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French bank Credit Agricole reports flat second-quarter net profit

French bank Credit Agricole reports flat second-quarter net profit

French bank Credit Agricole SA reported flat second-quarter net profit Thursday but said the U.S. subprime crisis had had a "limited impact."
The shares rose after the bank reported a 0.6 percent increase in second-quarter net profit to euro1.29 billion (US$1.76 billion) from euro1.28 billion a year earlier, above analyst expectations.
Before the announcement, Credit Agricole shares had tumbled more than 15 percent this year due to fears of possible fallout from risky subprime mortgages in the U.S. The shares rebounded a bit Thursday, up 4 percent to euro27.97 (US$38.13) in early morning trading in Paris.
Foreclosure and late payments have spiked especially for subprime borrowers, people with blemished credit histories or low incomes. As liquidity linked to the U.S. mortgages dried up, banks have become more stringent about lending and central banks injected cash into the monetary system.
Some foreign banks have been affected by the crisis. France's BNP Paribas spooked markets Aug. 7 by temporarily freezing three funds with exposure to the subprime crisis.
In a statement, Credit Agricole said none of its business lines have direct holdings of U.S. subprime loans, and that the crisis "had a limited impact."
Its asset management business has calculated its exposure at euro100 million (US$136 million), and its corporate and investment bank Calyon has some exposure in its credit derivatives and engineering and distribution businesses.
"Difficulties encountered in these businesses were more than offset by the performance of the other capital market activities desks," the bank said.
Results in July and August, when the turmoil in financial markets took off, are roughly the same as in 2006, Credit Agricole said.
"Credit Agricole results are overall quite encouraging," said Axel Pierron, an analyst at international financial research and consulting firm Celent. "Nevertheless, there is a clear concern about the bank's ... ability to manage its operating expenses."
He noted that while the net banking income had increased by 26.4 percent, "the operating expenses skyrocketed with an increase of 41.7 percent."
It "should be a clear priority for the management of CA to address if the bank wants to compete with bank premiere league table," he said.


Updated : 2021-05-07 01:02 GMT+08:00