* To raise dividend payout ratio to 50 pct
* Focuses on retail banking, savings management, insurance
* Steps up cost cuts, 520 million eur in 2014-2016
* Targets ROTE at 12 pct in 2016 vs 9.3 pct in 2013
(Repeats to add link to Breakingviews)
By Maya Nikolaeva and Matthias Blamont
PARIS, March 20 Credit Agricole
outlined plans to increase net profit by more than 60 percent in
two years' time by cutting costs and selling a wider range of
existing products to customers to combat slow growth in its
French home market.
Analysts said the plan unveiled on Thursday was sensible but
not enough to make Credit Agricole stand out from bigger rivals
Societe Generale and BNP Paribas which are
due to present their strategies later this year.
The number-three listed French bank by market value told
investors in London it aimed to increase net profit to more than
4 billion euros ($5.56 billion) by 2016.
The bank, which generates more than 70 percent of its
revenue in France, has been selling assets and pulling out of
markets such as Greece to meet tougher post-crisis regulation
and combat tougher economic conditions. It returned to profit in
2013 after two years of losses.
The Credit Agricole Group, a network of regional savings
banks that controls Credit Agricole, is one of the biggest
lenders in France, serving one in three households and companies
and nine out of 10 farmers.
However the 120-year-old semi-cooperative lender said it
faces three years of stagnant retail revenues at home where
unemployment is near all-time highs in a lacklustre economic
Analysts said Credit Agricole's growth plan was in line with
other French banks which they expect to improve cross-selling of
products such as insurance, cutting costs and keeping provisions
in check in a bid to improve profitability.
Fund manager Francois Chaulet, of Montesegur Finance in
Paris, said he still preferred BNP Paribas and SocGen because
they had completed the process of bolstering their balance
"Credit Agricole is still focused on strengthening its
capital base and being a conservative bank," he said.
Credit Agricole is also following rivals by promising a
higher capital return to investors. The bank will increase its
dividend payout ratio to 50 percent in 2015 from 35 percent in
2013, with a cash component of about 50 percent.
Credit Agricole said it was aiming to cut 520 million euros
in costs over the next three years to lift its return on
tangible equity (ROTE) to 12 percent in 2016 versus 9.3 percent
in 2013. This measure of profitability strips out intangible
assets such as goodwill.
The bank is reviewing its branch networks in France -
although it said it has no plans to close any - and plans to
invest more in online services as high street banking declines.
MODEST REVENUE GROWTH
Shares in Credit Agricole, known in France as the "green
bank" due to its historic roots in the farming community, were
down 2.3 percent on Thursday, tracking a broader sell-off on
European markets. They have risen 23 percent so far this year,
outstripping a 1 percent rise in European banks.
The bank is targeting a 3 percent rise in annual revenue
between 2014 and 2016, with most of the growth coming from its
retail banking, asset management and insurance businesses.
Credit Agricole envisages 850 million euros in extra revenue
from selling a wider range of products to customers, with
savings and insurance business contributing most.
Customers, on average, currently buy seven or eight
different products or services from the group, such as insurance
or wealth management and the bank is looking to increase that.
Credit Agricole said its asset manager Amundi was targeting
1 trillion euros in assets under management by 2016, up 30
percent from end-2013, through acquisitions and partnerships.
It also expects a recovery in its retail operations abroad,
especially in Italy and investment banking - business lines that
were hit hardest during the financial crisis.
(Additional reporting by Lionel Laurent and Alexandre
Boksenbaum-Granier; Editing by Andrew Callus and Erica