CREDIT AGRICOLE SA: Results for the second quarter and first half
of 2020 - A V-shaped recovery for Crédit Agricole Group
Results for the second quarter and
first half of 2020
Montrouge, 6 August 2020
A V-shaped recovery for
Crédit Agricole Group
Crédit Agricole Group* |
Underlying revenues1Q2:
€8,536mstable Q2/Q2H1:
16,914m+0,3% H1/H1 |
Underlying GOI1Q2:
€3,398m +5,4% Q2/Q2H1:
€5,843mstable H1/H1 |
Underlying net income1Q2:
€1,785m -3,3% Q2/Q2 H1:
€2,767m-15,7%
H1/H1 |
CET1 ratio CET116.1% +0.6pp
June/March,+7.2pp above SREP2 |
- Q2 stated net income Group share: €1,483m
(-18.2% Q2/Q2), H1: €2,391m (-24.4% H1/H1); Q2
stated revenues: €8,096m (-4.6% Q2/Q2); H1: €16,462m (-1.3%
H1/H1)
- Strong recovery in Group business activity thanks to
the Universal Customer-focused Banking model: 685,000 new
retail banking customers in H1-20, net promoter score up (+7 pts
vs. 2019 in Regional Banks and LCL); growth in outstanding
loans excluding State guaranteed loans (+5.9% June/June),
accelerated roll-out of the three pillars of the Group project,
especially in green finance.
- One of the best levels of loan-loss reserves in Europe.
Stable NPL ratio (2.4%), increase in coverage ratio (84.5% +0.2pp
vs. March 2020); loan loss reserves of €20.1bn;
increase in provisioning (to €1,208m, x2 Q2/Q2),
(70% of the increase related to provisioning on performing loans of
€424m in Q2). Annualised cost of risk/outstandings in H1 45bp;
- Very strong level of solvency, CET1 at 16.1%, 2022 MTP
target already reached (buffer above SREP: 7.2pp)
- Excellent results for the Regional Banks:
Underlying net income €663m (+17.9% Q2/Q2). Underlying revenues up:
+1.2% Q2/Q2, underlying costs excluding SRF down: -8.9% Q2/Q2;
stable NPL ratio (1.8%), high coverage ratio (99.7%), increase in
provisioning (+24.9% Q2/Q2)
* Crédit Agricole S.A. and 100% of Regional Banks |
Crédit Agricole S.A. |
Underlying revenues1Q2:
€5,185m+0.1% Q2/Q2H1:
€10,322m+2.4% H1/H1 |
Underlying GOI1Q2:
€2,130m -0.5% Q2/Q2H1:
€3,713m+2.9% H1/H1 |
Underlying net income1Q2:
€1,107m -10.9% Q2/Q2 H1: €1,758m-13.7%
H1/H1 |
CET1 ratio 12.0% +0.6pp
June/March, +4.1pp above the SREP3 |
- Stated result: €954m (-21.9% Q2/Q2); stated
revenues: €4,897m (-4.9% Q2/Q2), stated GOI: €1,838m (-12.9%
Q2/Q2)
- GOI up in the first half: €2.1bn Q2-20 -0.5%
Q2/Q2; €3.7bn H1-20 +2.9% H1/H1; improvement in Q2 of the
cost/income ratio of 1.2pp thanks to stable revenues (+0.1%) and
lower expenses (-1.9%);
- Increase in provisioning (€908m, x2.5 Q2/Q2),
of which €236m in provisioning on performing loans (48% of the
increase). Annualised cost of risk/outstandings in H1 74bp; stable
NPL ratio (3.2%), increase in coverage ratio (73.4% +0.9 pp vs.
Mar. 20); loan loss reserves: €10.1bn.
