Credit Agricole Joins French Rivals With Surprise Q2 Profit Jump

Credit Agricole joined French rivals BNP Paribas and Societe Generale in announcing on Thursday better-than-expected quarterly profits amid record activity in its investment banking division.

Net income came in at 1.98 billion euros ($2 billion), a figure about 800 million euros higher than the average estimate of analysts.

Analysts also underestimated revenues, which rose 8.8% to 6.33 billions euros, roughly 10% higher than expected.

While activity grew across business lines including retail banking, the bank's management said investment banking shone particularly during the quarter.

Underlying revenues for the Corporate and Investment Banking (CIB) division jumped 22% to 1.58 billion euros, a performance which the bank said reflected "record commercial activity, in a context of high volatility and high customer hedging needs".

Fixed income, currencies and commodity (FICC) trading jumped about 37% while "buoyant" investment and equity activities rose 12.8% even as financial markets experienced one of the worst first-halves in living memory.

A sharp drop in the cost of risk - money set aside for failing loans - also helped lift the group's profits after provisions were taken during the first quarter to compensate for the potential economic fallout of the war in Ukraine.

NO COMMENT ON ITALY

In the first quarter, a disappointing reading for its capital ratios had weighed on Casa's shares but the bank pointed out that the key CET 1 metric had since added 0.3% between April and June to 11.3%.

In June, the bank unveiled a strategic plan in which it targeted a net profit of more than 6 billion euros by 2025 and pointed to strong potential for growth in Italy where it recently bought smaller peer Credito Valtellinese and built up a 9.2% stake in Banco BPM.

The latter on Wednesday said it expected to decide by the end of the quarter over a possible new insurance partnership for which Credit Agricole and French insurer AXA are both candidates.

During a conference call with reporters, Credit Agricole's management said they were aiming to make the "best offer" but declined to comment any further on the process.

Following the surprise announcement that the head of the Large Client division, Jacques Ripoll, was leaving to join renewable energy group Eren, the group announced a rejig of its top management on Wednesday with the appointment of two new deputy CEOs: CFO J?r?me Grivet and Olivier Gavalda, head of the Paris region branch.

At the close on Wednesday, the shares of Casa, SocGen and BNP Paribas were down 27.4%, 26.1% and 22.2% year-to-date respectively, trailing the European banking index which lost 19.1% over the same period.