Credit Agricole 1Q net profit falls 77 percent

PARIS — French bank Credit Agricole SA said Thursday its net profit fell 77 percent in the first quarter as the global financial crisis continued to weigh on its asset management, insurance and private banking activities.

France’s largest retail bank by clients reported net profit of euro202 million ($275 million) for the first three months of the year, down from euro892 million a year earlier.

The bank said it “continues to benefit from a very solid financial position,” with a core Tier 1 ratio — a key measure of a bank’s capital strength — of 8.0 percent, unchanged from the previous quarter.

The bank, known as the Green Bank due to its origins as a lender to France’s farmers, said its provisions for potential losses more than doubled in the first quarter, to euro1.1 billion from euro446 million a year earlier. The bank blamed worsening economic conditions for the rise, especially in its international retail banking and financing businesses, where these costs nearly tripled compared to a year earlier.

The stock closed almost flat at euro10.18 in Paris.

The drop in earnings was worse than investors had expected and demonstrated that Credit Agricole and most other French banks “are not expecting an early exit of the crisis and are getting ready for a worsening of the economic scenario,” said Axel Pierron, a banking analyst at financial research firm Celent.

Chief Executive Georges Pauget said the bank had performed well under “difficult conditions” and that Credit Agricole had come through the financial crisis transformed.

“We are powerful but different today,” Pauget said in a conference call with reporters. Pauget also reiterated his stand that Credit Agricole would not seek additional state aid beyond the euro3 billion it received under the government’s first round of bank bailouts last year.

France’s top six banks received a total of euro10.5 billion in government money last December, and some of them, including BNP Paribas and Societe Generale, have said they will request additional state financing in an upcoming second round.

Credit Agricole’s revenue slipped 1.2 percent to euro4.1 billion in the quarter. The year earlier period’s revenue had been boosted by a euro882 million capital gain on the sale of shares in French utility Suez.

The bank’s corporate and investment banking division reported much lower losses in the first quarter compared to a year ago, when the bottom line was hammered by massive writedowns linked to U.S. subprime loans.

The divison’s net loss for the quarter narrowed to euro17 million from euro795 million a year earlier. The bank cut 141 jobs in this division during the first quarter, helping bring down operating costs by 16.3 percent compared to the first quarter of 2008.

The asset management, insurance and private banking divison was hampered by stock market declines from a year ago, reporting a 42 percent drop in net profit on a 28 percent fall in revenue.