- CET1 ratio up sharply (+0.6pp) to 12.0%,
incorporating ECB regulatory adjustment measures (Quick Fix for
+41bp) and the impact of the market upturn in the quarter on
unrealised gains and/or losses on securities portfolios
(+19bp). Provision for Q2 dividends of €0.15 per
share. Buffer above SREP requirements: 4.1pp at 30 June,
+0.6pp vs. March
- Underlying earnings per share: Q2-20: €0.36, -10.1% Q2/Q2;
H1-20; €0.53, -15.5% H1/H1.
- Annualised H1 underlying RoTE 8.5%
- Liquidity indicators up (€405bn in reserves at
30/06/2020, an increase of €67bn vs. 31/03/2020).
- Activation of the Switch mechanism due to
market tensions during H1, stated cost of risk impact of €65m.
|
This press release comments on the results of Crédit Agricole
S.A. and those of Crédit Agricole Group, which comprises the Crédit
Agricole S.A. entities and the Crédit Agricole Regional Banks,
which own 55.9% of Crédit Agricole S.A. Please see p. 32 onwards of
this press release for details of specific items, which are
restated in the various indicators to calculate underlying income.
A reconciliation between the stated income statement and the
underlying income statement can be found on p. 4 for
Crédit Agricole Group and on p. 9 for
Crédit Agricole S.A.
Crédit Agricole
Group
Largest bank in France, the Group is massively
committed to supporting the economy
The crisis has brought the Group even closer to
its customers. Substantial support measures were introduced to
stay in contact with them. 9 out of 10 branches
and advisers throughout the Group’s retail banking network could be
contacted during the lockdown period, either in person or remotely.
At CA Italia, there was a significant increase in remote
interactions, with +30% of customers active online. For the
Regional Banks, the growth rate for digital customers was up +0.8
of a percentage point.
The Group’s strong efforts throughout this
challenging period are also reflected in its support for
its hardest-hit customers. The Group has been aligned from
the outset with government strategies, with targeted measures for
each customer category, and therefore continues to meet its
customers’ needs. On 6 March, Crédit Agricole Group granted a
six-month moratorium on loan repayments for
corporate, SME and small business customers impacted by COVID-19.
As at 17 July 2020, a total of 552,000 moratoria was granted in
French retail banking for a total amount of €4.2 billion in
extended maturities (of which, 83% for SMEs, small businesses, and
Corporates, 71% at the Regional Banks and 29% at LCL). The
French government also announced the introduction on 25 March of
State guaranteed loans (Prêts Garantis par l’Etat)
to meet the cash flow requirements of businesses impacted by the
coronavirus crisis. By virtue of its strong regional presence and
universality, the Group supports all businesses, from the smallest
company to the largest corporation, and to date has received 23.7%
of all State guaranteed loan requests. As at 24 July 2020, a total
of 179,500 applications had been received by the Group for an
amount of €28.7 billion (of which 62% for Regional Banks, 30%
for LCL and 8% for Crédit Agricole Corporate and Investment Bank).
The Group has provided specific support to its SME and
small business customers insured against business
interruption, with mutualistic support totalling
€239 million. Lastly, €2 billion of moratoria and
State Guaranteed loans have been provided to CA Italia’s
customers.
Being available and receptive to its
most disadvantaged customers has been a key priority for
the Group in recent months, as the number of customers in a
vulnerable situation rose significantly. The Group has responded by
offering exemptions from penalty and overdraft facilities for SMEs
and small businesses at the Regional Banks and LCL.
