UPDATE 2-France's Credit Agricole says on track after Q3 gains

* Q3 net profit up, in line with expectations

* Revenue from retail banking up

* CEO says bank to meet all 2019 targets

* Trading arm hit by adverse market conditions (Adds analyst comment and detail)

PARIS, Nov 7 (Reuters) - Credit Agricole is on track to meet its financial targets after it reported higher third-quarter profits, the French bank’s chief executive said on Wednesday.

Net profit rose 3.2 percent to 1.10 billion euros ($1.26 billion) topping the 1.03 billion euros expected by analysts in a poll by Inquiry Finance for Reuters.

Revenue rose 5 percent to 4.80 billion euros, short of the 4.86 billion expected by analysts.

“The results are serious and the fruit of our structural prudence,” Chief Executive Philippe Brassac told reporters. He said the bank had already met some of its financial targets for 2019 and was on track to meet the others.

Kepler Cheuvreux analysts expect Credit Agricole to reach its 2019 net profit target this year.

Montaigne Capital fund manager Pierre Willot, whose portfolio does not include Credit Agricole shares, said the bank’s results had been flattered by a drop in provisions.

“The beat mainly comes from a provision write back. Therefore, adjusted results are in line, no more, in my view,” Willot said.

Credit Agricole shares were down 0.9 percent at 11.41 euros in early trade.

The bank delivered “good capital generation”, analysts at brokerage Jefferies said in a note to investors. They reiterated their ‘buy’ rating with a target share price to 18.50 euros.

Large European banks such as Credit Agricole are juggling to boost profits while increasingly demanding regulations limit the extent to which they can undertake high-risk activities.

Fast-changing technology and new consumer habits are also forcing them to spend heavily on overhauling their business models.

Credit Agricole’s results come a week after French rival BNP Paribas posted higher third-quarter profits, although BNP Paribas’ results showed some weakness in retail banking and disappointing overall revenue.

Brassac said his bank had found the right balance as its different retail banks in France and Italy saw significant profit increases, with proceeds from fees offsetting dwindling interest margins.

Credit Agricole’s core capital ratio inched up in the quarter to 11.5 percent, a level which Brassac intends to maintain.

He said Credit Agricole would keep focusing on organic growth rather than acquisitions, without ruling out possible takeovers.

Revenue from Credit Agricole’s corporate and investment banking also held up well, with 4.4 percent growth even though its fixed-income, commodity and currency trading arm was hit by adverse market conditions including low interest rate volatility on the European bond market.

BNP Paribas reported weak revenue from its trading arms last week, and one of BNP Paribas’ top traders stepped down following its results.