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Markets News

UPDATE 1-Credit Agricole: no clear visibility to 'end of tunnel' after new lockdowns

(Updates with CEO, CFO comments)

PARIS, Nov 4 (Reuters) - France’s second-biggest listed bank Credit Agricole reported on Wednesday an 18.5% drop in third-quarter profit, performing in line with expectations as a solid performance in capital markets offset higher provisions for bad loans.

Credit Agricole said the government’s stimulus helped stabilise 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, it would not necessarily mean a jump in the provisions, the bank’s chief financial officer said.

“We will have a tougher base-case scenario in the 4th quarter, but we cannot make a conclusion that we will again have an explosion in the cost of risk,” Jerome Grivet told journalists.

Chief Executive Philippe Brassac said no one doubted the solid position of banks, notably French ones, to help the economy get through the crisis.

The European regulators earlier this year told banks to halt dividend payments as a deep, pandemic-induced recession would deplete much of their available capital.

Brassac said banks could hope for a return to some “normality” where the regulator would decide case-by-case whether banks can pay out dividends next year.

Over the nine months of 2020, Credit Agricole made provisions for dividends of €0.40 per share.

Credit Agricole said its net income fell to 977 million euros ($1.14 billion), while revenue was up 2.4% at 5.15 billion euros.

“The crisis is not resolved and with the second lockdown period we have no clear visibility at the end of the tunnel,” the bank said in its presentation.

Analysts had forecast net income at 980 million euros and revenue at 5.05 billion, according to the IBES estimate from Refinitiv.

Capital markets revenue rose by 24.8% in the third quarter, “thanks to the continued strong performance of the primary bond activity”, the bank said.

$1 = 0.8574 euros Reporting by Maya Nikolaeva and Matthieu Protard; Editing by Muralikumar Anantharaman and Stephen Coates

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