In the current context, the Group
Project is more than ever proving its relevance. With
regards to the Customer Project, the
intensification of the relationship with customers has been
reflected in their feedback and the Group is seeing an increase in
its NPS4 (Net Promoter Score) across all networks in 2020: +8
points for the Regional Banks (+7 points vs. 2019),
+2 points for LCL (+7 points vs. 2019) and improvement of
customer satisfaction for CA Italia. The Group is also continuing
to steer its distribution and relationship model towards greater
digitisation. Examples of this during the quarter include the
increase in the contactless payment limit from €30 to €50 rolled
out in six weeks, electronic signature of State guaranteed loan
applications for SME and small business customers in Retail
banking, paperless property and casualty insurance claims, and
automatic processing of moratoria applications at CAL&F. The
Human Project has been further strengthened, first
and foremost by the total commitment of all employees to support
customers, whether or not they have contact with them. Exceptional
delegations have been set up in branches, illustrating the Group’s
sense of local responsibility. During the crisis, customers have
demonstrated a greater appetite for ESG offerings, which has made
the Group even more determined to step up its community involvement
through the Societal Project. At end-June, it
introduced a non-financial reporting platform at Group level to
meet the challenges of implementing and managing the Group’s
societal targets. The approaches of the Crédit Agricole S.A.
sub-divisions are also aligned with the Group’s community
involvement, which has led to the launch of the first global equity
fund focused on reducing inequalities for Amundi and the first
complete range of asset investments in the fight against global
warming for LCL. Crédit Agricole Corporate and Investment Bank,
meanwhile, ranks Number 1 globally for social and green bonds. The
Group is also very focused on diversity and youth employment and is
determined to achieve its targets in these areas. Specifically, it
has pledged to employ 4,000 work/study employees in 2020 (which
places it in the Top 2 of the Figaro/Cadremploi ranking) and is
making good process in the SBF 120's ranking of women in
decision-making bodies, moving up 46 places in 2020 to rank in the
Top 50. All of this attests to the accelerated roll-out of
the Group Project's three Pillars.
The Group’s commercial activity in the
quarter was good, but especially buoyant at the end of the period.
AuMs were up from second quarter 2019 (+7.1%), as were those of
life insurance (+1.6%) with a rise in the percentage of unit-linked
assets (+0.5 percentage point between June 2019 and June 2020 to
22.7%). In the retail banking networks in France and Italy, growth
in outstandings remained strong. Loans outstanding amounted to
€726.9 billion (€681.8 billion in France and
€44.2 billion in Italy; €708.4 billion excluding State
guaranteed loans), up +8.7% from second quarter 2019 (+9% in France
and +4.9% in Italy), and up +5.9% excluding State guaranteed
loans. On-balance sheet deposits stood at €671.8 billion,
up +11% from second quarter 2019, while off-balance sheet deposits
remained stable (+0.1% at €382.8 billion). Gross customer
capture was particularly solid (+685,000 customers in 2020, of
which 630,000 in France and 55,000 in Italy), with a sharp
acceleration in June (+150,000 customers, +2.4% June/June). Against
this backdrop, the customer base continued to grow significantly
(+38,000 additional customers in 2020, of which 36,500 in France
and 1,500 in Italy, +4.4% June/June). Consolidated consumer finance
loans were stable (+0.2%), with sales regaining momentum in June
(+170% between April and June 2020). Lastly, business in the Large
Customers business line was extremely buoyant, especially in
capital markets (revenues up +44% from second quarter 2019), with
all sub-divisions making a strong contribution. Financing
activities also posted good revenue growth (+6%) due to its ability
to mobilise the full range of financing solutions for
customers.
Group results
In the
second quarter of 2020,
Crédit Agricole Group’s stated net income Group
share amounted to €1,483 million,
versus €1,813 million in second quarter 2019.
The specific items recorded in the quarter
generated a net negative impact of -€302 million on
net income Group share.
