By Mathieu Rosemain

PARIS (Reuters) -French bank Credit Agricole SA reported a smaller-than-expected drop in third-quarter net profit on Wednesday after a record three months for its investment bankers offset weakness at some of its retail businesses.

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 ($1.83 billion) after a provisioning boost in 2023 linked to French savings accounts disappeared.

The smaller profit was still better than the 1.58 billion-euro analyst consensus compiled by the company.

The listed entity 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.

“Credit Agricole delivered a solid set of Q3 results largely in line with consensus at the pre-tax level,” Royal Bank of Canada said in an early note to clients, noting “mixed trends across divisions”.

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.

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.

RETAIL DROP

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.

Revenues from the bank’s insurance business also fell 1.2% over the period.

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 and Jan Harvey)

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