- 3 min
First quarter 2013
Revenues and income resilient in core businesses
Crédit Agricole Group* in the first quarter of 2013
Net income Group share excluding revaluation of own debt issues and CVA /DVA: €1,287 million
Net income Group share: €1,025 million (+18.7% Q1/Q1)
Core Tier 1 ratio: 11.0%
Fully loaded Basel 3 CET 1 ratio: 9.6%**
* Crédit Agricole S.A. and 100% of the Regional Banks
** Based on CRD 4 rules as analysed by Crédit Agricole S.A. at end-March 2013 and before application of transitional provisions.
Crédit Agricole S.A. in the first quarter of 2013
Revenues of the business lines: €4.8 billion (-9.0% Q1/Q1)
Net income Group share excluding own debt revaluation and CVA /DVA: €726 million
Net income Group share: €469 million (+50.8% Q1/Q1)
Core Tier 1 ratio
9.7% before transitional application of financial conglomerates regulation (+50bp)
8.5% after application of transitional regulation
Crédit Agricole Group
Crédit Agricole Group generated net income Group share of 1,287 million euros in the first quarter of 2013, excluding revaluation of debt issues and the impact from the application of IFRS 13 (CVA/DVA.). Including these items, net income Group share amounted to 1,025 million euros, compared with 863 million euros the first quarter of 2012 on a comparable scope and methods.
Jean-Marie Sander, Chairman of Crédit Agricole S.A., commented: ”The first quarter 2013 results demonstrate the pertinence of our economic model, focused on universal retail banking, as well as the transformation of the Group, which remains committed to financing the real economy”.
For Jean-Paul Chifflet, CEO of Crédit Agricole S.A.: "These results confirm the predominance of our retail banking businesses, which give the Group a high base of recurring income: retail banking and the savings and insurance business lines account for 78% of revenues and 85% of net income generated by the Group's business lines".
In terms of solvency, the Core Tier 1 ratio was 11.0% at 31 March 2013, reflecting the impact from the transitional application of the treatment of equity investments in insurance companies pending Basel 3. This is in line with the target of 10% fully loaded under Basel 3 by the end of 2013.
Crédit Agricole S.A.
Crédit Agricole S.A.'s Board of Directors, chaired by Jean-Marie Sander, met on 6 May 2013 to review the financial statements for the first quarter of 2013.
Net income Group share amounted to 726 million euros before revaluation of debt issues and the impact from the application of IFRS 13 (CVA/DVA); after these items, it was 469 million euros. Other than these factors of volatility which are attributable to the application of new accounting standards, reported results were not affected by exceptional events.
For Jean-Paul Chifflet, Chief Executive Officer of Crédit Agricole S.A., reported results reflect resilient revenues and income in the Group's core businesses, a persistently moderate cost of risk and a steady decline in expenses, in a mediocre economic environment.
Retail banking delivered a strong performance, with year-on-year increases of 5.5% in on-balance sheet customer deposits and of 0.8% in lending across all of the Group's branch networks (Regional Banks, LCL and foreign banks) in the first quarter of 2013. Moreover, business was solid in the Savings (Amundi and Private Banking) and Insurance business segments, with net new inflows of over 14 billion euros over the quarter as well as market share gains in both asset management and life insurance. Aggregate revenues for these business rose by a moderate 15 million euros by comparison with the first quarter of 2012.
In Consumer finance and Corporate and investment banking, revenues fell by comparison with the first quarter of 2012, which was impacted by the adjustment plan that ended in December 2012. In these segments, revenues were adversely affected in the first quarter of 2013 by the managed reduction in business and a less buoyant fixed-income market than in the first quarter of 2012.
The cost of risk remained moderate on the whole. It amounted to 68 basis points of outstandings on an annualised basis, in line with the second and third quarters of 2012 (64 and 60 basis points respectively), but lower than in the first and fourth quarters of 2012, when higher provisions were booked for Agos Ducato. In the first quarter of 2013, provisions for the Italian consumer finance subsidiary were restored to a level in line with expectations for 2013 (232 million euros). In Retail Banking, the trend in cost of risk was consistent with expectations at LCL for 2013 (37 basis points compared with 34 basis points in the first quarter of 2012) and at Cariparma, where it was stable by comparison with the last quarter of 2012. In Corporate and Investment banking, the cost of risk remained very moderate at 28 basis points, with the bulk of net charges to provisions going to collective reserves.
Operating expenses fell in the first quarter of 2012. This is particularly notable in that taxes increased by 25 million euros year-on-year in the first quarter. The organic decrease over the quarter was 125 million euros, or -4.2% of the cost basis of the quarter. The main business lines contributing to this reduction were Specialised financial services and Corporate and investment banking, with workforce reductions of 5% and 11% respectively, in keeping with adjustment plan guidelines. Expenses will continue to contract with the gradual implementation of the MUST programme, which aims to lower Crédit Agricole S.A.'s operating expenses by 650 million euros by 2016 through optimisation in three main areas: information systems, purchasing and property.
In the area of solvency, Crédit Agricole S.A. continued to strengthen its intrinsic ratios. With the deconsolidation of Emporiki, which became effective in the first quarter, Crédit Agricole S.A.'s Core Tier 1 ratio at end-March 2013 would have been 0.5% higher than at end-December 2012. However, in 2013, a transitional financial conglomerates regulation is being applied pending Basel 3. Shares in insurance companies, which were previously deducted from total equity, are now weighted in the denominator and treated as an equity exposure (weighting of 370%). This regulation produced a negative impact of 113 basis points on the Core Tier 1 ratio, which fell to 8.5% as a result. This figure is a low point before extension of the Switch, as announced at the 2012 annual results presentation, and before application Basel 3 as from 2014.
Crédit Agricole Group’s liquidity position continues to strengthen. The Group's cash balance sheet (at bank level) amounted to 1,048 billion euros at 31 March 2013 and the surplus of long-term funding sources over long-term applications of funds was 48 billion euros at the end of the first quarter. Liquidity reserves amply covered short-term market funds (by 165%). Moreover, at end-March 2013, Crédit Agricole S.A. had completed 45% of its annual medium-to long-term market issuance programme, set at 12 billion euros. Issues placed via the Group's branch networks and additional funds raised by the specialised subsidiaries amounted to 4 billion euros in the first quarter.
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