Specific items, this quarter
(-€302 million on net income Group share), included the impact
of the cooperative support given to SME and small business
customers with business interruption insurance amounting to
‑€94 million in Regional Bank revenues, -€2 million in
LCL revenues and -€143 million in insurance revenues (impact
on net income Group share of ‑€64 million, -€1 million and
-€97 million respectively), as well as the impact of the cash
adjustment on the Liability Management transaction carried out by
Crédit Agricole S.A. at the beginning of June 2020
(-€41 million in revenues and -€28 million in net income
Group share). The recurring accounting volatility items are to be
added with a net negative impact of -€160 million in revenues
and ‑€109 million in net income Group share, namely DVA (Debt
Valuation Adjustment, i.e. gains and losses on financial
instruments related to changes in the Group’s issuer spread), in
addition to which the Funding Valuation Adjustment (FVA) portion
associated with the change in the issuer spread, which is not
hedged, totalling -€5 million, the hedge on the
Large Customers loan book amounting to -€51 million, and
the change in the provision for home purchase savings
plans amounting to -€53 million. Specific items also include
integration costs for entities recently acquired by CACEIS (Kas
Bank and S3) for ‑€5 million in operating expenses and
-€2 million in net income Group share. The activation of the
Switch guarantee in second quarter 2020 generated two opposite
impacts on cost of risk amounting to €65 million in the Asset
Gathering business lines (positive impact) and for the
Regional Banks (‑€65 million). In the second quarter 2019,
specific items had had a net negative impact of ‑€33
million on net income Group share; they included only
recurring accounting volatility items such as the Debt Valuation
Adjustment (DVA, i.e. gains and losses on financial instruments
related to changes in the Group’s issuer spread) amounting to
-€3 million, the hedge on the Large customers loan
book for -€6 million, and the changes in the provisions
for home purchase savings schemes in the amount of
‑€24 million.
Excluding these specific items, the
underlying net income Group share5 was
€1,785 million, down -3.3% compared to second
quarter 2019. This decline was mainly due to the effects of the
COVID-19 crisis, particularly on outstanding loan provisioning.
Credit Agricole Group – Stated and
underlying results, Q2-20 and Q2-19
€m |
Q2-20 stated |
Specific items |
Q2-20 underlying |
Q2-19 stated |
Specific items |
Q2-19 underlying |
Q2/Q2 stated |
Q2/Q2 underlying |
|
|
|
|
|
|
|
|
|
Revenues |
8,096 |
(441) |
8,536 |
8,485 |
(49) |
8,534 |
(4.6%) |
+0.0% |
Operating expenses
excl.SRF |
(5,036) |
(5) |
(5,031) |
(5,308) |
- |
(5,308) |
(5.1%) |
(5.2%) |
SRF |
(107) |
- |
(107) |
(4) |
- |
(4) |
x 27.5 |
x 27.5 |
Gross operating income |
2,953 |
(445) |
3,398 |
3,174 |
(49) |
3,223 |
(7.0%) |
+5.4% |
Cost of risk |
(1,208) |
- |
(1,208) |
(598) |
- |
(598) |
x 2 |
x 2 |
Equity-accounted
entities |
78 |
- |
78 |
94 |
- |
94 |
(17.0%) |
(17.0%) |
Net income on
other assets |
78 |
- |
78 |
(8) |
- |
(8) |
n.m. |
n.m. |
Change in value of goodwill |
(3) |
- |
(3) |
- |
- |
- |
n.m. |
n.m. |
Income before tax |
1,898 |
(445) |
2,343 |
2,662 |
(49) |
2,711 |
(28.7%) |
(13.6%) |
Tax |
(308) |
142 |
(450) |
(728) |
16 |
(743) |
(57.7%) |
(39.5%) |
Net income from discont'd or held-for-sale ope. |
(0) |
- |
(0) |
8 |
- |
8 |
n.m. |
n.m. |
Net income |
1,590 |
(303) |
1,893 |
1,942 |
(33) |
1,976 |
(18.1%) |
(4.2%) |
Non controlling interests |
(107) |
1 |
(108) |
(130) |
- |
(130) |
(17.4%) |
(16.6%) |
Net income Group Share |
1,483 |
(302) |
1,785 |
1,813 |
(33) |
1,846 |
(18.2%) |
(3.3%) |
Cost/Income ratio excl.SRF (%) |
62.2% |
|
58.9% |
62.6% |
|
62.2% |
-0.3 pp |
-3.3 pp |
|
|
|
|
|
|
|
|
|
Net income Group Share excl. SRF |
1,580 |
(302) |
1,882 |
1,815 |
(33) |
1,848 |
(13.0%) |
+1.8% |
In the second quarter 2020, underlying
revenues were stable compared to the same period in 2019
at €8,536 million. For core businesses excluding the Corporate
Centre, they were up +2.2%. This level of revenue for the quarter
was due to a level of activity that remained buoyant, despite the
public health crisis, especially in the Large Customers business
line, which posted revenue growth of +20.9% (+€310 million).
