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Individual shareholders' corner

Sound fundamentals, performance in line with targets of returning to significantly positive results

Jean-Marie Sander, Chairman of Crédit Agricole S.A., et Jean-Paul Chifflet,  Chief Executive Officer of Crédit Agricole S.A.

Crédit Agricole S.A.'s Board of Directors, chaired by Jean-Marie Sander, met on 18 February 2014 to examine the financial statements of the fourth quarter of 2013 and approve the full year 2013 financial statements.

Jean-Marie Sander, Chairman of Crédit Agricole S.A., commented: "These results reflect an increased contribution from the Regional Banks and a solid performance from Crédit Agricole S.A. business lines. Once again, they demonstrate the strength of our retail banking business and related activities and the strength of our Group, which is today the leading retail bank in France and Europe".

Jean-Paul Chifflet, Chief Executive Officer of Crédit Agricole S.A., added: "Our results first and foremost reflect the robustness of our economic model. Prior to unveiling our medium-term plan on 20 March next, Crédit Agricole has shown that it is ready to move forward with confidence. It has reduced its risk profile and refocused on the businesses where it excels. It has a strong capital structure and is ahead of Basel 3 regulatory requirements".

Crédit Agricole S.A.'s net income Group share came to 2,505 million euros for full year 2013, including 612 million euros for the fourth quarter. The continued refocusing has consisted in selling portfolios, investments or subsidiaries that no longer form part of Crédit Agricole S.A.'s core business, including the completion of the disposal of Emporiki, Cheuvreux, CLSA and Bankinter, a reduction in the investment in Eurazeo, preparation for the disposal of Newedge coupled with a reinforced investment in Amundi, preparation for the disposal of CACF Nordic* entities and of CA Bulgaria, sale of the CDO book and the US RMBS book.

For full year 2013, business remained buoyant in the retail banking networks, with 4.5% year-on-year growth in onbalance sheet deposits and more than 2% growth in home loans. Savings management and Insurance delivered a 47.7 billion euro increase in assets under management, including 13.1 billion euros in net inflows during the year.

Businesses that are deliberately being scaled back in some areas of activity, such as Specialist financial services and Corporate and Investment Banking, experienced a limited decline in revenues.

This resilience of activity is reflected in the slight increase in Crédit Agricole S.A.'s revenues (up 0.4% compared with 2012). Operating expenses were down 3.0% in 2013, mainly due to the MUST cost reduction plan, which exceeded its end-2013 cost savings target. Gross operating income increased by 9.4% year-on-year.

Cost of risk was down 20.0% to 67 basis points of loans outstanding compared with 75 basis points in 2012. All business lines contributed to this positive trend, the improvement at Agos Ducato being the major contributor.

All in all, reported net income Group share was 2,505 million euros, a level close to the normalised level of 2,449 million euros as the various specific items globally cancelled each other out. The accounting effects creating negative pressure on results, such as issuer spreads, Day 1 CVA/DVA, DVA running and loan hedges, were offset by capital gains on disposals and the impact of tax deductibility of Emporiki's January 2013 capital increase on the calculation of tax. The balance sheet and capital structure improved considerably during 2013.

During the second half of 2013, due namely to the application of standard IAS 32 (netting of derivatives traded through a clearing house), Crédit Agricole S.A.'s balance sheet decreased by 305 billion euros at end-December 2013 versus a year before, a reduction of 24% excluding insurance and intragroup transactions.

In 2013, Crédit Agricole was active on the capital markets to ensure the financing of its activities.
Crédit Agricole S.A. raised 15.5 billion euros of senior debt, i.e. 3.5 billion euros more than its initial programme, at far better average conditions than in the previous year. The issuance programme for 2014 has been set at 10 billion euros. At 12 February 2014, 40% of the programme had already been completed.

In addition, Crédit Agricole S.A. achieved a 1 billion US dollar Tier 2 contingent capital issue in September 2013, followed in January 2014 by an Additional Tier 1 issue of 1.75 billion US dollars, which contributed to strengthen its capital structure.

In terms of solvency, capital ratios have improved, with a Basel 2.5 Core Tier 1 ratio of 10.0% at end-December 2013, compared with 9.2% one year earlier, and a global ratio of 15.8% compared with 13.2% one year earlier. These favourable trends stem from tight control over risk-weighted assets coupled with organic capital generation including retained earnings.

The fully loaded Basel 3 Common Equity Tier 1 ratio stood at 8.3%, pro forma January 2014 when the Basel 3
regulations come into force.

*This project is subject to the consultation with the relevant workers council and the authorisation of the relevant regulatory bodies