Credit Agricole SAFollow credit-agricole.com

Sentiment Score: -21

Sentiment Change: -1

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Credit Agricole SA Earnings - Analysis & Highlights for Q3 2024

Overview

PositivesNegativesOutlook

Net profit is up by 4% for the group on the first nine months of the year.
Revenues at CACIB and the assets administered by CACEIS continue to be up this quarter.
The development of the retail-related activities was quite solid in Q3.
The company is posting an increase of the net profit, which is a plus 16% on the bottom line of Crédit Agricole Assurances.
The cost of risk for Crédit Agricole SA is very stable, both compared to Q3 2023 and also to Q2 2024, even slightly down as compared to Q2 2024.

Q3 2024 Earnings Call

The cost of risk is up at LCL both in absolute numbers and also in terms of bps as compared to the outstandings.
The cost of risk is a little bit up at LCL both in absolute numbers and also in terms of bps as compared to the outstandings.
The company is facing a slight impact on the top line.

Q3 2024 Earnings Call

The company expects the net profit to grow alongside with the overall volume of business. A 5% growth is a decent guidance on the medium to long term.
The company expects to continue to have a very good cost income ratio and a return on tangible equity, which continues to be comfortably above the target of 12% at 14.5%.

Q3 2024 Earnings Call

Q&A Highlights from Credit Agricole SA Earnings Call Q3 2024

Analyst asked about the company's target for profitability in 2024 and why it hasn't provided a more specific guidance.
- The company's target for profitability in 2024 remains at €6 billion, and it has no plans to provide a more specific guidance at this time. The company's target is based on various factors, including the corporate tax surcharge in France, and it believes that providing a more precise target would be premature.
Analyst asked about the company's optimism on the French home loan demand and whether it's reliant on further declines in interest rates.
- The company is more positive about the French home loan demand due to increased production of new home loans in Q3, and the market has shown signs of recovery. The company believes that the low point in production has passed, and the market is stabilizing. The company is monitoring the situation closely, but it's more positive about the market's prospects.
Analyst asked about the dynamics of front-book margins in consumer finance compared to back-book margins.
- In consumer finance, the company has seen a significant increase in refinancing costs, which has led to a deterioration in the margin of new loans. However, the margin for new loans has stabilized and improved over the past quarter, with a 86 bps increase compared to the previous quarter. The company is working to recover the level of margin on outstanding loans, which was better two or two and a half years ago, and expects this to happen over the coming quarters.
Analyst asked about the impact of weather events, such as flooding, on crop claims.
- The company expects to account for the flooding and other weather events that have occurred in France since the beginning of October in the fourth quarter, but does not foresee a massive impact on the quarter's numbers. The company has reinsurance policies in place to mitigate the impact of these events, and the specific regions affected by the flooding are not expected to have a significant impact on the company's overall performance.
Analyst asked about the company's cost structure and how it relates to revenue growth.
- The company's cost structure is aligned with its revenue growth, and it has a cost-to-income ratio of 52.6% for the first nine months of the year, which is one of the best for CIB activities in Europe. The company prefers to invest in the further development of the business rather than optimizing its cost-income ratio, which may lead to a reduction in the scope of the business.
Analyst asked about the company's exposure to the UK motor finance-related legal claims and insurance activities.
- The company is not significantly exposed to the UK motor finance-related legal claims. The company's insurance activities generate RWA consumption in connection with the carrying value of Crédit Agricole Assurances, and every time they make a profit, they increase the carrying value, which is translated into RWAs with a ratio of 370%. The company expects to reduce the carrying value and RWA consumption of Crédit Agricole Assurances in Q4 due to the payment of a yearly dividend.

Q3 2024 Earnings Call