The Regional Banks also recorded a slight increase in
underlying revenues (+1.2% or +€39 million), as did the Asset
Gathering business line (+1.6% or +€24 million). However,
Retail banking in France and internationally and Specialised
financial services recorded a decline in their revenues for the
period, respectively posting a drop of -6.5%/-€106 million and
-11.7%/‑€80 million.
Underlying operating expenses excluding
SRF (Single Resolution Fund) were down
-5.2% compared to second quarter 2019 at -€5,031 million.
Apart from the Large Customers business line, whose expenses
increased by +€55 million (+7.0%), all other business lines posted
lower expenses for the period, particularly all Retail banking
(Regional Banks: -8.9%/-€198 million; LCL:
-5.1%/-€29 million; International retail banking:
-3.5%/-€16 million). These decreases were mainly due to lower
HR and travel costs. Overall, the Group posted a positive +5.2
percentage points jaws effect (Regional Banks:
+10.1 percentage points). The contribution to the Single
Resolution Fund was supplemented this quarter by an
additional €107 million (vs. €4 million euros
in second quarter 2019). The underlying
cost/income ratio excluding SRF stood at 58.9%, an improvement of
+3.3 percentage points compared to second
quarter 2019.
Underlying gross operating
income was therefore up +5.4% to €3,398 million compared
to second quarter 2019. Excluding the SRF contribution, the
underlying gross operating income was up +8.6% to €3,505 million,
compared to the second quarter 2019.
Cost of credit risk was up
significantly (x2 compared to second quarter 2019) due to increased
provisioning on performing loans for all sub-divisions in the
context of the COVID-19 crisis. It amounted to
€1,208 million in second quarter 2020, versus €598
million in second quarter 2019. Asset quality was good: the
non-performing loan ratio was stable at 2.4% at end-June 2020 and
the coverage ratio stood at 84.5%, up +0.2 percentage point over
the quarter. Loan loss reserves amounted to €20.1 billion at
end-June 2020, 30% of which was for performing loans (Stages 1 and
2). Starting in the first quarter of 2020, the context and
uncertainties related to the global economic conditions were
gradually taken into account and the expected effect of public
measures were incorporated to anticipate future risks. Provisioning
levels were established to reflect the sharp deterioration in the
environment, taking into account several weighted economic
scenarios and applying flat rate adjustments for the retail banking
portfolios and corporates portfolios and specific additions for
some targeted sectors, namely tourism, automotive, aerospace,
retail textile, energy, and supply chain. Several weighted economic
scenarios were used to determine the provisioning of performing
loans, of which a more favourable scenario (GDP at -7% in France in
2020, +7.3% in 2021 and +1.8% in 2022) and a less favourable
scenario (GDP at -15.1% in France in 2020, +6.6% in 2021 and +8% in
2022).
The increase in provisioning on performing loans
accounted for 70% of the total increase in provisioning between
second quarter 2019 and second quarter 2020. Annualised
cost of risk/outstandings6 in the first half of 2020
was 45 basis points (vs. 33 basis points
over a four rolling quarters and 51 basis points in
annualised quarters). Provisioning on Stages 1 and 2 amounted to
€424 million, versus €0 in second quarter 2019 and
€398 million in first quarter 2020. Provisioning on
proven risks amounted to €785 million (versus
€588 million in second quarter 2019 and €516 million in
first quarter 2020).
