* CEO sees "significantly positive" full-year results
* Q2 net income 696 mln eur vs I/B/E/S poll avg 514 mln
* Group leverage ratio at 3.5 pct
* CEO cautious on prospects for French economy
* Shares up 1.4 pct, extending recent gains
(Adds investor comment, details, background, shares)
By Christian Plumb and Matthias Blamont
PARIS, Aug 6 Credit Agricole reported
a more than twelvefold increase in quarterly profit, becoming
the latest French lender to beat forecasts as its slimmed down
investment bank showed unexpected resilience.
However, France's third-biggest bank struck a cautious note
on the domestic economy, which has become all the more important
to the 119-year-old semi-cooperative bank as it unwinds an
ill-fated expansion abroad.
"The economic situation remains weak and we're proceeding in
an environment that's too heavy with constraints for the banks,"
Chief Executive Jean-Paul Chifflet said on a conference call,
adding management was "cautious over the medium- to long-term".
France, the euro zone's second-largest economy, is
struggling to haul itself out of a period of prolonged economic
weakness, with jobless claims at a record high.
Nonetheless, Chifflet predicted Credit Agricole - which in
2012 posted a loss close to 4 billion euros ($5.3 billion)
related to its exit from Greece and asset writedowns - would
deliver a "significantly positive" result for the full year,
helped by its disposal of problem businesses and cost cutting.
Net income in the three months ended June 30 rose to 696
million euros from 56 million a year earlier, beating analysts'
average forecast of 514 million. Revenue fell 0.9 percent to
4.39 billion euros, also topping an estimate of 4.16 billion.
Results were mixed at the lender's retail units, while
profit at its investment bank jumped 38 percent, helped by
fixed-income capital markets, echoing strong results at rival
Societe Generale last week.
France's largest bank, BNP Paribas, also beat
earnings forecasts, powered by its retail banks. Investment
banking and asset management specialist Natixis is set
to announce results later on Tuesday.
At 1035 GMT, Credit Agricole shares were up 1.4 percent,
trimming an initial jump of up to 5.1 percent, but bringing
their gains this year to 31 percent, about triple the European
"All the lights have turned green," said Jacques-Pascal
Porta, a fund manager at OFI Gestion Privee in Paris.
"It's a bank that had suffered a lot and now we're seeing a
logical re-rating that allows the group to return to a valuation
level that corresponds to its profile, which is that of a less
CAPITAL IN FOCUS
Credit Agricole's capital remains a concern for some
analysts, however, especially given regulators' renewed focus on
its leverage - a measure of equity to assets - estimated by
JPMorgan analysts at l.7 percent.
That compares with the 3 percent regulators are targeting
for 2018. Credit Agricole has preferred to focus on the leverage
ratio at the group level - including the regional banks that
control the listed entity - which it said stands at 3.5 percent.
The group's fully-loaded Basel III core capital ratio rose
to 10 percent as of June 30 from 9.6 percent at the end of the
first quarter. No figure was disclosed for the listed entity.
Credit Agricole Chief Financial Officer Bernard Delpit said
only the group level ratios should matter.
"It's on that level up until now that we've dealt with
regulators as well as with credit ratings agencies," he said.
Delpit said the bank had cut its global payroll, which stood
at 150,000 at year-end, by nearly 10 percent from the year-ago
quarter, resulting in a roughly 50 million euro reduction in
Credit Agricole acknowledged it had inadvertently published
its results on Monday night at around 2000 GMT because of a
"technical error". They had been scheduled to be disclosed at
0500 GMT on Tuesday.
($1 = 0.7553 euros)
(Additional reporting by Blaise Robinson; Editing by James
Regan and Mark Potter)