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Credit Agricole Eyes Top Tier FICC Role as Earnings Beat

A logo on the exterior of the Credit Agricole SA bank headquarters in Montrouge, France, on Wednesday, Aug. 2, 2023. Credit Agricole reports earnings on August 4. Photographer: Nathan Laine/Bloomberg (Nathan Laine/Bloomberg)

(Bloomberg) -- Credit Agricole SA posted a second-quarter profit that beat analysts estimates, as traders and deal-makers outperformed and the lender began to see the delayed benefit of higher interest rates in France.

The French bank’s net income for the three months through June came in at €1.8 billion, lower than a year ago but aided by robust revenue at the investment bank. An 11% gain in net interest margin in France buoyed the domestic retail bank. 

“Definitely this is an area in which we’ve been improving a lot over the last five, six years,” deputy CEO Jerome Grivet said in an interview on Bloomberg TV, commenting on the trading business. The results “are not a one-off, it’s definitely our status to be in the top tier of the bigger investment banks when it comes to FICC trading activities.”

Chief Executive Officer Philippe Brassac earlier this year brought forward a goal to reach annual adjusted profit of €6 billion, a target the bank confirmed on Thursday. While French rules have prevented lenders from immediately passing on higher loan costs to customers as interest rates rose, they’ve now caught up.

The bank’s fixed-income, commodities and currencies traders, who broadly outperformed their peers throughout 2023, posted underlying revenue up 1.7% from a year earlier, a better result than BNP Paribas SA though short of Wall Street.

Credit Agricole shares rose 1.4% at 9:06 a.m. in Paris trading, bringing gains this year to 11%.

The bank, which remains less geared toward markets than its largest European peers, has also been supported in recent years by Brassac’s efforts to increase the lender’s footprint in interest-rate sensitive Italy.

In the second quarter, Credit Agricole’s international banking benefitted from higher fee and commission income in Italy and higher net interest margin in Poland.

Credit Agricole’s asset manager Amundi SA, which reported its earnings separately last month, saw assets under management hit 2.2 trillion, a record high, after clients poured €15.5 billion in its funds.

--With assistance from Donal Griffin and Tom Mackenzie.

(Updates with CFO comment in third paragraph.)

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