Crédit Agricole warns over drag from second French lockdown
Bank’s third-quarter profits slide despite stronger showing from its investment bank
Crédit Agricole warned that there was no visibility at the “end of the tunnel”, as a resurgence of the coronavirus pandemic in France prompted the bank to increase its provisions for the risk of bad loans.
The caution from Crédit Agricole came as its third-quarter profits fell 19 per cent from a year earlier to €977m. The bank’s revenues climbed 2 per cent to €5.2bn.
Although the outlook for the French economy is deteriorating, Crédit Agricole’s third-quarter results beat forecasts. Analysts had expected net income of €790m, while the bank’s revenues were 4 per cent above expectations, according to Jefferies.
However, Crédit Agricole said the coronavirus crisis was “not resolved and with the second lockdown period we have no clear visibility at the end of the tunnel”.
Just over 70 per cent of the increased provisioning for the risk of loans souring “primarily related to prudent provisioning in sensitive sectors such as aviation, hotels, tourism, restaurants and certain professionals,” the bank said.
Despite being a much smaller player in global financial markets, Crédit Agricole still benefited from the boost in trading revenues enjoyed by rivals. Its investment banking revenue was up 10 per cent in the quarter, the bank said.
Chief executive Philippe Brassac said that he hoped for a return to “normality” and that banks would be able to start paying dividends again from next year, after regulators told them to halt payments to build up capital as insurance against the pandemic’s effects.