Credit Agricole Bank reports 1Q 75% drop over Greek losses

PanARMENIAN.Net - Credit Agricole SA, France’s third- largest bank by market value, said first-quarter profit dropped 75 percent, hurt by Greek losses.

The bank slumped as much as 4 percent in Paris trading after reporting net income of 252 million euros ($326 million), less than the 482 million-euro average estimate of five analysts surveyed by Bloomberg.

If Greece left the eurozone, and there was a subsequent 50-percent devaluation of the drachma as would then be inevitable, Credit Agricole would lose about 2.5 billion euros, having invested 7.0 billion euros in the subsidiary.

Credit Agricole booked 940 million euros of net losses related to Emporiki Bank of Greece SA, the Athens-based unit it acquired in 2006, and Greek bond writedowns resulting from the nation’s sovereign debt restructuring. The French bank is struggling to staunch losses from Greece after reporting its first annual loss last year.

Chief Executive Officer Jean-Paul Chifflet pledged on Feb. 23 to reduce “by a maximum” Credit Agricole’s exposure to refinancing the Greek unit. The net refinancing exposure to Emporiki was 4.6 billion euros at the end of March, compared with 5.5 billion euros in December, partly as deposits rose.

The losses from Greece in the first quarter included 130 million euros in writedowns on Emporiki’s deferred-tax assets and 319 million euros in provisions on debt from three Greek companies as part of the country’s sovereign-debt restructuring.

Credit Agricole last year reduced its Greek staff by 11 percent to 5,100, booking 51 million euros in costs. The lender, which spent about 2.2 billion euros in 2006 to amass a controlling stake in the Athens bank, last year wrote down 359 million euros of remaining goodwill at the unit.

In January, Credit Agricole Group injected about 2 billion euros to reinforce Emporiki’s capital. Chifflet, who took over in 2010, last year started trimming the bank’s balance sheet and Credit Agricole in December scrapped its 2014 earnings targets.

Most of Credit Agricole’s balance-sheet cuts come from its corporate- and investment-banking unit. The division, which is shedding 1,750 jobs and closing operations in 21 countries, aims for “medium-term” annual revenue of 5.4 billion euros compared with 4.73 billion euros in 2011, the bank said in April.

First-quarter profit at the unit was 156 million euros, hurt by 246 million euros of net costs related to its balance- sheet trimming plans, Credit Agricole said. Revenue from continuing capital-market and investment-banking operations fell 2.6 percent to 899 million euros, the bank said.

Earnings from the regional banks’ French consumer network were 372 million euros, compared with 374 million euros a year earlier. The LCL French consumer-banking network had 204 million euros of profit, up from 195 million euros a year earlier, Bloomberg reports.