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Credit Agricole SA benefited from record inflows at its asset-management unit and higher revenue at the investment bank in the fourth quarter, bolstering Chief Executive Officer Philippe Brassac after he unveiled his new targets.
Revenue from capital markets and investment banking rose by more than half, in a period that saw a surge in trading revenue at most Wall Street banks, helping revenue at the French lender beat estimates. Net income of 1.66 billion euros ($180 billion) was also better than expected.
Brassac is betting on corporate banking and asset management for growth to offset the impact of low or negative interest rates and rising capital requirements. The bank in December wrote down the value of its French retail banking division LCL by about 600 million euros to reflect the tougher environment the lender faces.
Net income was boosted by more than 1 billion euros from a favorable tax ruling, which more than offset the writedown on the French retail business. The dividend was increased by 1.4% to 70 cents, the bank said.
Credit Agricole rose as much as 1.1% in early Paris trading, before reversing gain to trade 1.1% lower at 9:49 a.m. Before today, the stock had gained 38% over the past 12 months, making it the second-best performer in the Stoxx 600 Banks Index.
Credit Agricole is more diversified and less dependent than rivals BNP Paribas SA and Societe Generale SA on trading, and it has been able to turn to acquisitions to support growth. The lender is among the firms that have come up as potential buyers for HSBC Holdings Plc’s French retail operations, though Jerome Grivet, the chief financial officer, on Friday said he isn’t interested.
Credit Agricole is considering deals to grow its asset management unit or the specialized financial services business, but not in French retail, where it already has a large presence, he said in an interview with Bloomberg TV.
Its giant asset manager, Amundi SA, has grown into Europe’s largest with the help of acquisitions, making it a model for rivals seeking to consolidate. Amundi on Wednesday raised its dividend and reported record net inflows of 76.8 billion euros in the fourth quarter after a new pension mandate in India.
Amundi’s development will be “amplified with two strategic initiatives,” its partnership with Spain’s Banco Sabadell SA and a Chinese subsidiary created in partnership with Bank of China, Yves Perrier, the asset manager’s CEO said in a statement.
Brassac has reorganized Credit Agricole’s structure and sold less-strategic holdings over the past years while seeking partnerships with other companies. The CEO in June pledged to boost net income by more than 600 million euros over three years and drive down costs, after meeting previous key targets ahead of schedule.
The lender affirmed those targets in December, when it announced the goodwill charge at LCL. Credit Agricole merged with Credit Lyonnais in 2003 and the latter went on to focus on retail banking and adopted the LCL brand in 2005, according to the company’s website.
(Updates with CFO comments in seventh paragraph.)
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