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March 2013 - A year of transformation
2012 was a year of difficulties and effort on the part of everyone.
Our activities fell against the backdrop of deterioration in economic conditions, with growth forecasts revised downwards in both France and Europe. As a result of regulatory reforms affecting the banking industry, we have also been required to demonstrate our flexibility and revise the conditions under which we conduct our business activities on a long-term basis.
In this particularly challenging climate, Crédit Agricole S.A. sustained a net loss (Group share) of €6,471 million. This performance reflects primarily exceptional accounting entries, as well as strategic decisions made to lay the foundations for our future. However, it should not overshadow the recurring earnings base of our business lines and, above all, the solidity of our bank. 2012 should be regarded as a turning point in the history of Crédit Agricole, with the aim of consolidating our unique and durable banking business model.
The major steps forward achieved include the sale of Emporiki to Alpha Bank, which was carried out swiftly and in an orderly manner. This asset sale was necessary for both Crédit Agricole, in view of the ongoing risks of losses, and for the Greek financial sector, currently in the process of restructuring.
Like every year, we carried out tests to measure the fair value of our assets in each of our business lines, taking account of the economic situation and growth outlook. On the basis of this, we recognised significant impairment charges, which had a very negative impact on our income. However, these measures - which did not entail any cash outflow - do not affect the Group’s solidity or its ability to finance the French economy in any way.
Another structural project is our adjustment plan, which has been pursued with determination. Going beyond the targets we had set ourselves, the plan attests to the commitment of our staff and the Group’s ability to adapt. This is reflected by our enhanced financial strength, which is vital in our business.
Crédit Agricole is a solid bank. In the space of a year, we have improved our solvency ratios, primarily thanks to a reduction in risk-weighted assets. The Crédit Agricole Group had a Core Tier 1 ratio of 11.8% and Crédit Agricole S.A. 9.7% as at 31 December 2012 (pro forma for the sale of Emporiki). As stated previously, the Crédit Agricole Group will have a Basel III Common Equity Tier 1 capital ratio of over 10% at the end of 2013.
Lastly, Crédit Agricole is a useful bank, able to serve its various customers. We are continuing to lend in a less favourable climate. As such, loans outstanding rose to a level of €485 billion at the end of the year in France, with the Regional Banks and LCL. Crédit Agricole therefore remains the leading provider of finance to the French economy.
2012 was a significant year in the history of Crédit Agricole and we are fully aware of this. As a result of the extensive adjustment efforts of the last 18 months, we are now able to look to the future from solid foundations, with market-leading positions in France and Europe, a stronger balance sheet thanks to our reduced debt and priority given to organic growth. These principles form the basis of our three main ambitions for 2013: to adopt a new strategic plan, return to profit and increase Crédit Agricole S.A.’s financial strength.