Underlying pre-tax income stood at
€2,343 million, a year-on-year decrease of -13.6%. In
addition to the changes in operating income explained above,
underlying pre-tax income also includes the contribution from
equity-accounted entities in the amount of €78 million (down
-17.0%, mostly due to the Crédit Agricole Consumer Finance joint
ventures) and net income on other assets, which stood at
€78 million this quarter (versus -€8 million in second
quarter 2019) and includes a real estate capital gain recorded by
CA Italia. The underlying tax charge
fell -39.5% over the period. The
underlying tax rate dropped by -8.6 percentage points to
19.8%, mainly in line with the decrease of tax rate in France since
the beginning of 2020. Accordingly, underlying net income
before non-controlling interests was down -4.2% and underlying
net income Group share was down -3.3% compared to second quarter
2019.
Credit Agricole Group – Stated and
underlying results, H1-20 and H1-19
€m |
H1-20 stated |
Specific items |
H1-20 underlying |
H1-19 stated |
Specific items |
H1-19 underlying |
H1/H1 stated |
H1/H1 underlying |
|
|
|
|
|
|
|
|
|
Revenues |
16,462 |
(452) |
16,914 |
16,682 |
(175) |
16,857 |
(1.3%) |
+0.3% |
Operating expenses
excl.SRF |
(10,584) |
(75) |
(10,509) |
(10,585) |
- |
(10,585) |
(0.0%) |
(0.7%) |
SRF |
(562) |
- |
(562) |
(426) |
- |
(426) |
+31.9% |
+31.9% |
Gross operating income |
5,316 |
(527) |
5,843 |
5,671 |
(175) |
5,846 |
(6.3%) |
(0.0%) |
Cost of risk |
(2,137) |
- |
(2,137) |
(879) |
- |
(879) |
x 2.4 |
x 2.4 |
Equity-accounted
entities |
168 |
- |
168 |
188 |
- |
188 |
(10.8%) |
(10.8%) |
Net income on
other assets |
84 |
- |
84 |
3 |
- |
3 |
x 29.2 |
x 29.2 |
Change in value of goodwill |
(3) |
- |
(3) |
- |
- |
- |
n.m. |
n.m. |
Income before tax |
3,428 |
(527) |
3,955 |
4,983 |
(175) |
5,158 |
(31.2%) |
(23.3%) |
Tax |
(789) |
148 |
(937) |
(1,576) |
57 |
(1,633) |
(50.0%) |
(42.6%) |
Net income from discont'd or held-for-sale ope. |
(1) |
- |
(1) |
8 |
- |
8 |
n.m. |
n.m. |
Net income |
2,638 |
(379) |
3,017 |
3,415 |
(118) |
3,534 |
(22.8%) |
(14.6%) |
Non controlling interests |
(248) |
3 |
(251) |
(253) |
- |
(253) |
(2.0%) |
(0.9%) |
Net income Group Share |
2,391 |
(376) |
2,767 |
3,163 |
(118) |
3,281 |
(24.4%) |
(15.7%) |
Cost/Income ratio excl.SRF (%) |
64.3% |
|
62.1% |
63.5% |
|
62.8% |
+0.8 pp |
-0.7 pp |
|
|
|
|
|
|
|
|
|
Net income Group Share excl. SRF |
2,913 |
(376) |
3,289 |
3,569 |
(118) |
3,687 |
(18.4%) |
(10.8%) |
In the first half of 2020,
underlying net income Group share declined by
-15.7% compared to first half 2019; Underlying
revenues were up +0.3% and underlying operating expenses excluding
SRF were down -0.7%, resulting in a positive jaws effect of +1.0
percentage point. The contribution to the SRF increased by 31.9% to
€562 million. SRF contribution aside, the underlying gross
operating income was up +2.1% to 6,405 million compared to the
first half-year 2019. The cost of credit risk was
multiplied by 2.4 and the tax charge fell 42.6% compared to first
half 2019.
