Morningstar | Credit Agricole: Resilient 1Q19 Results
No-moat Credit Agricole reported attributable net income of EUR 763 million for the first quarter of 2019. This is 11% lower than the EUR 856 million it reported in the first quarter of 2018 and it missed the EUR 822 million consensus had pencilled in by 7%. A 1% decline in revenue combined with a 1% increase in operating expenses were enough to lead to a 6% decline in pre-provision profits. Credit Agricole books its full contribution to the European Strategic Resolution Fund, or SRF, in the first quarter of the year. The 14% year-on-year increase in its contribution therefore had an outsize impact on Credit Agricole's first-quarter results. We maintain our no-moat rating and our fair value estimate of EUR 12 per share.Corporate and investment banking, including custody banking, contributed 30% of attributable profit for the 2018 fiscal year. At first glance a 3% year-on-year growth in attributable income for this business looks respectable in an environment which many of its investment banking peers found challenging. The results were however saved by loan loss provisions swing into a net write back in the first quarter of 2019. Pre-provision profits declined by 12% year on year although we do once again have to highlight the outsize impact of the full SRF charge taken in the first quarter. The 2% growth year on year recorded in fixed income currencies and commodities, or FICC, capital market business is in line with the average performance of European investment banks in their FICC operations.
Insurance contributed 25% of Credit Agricole's attributable profits in 2018. First-quarter results were resilient with attributable profit year-on-year growth of 3%, with flat revenue. The savings business continues to see good inflows in unit-linked policies, while the property and casualty business continue to see strong double-digit premium growth.
Credit Agricole is active in the market of retail banking and related businesses. Co. provides day-to-day banking, savings products, mortgage and consumer loans, insurance, private banking, asset management, lease finance and factoring, corporate and investment banking. Its activities can be divided into six business lines: French Retail Banking - Regional Banks; French Retail Banking - LCL; International Retail Banking; Specialized Financial Services; Savings Management and Insurance; and Corporate and Investment Banking. Co.'s customers are personal customers, farmers, small businesses, companies and local authorities. As of Dec 31 2013 Co.'s total assets amounted to Euro1,536,873,000,000.
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