Credit Agricole's Q1 earnings jump as investment banking beats rivals

By Mathieu Rosemain

PARIS (Reuters) - Credit Agricole SA, France's second-biggest listed bank, posted a forecast-beating 55% jump in first-quarter net profit on Friday, helped by corporate and investment banking sales that outperformed rivals.

Net profit in the January to March period rose to 1.9 billion euros ($2.04 billion), above the 1.48 billion-euro average of 19 analyst estimates compiled by the company.

Sales climbed 11% to 6.81 billion euros, topping analyst expectations of 6.47 billion euros. The cost of risk, or money put aside for bad loans, was 400 million euros, 105 million euros less than expected.

European banks' first-quarter earnings have largely beaten expectations, with the boost from higher interest rates still supporting lenders' bottom line and sending their shares to multi-year highs.

Despite the overall rise in revenues, Credit Agricole said its retail sales in France grew by just 1.8% while its net interest margin, or the difference between what a bank earns on loans and pays out for deposits, was stable.

French banks have not benefited as much as peers from the rise in rates because they are required to pay more on deposits and a highly regulated mortgage market squeezes margins. Analysts expect them to perform better when rates fall.

Credit Agricole, which is controlled by 39 regional banks, said it was on track to meet its 2025 financial targets a year early. Targets include annual underlying net income of more than 6 billion euros and a return on tangible equity of more than 12%.

The lender said revenue at its corporate and investment banking businesses, which account for a quarter of overall revenue, rose 4% year-on-year, boosted by cash management and corporate leveraged finance.

Revenue from trading in fixed income, currencies and commodities (FICC) shrank 3%, in line with Wall Street banks but outperforming French rival BNP Paribas, which reported a fall of 20%.

Societe Generale, which also reported quarterly results on Friday, said sales from fixed income and currencies dropped by 17% over the period.

FICC trading across banks has been weaker than in 2023 as volatile markets have turned calmer.

Credit Agricole also controls Europe's biggest fund manager Amundi, owns asset servicing businesses and is expanding into wealth management.

($1 = 0.9332 euros)

(Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes)