Crédit Agricole shares drop after Q3 results miss expectations

Investing.com — Shares of Crédit Agricole (EPA:) were down over 4% on Wednesday following the bank’s third-quarter results, which came in slightly below analysts’ expectations. 

The French banking group reported an adjusted profit before tax of €2,366 million for 3Q24, which was 2% lower than the consensus forecast of €2,404 million. 

The miss was driven by a combination of factors, including softer operating income and higher operating expenses. 

While revenues were only 1% below consensus, operating expenses were 1% higher, leading to a 3% drop in pre-provision profit. 

This result was partially offset by impairments that were 12% lower than market forecasts.

The group’s stated net income, however, exceeded expectations, coming in at €1,666 million for the quarter, 4% above analysts’ estimates. 

This was mainly due to lower-than-anticipated tax charges. Capital ratios remained in line with expectations, with Crédit Agricole’s CET1 ratio at 11.70%, a 10 basis point increase from the previous quarter.

Breaking down the performance by division, the main drivers of the softer-than-expected results were the Corporate Centre and Asset Gathering businesses. 

The Corporate Centre’s larger-than-expected loss of €64 million accounted for around two-thirds of the overall gap in PPP, while Asset Gathering reported a 5% miss on consensus, contributing a similar delta of €58 million. 

On the other hand, the French retail banking division performed better than expected, with a 6% increase in PPP, which analysts at UBS noted was particularly relevant when considering broader industry trends, including comparisons with Société Générale (EPA:). 

Other business lines, such as Large Customers and International Retail, reported minor misses of around 2%, while Financial Services also showed a slight softening.

UBS pointed out that the results from French retail were bolstered by an equity revaluation of unspecified size, though insurance operations were impacted by higher-than-expected crop-related charges. 

These areas are likely to be discussed in more detail during the bank’s upcoming earnings call.

Despite the slightly weaker results, Crédit Agricole maintained its full-year targets, including a goal for underlying net income exceeding €6 billion. 

UBS Analysts remain positive on the outlook for some key divisions, including asset gathering, consumer finance, leasing, and corporate and investment banking, particularly as interest rates are expected to decline over the next year.