French lender reports $1.3b Q4 loss

Credit Agricole SA, France's second-largest bank by assets, posted its first quarterly loss since the company went public in 2001 after adding to writedowns linked to US subprime mortgages.

The fourth-quarter loss of 857 million euros ($1.3 billion) compares with a profit of 1.1 billion euros a year earlier, the Paris-based bank said yesterday. Credit Agricole rose as much as 4.3 percent in French trading after saying it will raise the dividend and doesn't plan any "major" acquisitions this year.

Credit Agricole's 3.3 billion-euro markdown was more than the 2.5 billion euros Chief Executive Officer Georges Pauget forecast in December. The lender is the most affected of the French banks by declining values of debt securities and rating downgrades of bond insurers, which have led to more than $180 billion of charges at the world's biggest financial firms.

"It's a disappointing set of results, but the market maybe feels that these are the last set of depreciations," said Clemence Bounaix, an analyst at Richelieu Finance which doesn't hold any Credit Agricole shares. "The risks and exposures are now known and the market feels it can turn the page."

Credit Agricole rose as much as 74 cents to 17.95 euros and was at 17.86 euros at 11:51 am in Paris. It has dropped 23 percent this year, while BNP Paribas SA, the largest French bank, has declined 21 percent. Societe Generale SA, the worst-performer among France's three biggest banks this year, has lost 25 percent.

'Turbulent' 2008

Because of the writedowns, Credit Agricole's Calyon investment-banking unit had a loss of 1.9 billion euros in the quarter, compared with a profit of 255 million euros a year earlier. Banks may face as much as $203 billion in additional writedowns, partially because of a bond-insurance crisis, UBS AG forecast last month.

"The banking world will remain turbulent in 2008 but Credit Agricole will keep its course," Chairman Rene Carron said at a press conference in Paris. "The dividend is a sign of confidence despite the decline in profit." The bank plans to increase its payout to shareholders 4.3 percent to 1.20 euros a share.

Credit Agricole also plans to "focus on integration and organic growth" rather than make large acquisitions this year, Chief Financial Officer Bertrand Badre said.

He declined to say if the company will take advantage of the decision by Spanish banking regulators allowing it to raise its stake in Bankinter to 29.9 percent from the 20 percent it holds now.

Integration costs

Net income at the French regional retail banks rose 1 percent to 223 million euros in the quarter, while profit from international retail banking fell 11 percent to 107 million euros because of the integration costs from acquiring banks in Italy and Greece.

Societe Generale, France's second-largest bank by market value, had a 4.9 billion-euro trading loss and wrote down the values of debt securities by 2.05 billion euros in the fourth quarter, resulting in a record 3.35 billion-euro loss.

BNP Paribas last month reported a 42 percent decline in fourth-quarter profit to 1.01 billion euros after taking provisions and writedowns of 1.2 billion euros for the full year.

Agencies

(China Daily 03/06/2008 page16)