February 15, 2017 / 6:26 AM / 10 months ago

UPDATE 2-Credit Agricole profit falls less than forecast after retail writedown

* CASA says Q4 net income down to 291 mln euros

* Writedown of 491 million euros on retail bank

* To reduce holding in Amundi to 70 percent (Updates with deputy CEO comments)

By Maya Nikolaeva and Julien Ponthus

PARIS, Feb 15 (Reuters) - Credit Agricole exceeded market forecasts on Wednesday, despite a 491 million euro ($519 million) writedown causing a sharp fall in the French bank’s fourth quarter profit.

Shares in Credit Agricole, which said the writedown on the value of its French retail banking business was due to low interest rates, rose 3.3 percent in early trading as fourth quarter net income of 291 million euros beat estimates.

The bank is the latest in France to report falling retail banking revenues, as lenders grapple with mortgage loan renegotiations and declining fee income.

Analysts had estimated Credit Agricole’s net income of 254 million euros in a Reuters poll, and while the result beat their forecasts, it was down from 882 million euros a year ago.

Chief Executive Philippe Brassac said the LCL retail bank faced the same problems as others.

“There is nothing specific to LCL when compared to retail (banking) in France,” Brassac told journalists.

Efforts to maintain and develop Credit Agricole’s customer base in a highly competitive environment would pay off in coming quarters, especially given the very slow but gradual rise in interest rates, Brassac added.

“The point to highlight this quarter is good underlying performance of LCL, which was an ongoing concern for some investors,” analysts at Jefferies said in a note.

LCL’s underlying revenue fell 1.1 percent over the fourth quarter, performing slightly better than its peers, while cost cuts helped drive net income up 35 percent to 160 million euros.

But for 2016 as a whole, LCL’s revenue fell 14 percent, while French retail revenue was down 3 percent at BNP Paribas and 3.5 percent lower at Societe Generale.

AMUNDI HOLDING

Credit Agricole operates a wide range of businesses including asset management, specialised financing and trading, which helped soften the blow from the pressures on its traditional retail banking that are set to linger in 2017.

The bank overhauled its complicated ownership structure last year, putting more capital in its listed arm and allowing it to reassure investors over all-cash dividends.

It has been focusing on its two key markets, France and Italy, and has been limiting its foreign expansion to its asset management arm Amundi, which is buying rival Pioneer Investments from UniCredit.

Credit Agricole Group, the parent of the listed entity, said that as part of Amundi’s rights issue to finance the Pioneer purchase, it was cutting its holding to 70 from 75.7 percent.

The bank’s asset gathering division, that includes asset management, insurance and wealth management, reported a 35 percent rise in net income over the fourth quarter, while net profits more than doubled at its investment banking arm.

Overall, group revenues rose 7 percent to 4.58 billion euros, above the poll average of 4.36 billion. ($1 = 0.9459 euros) (Editing by Sudip Kar-Gupta and Alexander Smith)

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