$4.6bn writedown for Credit Agricole
Paris, November 10, 2012
Falling profits in retail and investment banking left investors worried whether Credit Agricole is on the mend after the French bank took $4.6 billion of writedowns to try to draw a line under ill-fated deals.
France's No 3 bank missed third-quarter profit forecasts, even after stripping out the 3.6 billion euros of writedowns, including on investments in Greece, Italy and Spain.
Banks across Europe are slashing costs and shedding assets to cope with tougher regulations aimed at preventing a repeat of the 2008 financial crisis. The task has been complicated by a weakening economy as governments drive through austerity measures to clean up their own finances.
Credit Agricole announced a 1.96bn euro writedown on the sale of Greek unit Emporiki, in line with expectations but taking the total cost of its disastrous foray into the debt-stricken country to around 7.5bn euros.
Including writedowns on its soon-to-be sold Cheuvreux brokerage, its Italian consumer credit business, Spain's Bankinter, and losses on its own debt, the bank slumped to a quarterly loss of 2.85bn euros.
Even stripping out the one-off items, Credit Agricole's underlying net income came in at 716 million euros, short of analysts' average estimate of 786m.
Credit Agricole, founded 118 years ago as a federation of regional agricultural lenders, saw quarterly revenue slide by nearly a third to 3.43bn euros, lagging analysts' average estimate of 4.17bn.
Credit Agricole's French retail arm saw profit decline 3.5 per cent at its regional banks and 11pc at its LCL unit. Profit at its Italian Cariparma unit plunged 44.5pc.
At the same time, revenue at Agricole's regional banks rose 3.3pc, a positive note in an environment where bigger rivals Societe Generale and BNP Paribas saw declines in domestic retail revenue.
Investment banking, an area of strength at many banks this quarter including cross-town rivals SocGen and BNP, saw a 15 per cent drop in profit on an adjusted basis as Credit Agricole continued to cut back the unit's operations.-Reuters
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