PARIS: Credit Agricole said it had completed a simplification of its structure in the third quarter that puts more capital into the listed arm of the business, allowing it to set a minimum dividend level for next year.
The French bank, majority owned by a network of co-operative regional lenders, also said on Tuesday third-quarter net income doubled to 1.86 billion euros ($2.1 billion, Dh7.7 billion). This was higher than analysts’ average forecast of 1.70 billion euros in a Reuters poll.
The result included a well-flagged 1.25 billion-euro gain from a plan called ‘Eureka’ that simplifies the complex cross-shareholding structure between Credit Agricole’s listed entity and its co-operative parent banks.
The transaction, which in exchange for the cash hands full control of the regional banks back to themselves, helped the listed lender boost its common equity tier 1 capital ratio, a key indicator of its ability to absorb losses, to 12 per cent from 11.2 per cent at the end of June.
The bank said it intended to recommend in May 2017 a dividend of 0.60 euro per share for its 2016 results, based on a 50 per cent payout rate, and not to lower the dividend in 2017 relative to 2016.
“This addresses questions raised by a number of investors,” chief executive Philippe Brassac told journalists.
The plan for a simpler structure led to numerous exceptional accounting items this year and had left investors in doubt over the bank’s policy of paying out 50 per cent of earnings in dividends, Brassac added.
Credit Agricole’s revenue in the third quarter, however, came in below analysts’ forecasts, falling to 3.74 billion euros from 3.92 billion a year earlier.
Revenue in French retail, international banking, asset management, insurance and wealth management fell, while its corporate and investment bank fared well thanks to an industry-wide boom in fixed income trading.
Investors’ focus now turns to any improvements in its French retail unit LCL, which lagged peers earlier this year. Its net interest income (NII) — a measurement of how much a bank can earn by lending and investing its deposits and other funds — fell by 4.9 per cent, a better performance than Societe Generale’s 7.4 per cent decline but worse than BNP Paribas’ 4 per cent.
“Interest rates in the euro zone continued to fall during the quarter, putting further pressure on the interest margin ... triggering a new wave of loan renegotiations, especially at LCL in France,” the bank said.
Credit Agricole reduced costs over the quarter by 5.4 per cent at LCL, as part of its plan to cut and remodel branches and regroup back offices.
