(Bloomberg) -- Credit Agricole SA posted higher-than-expected third-quarter profit as its debt traders outperformed rivals, while analysts focused on disappointing revenue in insurance and consumer finance.
Net income for the three months through September came in at €1.67 billion ($1.8 billion), just ahead of estimates. Still, that was 4.7% lower than a year earlier due to base effects, the bank said.
Chief Executive Officer Philippe Brassac reiterated his expectation to hit a goal of annual adjusted profit of more than €6 billion in 2024, one year ahead of plan. The 6.2% gain for fixed income, currencies and commodities traders beat an average of Wall Street and European peers, aiding the French lender’s bid to take on top-tier investment banks in the segment.
The bank’s investment banking business posted underlying revenue up by more than a fifth. On average, the biggest US and European banks saw earnings jump in their equity trading and advisory and underwriting businesses in the period, while fixed income desks generated a smaller gain.
Other areas of the bank didn’t perform as well as some analysts had estimated. Jefferies said expected strength in insurance revenue was “dashed by weather related crop claims,” while consumer finance saw less momentum than anticipated.
Note: Credit Agricole Falls as Insurance Weighs on 3Q: Street Wrap
Credit Agricole shares were down 4.4% at 1:38 p.m. in Paris.
Credit Agricole’s expenses rose 9.2% to €3.69 billion after it invested to support growth, including at the corporate and investment bank. In the quarter, that division failed to meet the bank’s medium-term goal of keeping costs to less than 55% of revenue, although the bank said the ratio is improving and remained below the threshold during the first nine months as a whole.
French Retail
Credit Agricole’s French retail banking business, which has seen a delayed benefit from higher regional interest rates, posted a decline in revenue as a result of a base effect from 2023. Net interest income and fee income helped underlying revenue gain 3.7%. The bank said it’s seeing a “gradual repricing of loans” and increases in lending volumes.
Credit Agricole, which is less geared toward markets than its largest European peers, has been supported in recent years by Brassac’s efforts to increase the lender’s footprint in interest-rate sensitive Italy.
In the third quarter, Credit Agricole’s international banking unit posted revenue down 1.8% from a year earlier.
Credit Agricole’s asset manager, Amundi SA, saw lower net inflows than expected when it reported its earnings separately last month.
--With assistance from Macarena Muñoz.
(Updates with shares in sixth paragraph)
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