PARIS (Agvie Dow Jones) – Credit Agricole SA (CASA) on Thursday published the share of the core net income group for the first quarter of 2022 of €756 million, down 18.9% in the context marked by the war in Ukraine. This result takes into account the allocation of 389 million euros linked to its exposure to Russia.
The reported net income was €552 million, down 42.7%, taking into account the full value allocation to CA Ukraine shares of €195 million. So the difference between the published result and the baseline result is mainly due to this consumption related to Ukraine.
“On the financial front, the group has chosen prudent provisions in the face of very low proven risks,” said Philippe Brassac, Managing Director of Credit Agricole SA during a press conference. Of the 389 million allocated to Russia, 346 million correspond to precautionary provisions and 43 million to proven risks.
CASA’s cost of risk was €546 million in the first quarter, up 42.2% compared to the first quarter of 2021. The underlying cost of risk is 47 basis points on annual forecasts and 31 basis points over four graded quarters.
The group’s core net banking income (NBI) was €5.93 billion, up 7.6% compared to the first quarter of 2021.
Aside from the war-related effects in Ukraine, the group noted in its press release that it was showing “dynamic business activity in the first quarter,” considering the “macroeconomic impact of the conflict yet to come.”
The group explained that “all companies contributed to the increase thanks to the dynamism of activity during the quarter.” Income from the Savings and Insurance Management division increased 9.2%, incorporating the scale effect associated with the acquisition of index fund specialist Lixor, which was acquired last year by asset manager Amundi, a CASA subsidiary.
Senior customer revenue increased 4.4%, specialized financial services revenue increased 6.8%, and retail banking revenue increased 10.5% compared to the first quarter of 2021.
According to the consensus reached by FactSet, analysts on average expected a net profit of 588 million euros and GDP of 5.62 billion euros.
Expenses high
Core operating expenses – excluding the contribution to the Single Solution Fund (SRF) – of the group increased by 9.6% to €3.5 billion from €3.2 billion in the previous year. For its part, the Group’s contribution to the Resettlement Fund amounted to 636 million euros, an increase of 24.7% compared to the same quarter of 2021.
The group explains the increase in expenses mainly through changes in scope resulting from the merger of Lyxor and the Italian corporation Credito Valtellinese (Creval).
“If we analyze the evolution of expenditures excluding FRU and excluding ocean impacts associated with Lyxor and Creval, the growth (in expenditures) is only 5.4%,” explained Jerome Griffith, Managing Director, Vice Crédit Agricole SA, Responsible. of financing. The director explained that these fees correspond to investments “to develop activities.”
The cost/income ratio has deteriorated to 59% from 57.8% in 2021. “We are very low and below our target,” commented Jerome Griffith. The Group aims in its strategic plan to achieve a 60% cost / income ratio.
“Open” process to ensure BPM
Regarding the takeover offer of Banco BPM’s insurance activities in Italy, “We believe we can capture our opportunities, but it is of course an open process,” said Xavier Musca, Executive Vice President of Crédit Agricole SA. Moreover, according to him, “It is difficult to determine the size of what a partnership can constitute. The conditions under which such a partnership can be concluded are still under discussion.” But, even if CASA took over all of this activity, “the impact on Casa’s CET1 would be relatively modest,” he continued.
At the end of the first quarter, Casa CET1’s capital ratio was 11%, down 0.9 percentage points from its level of 11.9% in the previous quarter. The basic return on tangible equity was 11.6% at the end of the first quarter of 2022.
The group will present its medium and long-term future plan on June 22.
Frank Joslin, Lagvey. Ed: Eck
Agefi-Dow Jones Financial News
Dow Jones Newswires
May 05 2022 01:03 ET (05:03 GMT)