PARIS (Reuters) - Credit Agricole SA CAGR.PA hiked loan loss reserves in the second quarter as the COVID-19 pandemic bore down on large corporate clients but profits beat expectations after a boost in fixed income trading.
The cost of covering soured loans more than doubled to 842 million euros (761.48 million pounds) at France’s second-largest listed bank helping to drive a 22% drop in net income.
Collapsed German payments firm Wirecard was among Credit Agricole’s expected bad debts but Chief Executive Philippe Brassac declined to quantify the hit from the firm’s implosion. He said the bank was willing to reclaim the e-commerce payments technology it was working on with Wirecard as part of their partnership.
Credit Agricole is less dependent on trading than domestic rivals but its capital markets and investment banking division shone in the quarter with a 16% rise in revenue, boosted by a 44% increase in its fixed income business.
The bank cut its equity trading business years ago, helping it to avoid the big losses from equity derivatives which triggered management upheaval at Societe Generale and Natixis earlier this week.
Overall, net income fell to 954 million euros in the second quarter, ahead of a mean analyst estimate of 606 million euros, according to IBES data for Refinitiv, while revenue fell by 5% to 4.9 billion euros, broadly in line with expectations.
Revenue at its French retail bank LCL fell by 4%, while revenue from international retail activities and specialised financial services covering consumer finance both declined by more than 10%.
Reporting by Maya Nikolaeva; Editing by Sudip Kar-Gupta, Kim Coghill and Carmel Crimmins
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