French bank Credit Agricole's loss narrows in 4Q on lower charges for financial
crisis
AP Business Writer March 4, 2009
PARIS (AP) — French bank Credit Agricole SA said Wednesday its net loss
narrowed in the fourth quarter compared with a year earlier, when its market
trading business suffered a massive loss from the financial crisis.
Credit Agricole, the largest French bank in terms of retail clients, made a net
loss of euro309 million ($387 million) in the last three months of 2008,
compared to a loss of euro857 million a year earlier, when the bank took a
euro3.3 billion charge on losses in its structured debt operations.
The bank, known as the Green Bank due to its origins as a lender to France's
farmers, blamed its loss on falling market valuations of assets as the
financial crisis deepened at the end of last year.
The bank said it will slash its dividend this year to euro0.45 ($0.57) a share
from euro1.20.
For all of 2008, Credit Agricole's profit fell 75 percent to euro1.02 billion
($1.29 billion), while net banking income, the equivalent of sales, slipped 4.8
percent to euro16 billion.
In a statement, Chief Executive Georges Pauget said the bank had "proven its
ability to assess and reacted quickly to the crisis by adapting its business
model accordingly."
Celent financial analyst Enrico Camerinelli said it was "a breath of fresh air
to see positive results from a financial institution."
French peers BNP Paribas SA and Societe Generale also posted positive results
for 2008, although both suffered severely in the fourth quarter. Rival
cooperative banks Caisse d'Epargne and Banque Populaire, which last week
announced plans to merge, both lost money in 2008 because of massive losses at
Natixis SA, the investment bank they jointly control.
Credit Agricole shares have fallen nearly 14 percent so far this year. In
midafternoon trade in Paris Wednesday the stock was down 2 percent at euro6.95.
The bank nearly broke even in its corporate and investment banking division in
the fourth quarter.
For the full-year however, Credit Agricole's investment banking division
reported a euro1.9 billion loss, compared to a profit of euro1.5 billion in
2007. The bank blamed the performance on a euro3.4 billion loss over the year
on instruments tied to the U.S. mortgage market as well as the worsening
financial crisis.
The bank's international retail banking operations also made a loss last year.
Its Italian subsidiary Cariparma FriulAdria posted higher earnings, but this
was offset by losses in Greece, where Credit Agricole owns local lender
Emporiki Bank. The bank said Greece "remains a strategic market for the group"
and said it would support Emporiki's upcoming euro850 million capital increase.
Credit Agricole was among the six leading French banks to receive a total
euro10.5 billion in a government bailout plan last December as the financial
crisis deepened. Credit Agricole took the largest share, euro3 billion, but
Pauget has said the bank will not request any additional aid from the second
tranche of government aid expected to be announced soon.
Rescue Plans
“We do not expect the crisis to be over before the second half of 2010,” Chief
Executive Officer Georges Pauget said on a conference call with reporters.
“It’s very tough to give an outlook” on how the crisis will evolve, he said.
Credit Agricole in 2006 acquired a 72 percent stake in Athens-based Emporiki
Bank of Greece SA to gain 2 million retail clients in the country in a deal
that valued Emporiki at 3.3 billion euros. Emporiki, whose shares have fallen
76 percent in the past 12 months, is seeking 850 million euros in a rights
offer to replenish capital after a 492 million-euro loss last year on potential
bad loans.
Greece’s major banks, except Emporiki, are all tapping the country’s 28
billion-euro support plan, designed to keep lenders adequately funded and
credit flowing to businesses and consumers. Greece last month appointed state
representatives to the boards of nine Greek banks taking part in the plan.
Emporiki said Oct. 22 it planned to benefit from funding measures France is
providing to Credit Agricole, opting out of the Greek package
