Credit Agricole SA posted third-quarter results that beat analysts estimates as it benefited from higher interest rates in Italy and its traders outperformed peers.
Revenue at the Paris-based bank rose 19% and net income gained 33%, both ahead of estimates. The increases were driven by income from lending in Italy and a 26% jump in fixed-income trading, the firm said Wednesday, during a quarter where other European banks saw steep declines.
While buying and selling fixed-income securities accounts for a smaller share of revenue than at many peers, Credit Agricole has benefited this year as its traders largely bucked the slowdown across Wall Street. That and Chief Executive Officer Philippe Brassac’s efforts to increase the footprint in the interest-rate-sensitive Italian market over the past decade, for instance with the acquisition of Credito Valtellinese SpA, is shielding the lender while rivals such as Societe Generale SA struggle.
Deputy Chief Executive Officer Xavier Musca attributed the trading performance to Credit Agricole’s focus on client solutions rather flow products, which slowed down of late, and to progress in areas such as dollar bond issues.
“We’re increasingly asserting ourselves for what we are, that is, a debt house,” Musca said on a call.
SocGen posted a 5% drop in fixed income trading last quarter and BNP Paribas SA saw revenue from the business decline 12% from a year earlier. Both also reported declining income from lending in their home market, as local mortgage rules and higher rates for regulated savings continue to restrain banks’ ability to pass on higher rates to its customers. At SocGen, wrong-way interest rate hedges worsened the situation.
Credit Agricole’s French retail unit saw its revenue rise 6% as its net interest margins stabilized. The lender also cited the positive impact of “macro hedges.” International retail banking saw a 27% jump in revenue, as it continued to benefit from higher interest rates and margins in countries such as Italy, Poland and Egypt.
The French bank acquired Credito Valtellinese two years ago and also agreed to buy a 65% stake in Banco BPM SpA’s non-life insurance services.
Credit Agricole’s asset manager Amundi SA already reported its earnings separately last month, posting €13.7 billion of inflows in the third quarter, more than analysts anticipated.
