Credit Agricole’s Q3 trading slump mirrors SocGen

Bloomberg

Credit Agricole SA’s slump in third-quarter trading revenue rivaled that of Societe Generale SA as the French lender paid for its focus on bond markets.
Sales from trading fell 28 percent to 462 million euros ($535 million), Credit Agricole, based in a Paris suburb, said in a statement on Wednesday. It posted one of the weakest trading quarters of the French banks, mirroring a bond-trading decline of similar magnitude at SocGen. Natixis SA saw its fixed-income trading sales decline 11 percent.
Credit Agricole tumbled as much 3.4 percent in Paris trading, the most since August, and was down at 14.26 euros by 9:02 a.m. Revenue at its large-clients division, which includes trading and financing activities, and at the French consumer-banking unit came out at levels below estimates compiled by Bloomberg News.
The bank’s trading business suffered more than some rivals partly because of its focus on bonds, which fared worse than equities in a period marked by low volatility and subdued client activity. Still, there was some high points: Revenue from deals advisory rose in the quarter and Credit Agricole’s asset-gathering business had a jump in revenue, boosted by fund inflows at its insurance and Amundi SA units.

‘NO PROJECT’
Chief Executive Officer Philippe Brassac, 58, last year streamlined the company’s capital structure by reshaping the links with the regional banks that own a majority stake. While facing record-low or negative rates and the cost of new regulation, he’s geared the bank for growth including through deals, especially in Italy and in asset management.
But that growth isn’t likely to extend to a deal for Commerzbank AG, with Brassac saying he doesn’t see consolidation across the European banking “over the short term” and that the bank will focus on growing its existing businesses. The bank had signaled it could potentially be interested in Germany’s Commerzbank AG, Handelsblatt had reported last month.
Credit Agricole has “no project to buy a Commerzbank stake” or plan any other deal that would “break with” its 2019 targets, Brassac told journalists on a call. “Let’s be very pragmatic and very realistic, all the regulation is playing against that.”
Credit Agricole’s private-banking unit on Thursday agreed to buy a majority stake in Italian wealth manager Banca Leonardo for an undisclosed amount. In September, its Italian division agreed to purchase three local lenders and its asset-management unit, Amundi, earlier this year bought Pioneer Investments from UniCredit SpA for 3.5 billion euros.

RETAIL STABLE
In retail banking, revenue at LCL reached 848 million euros in the quarter and Chief Financial Officer Jerome Grivet repeated the bank’s guidance for stable annual sales at the unit. That compares with annual declines still expected for 2017 at Societe Generale’s and BNP Paribas SA’s French consumer-banking networks.
Overall, quarterly net income was 1.07 billion euros, above the 1.04 billion-euro average estimate of a Bloomberg survey. That compares with 1.86 billion euros in the previous year, when gains from restructuring links with the regional banks boosted earnings.