Crédit Agricole Posts Unexpectedly Large Loss

PARIS — The French bank Crédit Agricole posted an unexpectedly large third-quarter loss Friday, mainly from costs related to the disposal of its Greek unit.

The loss was €2.85 billion, or $3.6 billion; the market had been expecting a loss of about €1.8 billion. Crédit Agricole booked one-time costs of €1.96 billion on the disposal of its Emporiki unit . It said Oct. 1 that it had begun exclusive talks to sell Emporiki to Alpha Bank, also based in Athens, for a symbolic €1.

The French bank wrote down €181 million on its sale of CA Cheuvreux, a brokerage, to Kepler Capital Markets, and €193 million as the cost of deconsolidating its holding in Bankinter, after its stake in that Spanish bank fell below the regulatory threshold of 20 percent at which subsidiaries must be included in the parent’s results. It also wrote down the value of its own debt by €647 million and wrote down €572 million of goodwill in its consumer finance business.

Crédit Agricole’s revenue fell 32 percent to €3.4 billion, mainly as a result of the disposals of CA Chevreux and Emporiki.

Jon Peace, an analyst in London with Nomura International, said the charges on CA Chevreux and goodwill had come as a surprise to the market, as had the size of the own-debt charge, and that accounted for the entire difference between analysts’ expectations and the bottom line

The bank said that it had made “major progress” in straightening out its business and that without the exceptional items its net income would have been €716 million in the latest quarter. It credited a strong performance from its lending activities in France, where it is the market leader.

Still, that figure was well below the €786 million adjusted profit analysts surveyed by Reuters had been expecting. The bank’s shares fell 4.8 percent in Paris morning trading.

The Paris bank said its Core Tier 1 ratio, a measure of a lender’s ability to weather a financial shock, rose by seven-tenths of a percentage point since the end of last year, to 9.3 percent. It said it expected to reach its target of a fully loaded Basel III Common Equity Tier 1 ratio above 10 percent by the end of next year.

Article source: http://www.nytimes.com/2012/11/10/business/global/credit-agricole-posts-unexpectedly-large-loss.html?partner=rss&emc=rss