Wednesday, French retail banking giant Credit Agricole SA (ACA,CRARF.PK) reported a narrower net loss in its fourth quarter, boosted by strong double-digit growth in net banking income, despite falling asset valuations in a deteriorating market. The company also said its Board will recommend a dividend.
Credit Agricole's net loss for the quarter was 349 million euros in the quarter, compared to prior year's net loss of 756 million euros. Net loss - Group share was 309 million euros, narrower than loss of 857 million euros a year ago. The company's net loss on other assets was 280 million euros, compared to profit of 324 million euros in the previous year.
Net banking income in the quarter surged 91.1% to 4.60 billion euros from 2.41 billion euros last year.
Segment-wise, in the French Retail Banking, Regional Banks recorded no net banking income in the quarter, and LCL retail bank's net banking income rose to 966 million euros. International retail banking business income declined to 644 million, while specialized financial services income edged up 1.7% to 783 million euros. In the quarter, asset management, insurance and private banking income fell 17% to 925 million euros, while corporate and investment banking recorded income of 1.44 billion euros, compared to prior year's negative net banking income of 1.17 billion euros.
The company's gross operating income was 1.45 billion euros, compared to prior year's loss of 930 million euros. Operating loss for the quarter narrowed to 162 million euros from loss of 2.12 billion euros in 2007.
Operating expenses in the quarter dropped 5.7% to 3.15 billion euros reflecting tight controls, particularly over variable costs, while risk-related costs surged 35.9% to 1.61 billion euros.
Among peers, French banking giant BNP Paribas SA (BNP.L) on February 19 reported a huge net loss for its fourth quarter, as expected earlier, on higher cost of risk mainly due to challenges in the Corporate and Investment Banking, or CIB, division, significantly affected by market dislocation and the downturn in the economy. Fourth-quarter net loss, group share, was 1.37 billion euros, compared to net income, group share, of 1.01 billion euros last year. Quarterly revenues were 4.85 billion euros, down 29.9% from 6.92 billion euros in the prior-year quarter and down 36.3% from 7.61 billion euros in the third quarter.
Meanwhile, Societe Generale SA (SCGLY.PK), France's third-largest bank, in mid-February reported a net income of 87 million euros for the fourth quarter, compared with a loss of 3.35 billion euros last year, which included a huge loss from unauthorized, concealed market activities. Net banking income grew 41.6% in the quarter to 5.5 billion euros.
For the fiscal year 2008, Crédit Agricole's net income fell 72.2% to 1.27 billion euros from last year's 4.56 billion euros. Net income - Group share plunged 74.7% to 1.02 billion euros in 2008 from 4.04 billion euros in 2007. Pre-tax income fell 75.7% to 1.17 billion euros. Net banking income was 15.96 billion euros, down 4.8% from 16.77 billion euros last year. Gross operating income fell 18% to 3.32 billion euros.
On a consolidated basis, Crédit Agricole Group, comprising Crédit Agricole S.A. and the Regional Banks, posted a 54.7% decline in full-year net income to 2.94 billion euros from 6.49 billion euros last year, reflecting the Group's responsiveness in the midst of the crisis and the resilience of its business lines. Net income - Group share was 2.45 billion euros in 2008, down 58.9% from 5.97 billion euros a year ago. Net banking income dropped 3.9% to 28.46 billion euros from 29.61 billion euros in the prior year, due to solid momentum in retail banking, which offset the negative market impact.
René Carron, Chairman of Crédit Agricole S.A.'s Board of Directors, noted, "Despite a financial crisis of unprecedented magnitude in 2008, the Crédit Agricole Group confirmed its position as a leading European bank, with net income of €2.5 billion and a Tier 1 ratio of 9.4%. This performance is linked to a combination of factors: our shareholders' equity of €64 billion, the loyalty of our 58 million customers and the dedication of our 164,000 employees. The Crédit Agricole Group is the French economy's leading financial partner, with some €425 billion in aggregate loans outstanding."
Further, the company said its Board of Directors will recommend at the Annual General Meeting on May 19, 2009 that the shareholders approve a dividend of 0.45 euro per share. Two options for dividend payment will be offered, namely, full payment in cash, or full payment in shares.
Georges Pauget, Chief Executive Officer of Crédit Agricole, commented, "During the first half of 2008, when market conditions were still relatively favourable, we launched a rights issue of unprecedented size (€5.8 billion), which owed much of its success to the support of the Regional Banks. Throughout the year, we adjusted our model by taking an even more industrialised approach to our business lines and through an in-depth reorganisation of our Corporate and investment bank."
ACA last traded on December 17 at $0.34.
CRARF.PK closed its trading on February 20 at $9.25.
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