PARIS: Credit Agricole reported a sharp rise in its core capital ratio to 12.4 percent, as the bank took advantage of higher profits and a sale of a stake in investment company Eurazeo to beef up its financial position. An improving economic activity in its core European markets, coupled with a slight increase in interest rates and cost cuts, helped drive its second-quarter net income up 17 percent to 1.35 billion euros ($1.60 billion). “The economy is improving in our main markets, namely France and Italy, so I’m confident that we are on track to reach the financial targets that we have set for our medium-term plan for 2019,” Jerome Grivet, the deputy managing director of Group Finance at Credit Agricole, told CNBC on Thursday.
Revenues fell 0.6 percent, as its asset manager Amundi and insurance business suffered quarterly outflows. Its common equity tier one ratio, a key measure of financial strength, rose by 50 basis points compared to the end of March. When asked whether Credit Agricole’s pursuit of three Italian savings banks had been endangered by the recent government friction between Paris and Rome, Grivet replied: “Discussions are a little bit long because it is technically complex, but we didn’t feel any bad will in this discussion linked to political context.” On Tuesday, Credit Agricole confirmed to the Italian authorities it would still be interested in acquiring three small regional banks. The deal, previously expected to be closed this week, includes the acquisition of Italy’s Cesena, Rimini and San Miniato saving banks.
French President Emmanuel Macron appeared to anger Rome last month when he blocked Italian shipbuilder Fincantieri’s takeover bid for STX France shipyards. In a joint statement on Tuesday, the two countries said STX France would not be open to other bids until September 27. Italian Finance Minister, Pier Carlo Padoan, said there was still time to find a solution.
