By Mathieu Rosemain

PARIS (Reuters) – Shares of Credit Agricole SA fell nearly 6% on Wednesday after the French bank reported mixed quarterly results, marked by an unexpected fall in insurance revenues and a record three months at its investment banking division.

The lender reported a smaller-than-expected drop in third-quarter earnings but bank-wide revenue missed estimates, notably dragged down by its consumer finance and insurance businesses.

Credit Agricole’s insurance activities in particular saw sales retreat by 1.2% on higher claims tied to policies aimed at protecting farmers against losses in crop production.

“Revenue could have been better. We expected insurance revenue to be a particular highlight of CASA’s (Credit Agricole SA’s) Q3 results. This was not the case,” Jefferies analysts said in a note to clients.

Credit Agricole’s shares fell as much as 5.8% before trimming the losses to trade 4.2% down at 0904 GMT amid an overall stock market rise in the wake of the U.S. presidential election.

Net profit at France’s second-largest listed lender by market value in the July to September period fell 4.7% from a year earlier to 1.67 billion euros ($1.8 billion) after a provisioning boost in 2023 linked to French savings accounts disappeared.

The listed entity of Credit Agricole Group reiterated that it was on track to meet its 2025 financial targets a year early, including annual underlying net income of more than 6 billion euros.

The strong showing at Credit Agricole’s corporate and investment bank, where sales rose a forecast-beating 8.2% to 1.53 billion euros, compares with a 4.9% rise at rival Societe Generale and 9% at BNP Paribas.

Buoyant markets have encouraged investors to trade, companies to borrow and boosted capital markets activity globally in recent months, helping investment banks across Wall Street and Europe.

Credit Agricole’s revenue from trading in fixed income, currencies and commodities rose by 6.2%, below BNP’s 12% growth but close to Societe Generale’s 6.1%. 

“Foreign exchange and linear activities are suffering a little, but we have very good momentum in other sectors, particularly with regards to securitisation… bond issues,” Xavier Musca, head of Credit Agricole’s corporate and investment bank, said on a media call.

RETAIL DROP

The lender’s overall drop in earnings relates to the bank previously putting money aside to protect against higher interest rates for French savings accounts that customers use to buy a house.

Credit Agricole had benefited from more than 200 million euros of net profit released from those provisions last year, inflating 2023’s third-quarter numbers.

Bank-wide revenue this year came in 2.3% higher at 6.49 billion euros, below the 6.56 billion-euro average analyst estimate after revenues at its French and Italian retail banks contracted.

Sales at Credit Agricole SA’s French retail activities edged down 1.7% in the third quarter. Excluding the effect of the 2023 provisions, they would have been up 3.7% from a year earlier, the lender said.

Credit Agricole said its cost of risk – money set aside for bad loans – was 433 million euros, against the 792 million euros expected by analysts. 

A planned joint venture with payments company Worldline, CAWL, will be operational by end-March 2025 and has not been delayed by the sudden departure of Worldline’s long-time CEO in September after it issued another profit warning, deputy CEO Olivier Gavalda said. 

($1 = 0.9145 euros)

(Reporting by Mathieu Rosemain; Additional reporting by Bertrand de Meyer; Editing by Tommy Reggiori Wilkes, Jan Harvey and Emelia Sithole-Matarise)

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