French bank, Crédit Agricole reported robust 4Q18 results on Thursday (14 February), which showed that net profit jumped to EUR1bn (c. $1.13bn) from EUR387mn in 4Q17, when the bank had to book c. EUR400mn in tax-related charges. The result topped the EUR795mn Infront Data consensus expectation. Profit before tax, which excludes the charge, rose 6.5% YoY to EUR1.38bn.
Revenue came in at EUR4.81bn (+4.3% YoY) and has grown, on average, by 4.3% p.a. from 2016 to 2018, while return on tangible equity rose to 12.7% YoY. Crédit Agricole also surpassed the targets it set itself three years ago for 2019 on profitability and revenue growth, achieving these profit goals a year ahead of schedule. The bank said that it will issue new targets for 2019-2022 on 6 June. EPS came in at EUR0.33 – a 24.2% YoY rise.
In terms of segments, capital-markets and investment-banking revenue declined 29% YoY in 4Q18, led by fixed income. However, Crédit Agricole’s earnings are less dependent on investment banking than its French rivals. Revenue at insurance businesses rose 6% YoY, while income from retail banking in Italy was up more than 17% YoY.
According to Reuters, most large European banks have been “struggling to find new profit sources after years of rock-bottom interest rates”, which provide limited returns in retail banking. Crédit Agricole depends more on its retail network, insurance and consumer lending businesses than its rival French banks. While the bank’s market activities also suffered from a downturn late last year it did not make a loss, unlike some of its rivals, according to CFO Jerome Grivet.
The bank raised its dividend by 9.5% YoY to EUR0.69/share.