PARIS, Aug 4 (Reuters) - Credit Agricole, France’s third-biggest listed bank, reported a 12.4 percent rise in cost of risk in the second quarter as it put aside more money to cover litigation costs and boosted capital via its cross-shareholding structure.
The bank, majority owned by a network of cooperative regional lenders, said second-quarter net income rose to 920 million euros ($1.01 billion) from 17 million in the year-ago period, when it took a hit from its stake in troubled Portuguese lender Banco Espirito Santo (BES).
Adjusted net income was 982 million euros, down from 1.062 billion a year ago, weighed down by lower revenue in French retail and in specialised financial services.
The quarter was marked by an advance in talks with the U.S. authorities over payments denominated in U.S. dollars involving countries or individuals that have been sanctioned.
“These discussions are ongoing and are likely to lead to a global settlement in autumn 2015,” the bank said in a statement on Tuesday.
Credit Agricole booked an additional 350 million euros in litigation provisions, bringing the overall sum to 1.6 billion.
Credit Agricole said its core Tier 1 capital ratio, a key indicator of its ability to absorb losses, was stable at 10.2 basis points versus end-March.
The capital ratio was hit by the short-term impact of interest rate rises, which triggered a fall in the value of its equity stakes in regional banks and its insurance unit.
The fall in the ratio was partly offset by the so-called ‘switch mechanism’ - a way to raise capital internally. ($1 = 0.9142 euros) (Reporting by Maya Nikolaeva; Editing by James Regan)