ACA Credit Agricole SA

--Credit Agricole's second-quarter net profit fell 15% on the year to 1.22 billion euros

--The performance of its corporate and investment-bank business, where net income fell 22%, weighed on the results

--Credit Agricole's core Tier 1 ratio rose to 11.6% in June

 
    By Pietro Lombardi 
 

Shares in Credit Agricole SA (ACA.FR) trade sharply lower Friday after the bank said it slightly improved its capital buffer in the second quarter but the performance of its corporate and investment bank weighed on the results, contributing to a decline in net profit.

This is the first set of results following the presentation in June of the lender's new plan--which includes measures to simplify the group's capital structure and targets a profit growth of more than 3% a year through 2022--and comes as European banks face a challenging environment amid low interest rates and investment-banking businesses exposed to market volatility.

Net profit at France's second-largest listed bank by assets fell 15% on the year to 1.22 billion euros ($1.35 billion).

Revenue declined 0.4% to EUR5.15 billion.

Analysts had expected the bank to post a net profit of EUR1.24 billion on revenue of EUR5.10 billion, according to a consensus provided by FactSet.

Credit Agricole shares trade 5.15% lower at 0802 GMT, while France's CAC 40 index falls 2.6%.

The performance of the shares come in a difficult day for markets, with investors rattled by Trump's threat of new tariffs on Chinese goods.

"We got what we were looking for: good commercial trends, earnings visibility, operational leverage and gradual improvement of solvency," Jefferies analysts said.

Results for the quarter took a hit from the performance of the corporate and investment-bank business, where net income fell 22% to EUR452 million, with the bank mentioning a "sluggish" market and "a continuous erosion of margins."

Most of the French bank's other main divisions posted profit in line or slightly higher than the same period last year, while it was lower at its specialized financial-services business.

Despite the lower profit, Chief Executive Philippe Brassac said that the bank "once again delivered very high level of financial results, particularly illustrated by the 11% RoTE ratio."

The bank delivered a return on tangible equity--a key measure of profitability--of 11%. The plan presented in June targets a RoTE above 11% and net profit of more than EUR5 billion in 2022.

Credit Agricole's core Tier 1 ratio, a key measure of capital strength, notched up to 11.6% in June from 11.5% in March.

"The increase in Credit Agricole's CET1 this quarter further secures our dividend policy," Mr. Brassac said.

Write to Pietro Lombardi at @dowjones.com

(END) Dow Jones Newswires

August 02, 2019 04:47 ET (08:47 GMT)

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