Regional banks
Commercial activity at the
Regional Banks was buoyant in this quarter, with
growth in outstandings remaining strong.
Outstanding loans amounted to €543.3 billion
(€530.6 billion excluding State guaranteed loans), up +8.4%
from second quarter 2019 (+5.9% excluding State guaranteed loans).
There was a strong increase in home loans (+7%)
and loans to SMEs and small businesses, and
farmers (+14%). Loans were up from second
quarter 2019 (+32.6%) but down when State guaranteed loans are
excluded (-14.8%). Activity was particularly dynamic in
June, with a loan production level for June 2020 exceeding
that of June 2019 (+36.1%, of which +6.9% in home loans, +2.9%
excluding State guaranteed loans). Other indicators attesting to a
strong recovery are the number of loan simulations and applications
for savings accounts, up 75% and 63% (with 67% of the increase
related to savings accounts on the balance sheet) respectively
between March 2020 and June 2020. On-balance sheet
deposits stood at €495.9 billion, representing an
increase from second quarter 2019 of 11.1% (of which +25.2% for
demand deposits and +8.7% for passbooks), while off-balance
sheet deposits were stable (-0.5% at €264.7 billion) with
life insurance AuM up slightly (+0.9%) and AuM linked to securities
and transferable securities falling by -4.6%. Lastly, gross
customer capture remained very active
(+480,000 customers), with a sharp acceleration in June (+110 000
customers, +1.9% June/June), and a still-positive balance in
banking mobility (+38,500 customers). Against this backdrop, the
customer base continued to show a marked increase
(+27,000 additional customers in 2020, +6.7% June/June).
In second quarter 2020, the
Regional Banks’ underlying revenues stood at
€3,316 million, up from second quarter 2019 (+1.2%). The
net interest margin held steady while the overall
level of fee and commission income fell (-2.3%)
due to lower penalty-based fees and a decrease in payment fees.
Portfolio revenues were also down as a result of
end-of-quarter valuations based on international standards,
although they recovered from first quarter 2020. Underlying
costs excluding SRF were kept under control,
decreasing during the period (-8.9% in second quarter 2020 compared
to second quarter 2019) in line with lower HR costs. As a result,
underlying gross operating income increased in
second quarter 2020 (+19.6%) thanks to a positive jaws effect
(+10.1 percentage points). Ultimately, despite an increase in the
underlying cost of risk (+24.9%), the Regional
Banks’ underlying net income Group share still
rose +17.9% to €663 million.
Underlying revenues were down
-3.2% in the first half of 2020 compared to first half 2019, as was
underlying gross operating income (-5%), in line
with the drop in portfolio revenues following the
end-of-quarter valuations based on international standards. The
underlying cost/income ratio was stable (+0.1
percentage point) with a decline in underlying
costs excluding SRF (-3.1%).
Lastly, with an increased underlying cost of risk
(x2.1), the Regional Banks’ contribution to the Group’s underlying
net income Group share was down -19.8%.
The performance of the other
Crédit Agricole Group business lines is described in
detail in the section of this press release on
Crédit Agricole S.A.
* *
*
Dominique Lefebvre, Chairman of SAS Rue La
Boétie and Chairman of Crédit Agricole S.A.’s Board of Directors,
commented on the Group’s first quarter 2020 results and activity as
follows: “Utility is achieved every day through what we do in
concrete terms for citizens and for society. In these unprecedented
times, the men and woman of the Group are fully committed to
supporting customers and the economy. We are using our financial
strength and performance to aid recovery, throughout France. That
is, and always has been, our Raison d’êtreˮ.
Crédit Agricole
S.A.
Solid results (-13.7% H1/H1)
driven by GOI growth during the half year (+2.9%) and prudent
provisioning; underlying ROTE7
8.5%
- Stated result: €954m (-21.9% Q2/Q2); stated
revenues: €4,897m (-4.9%); stated GOI: €1,838m (-12.9%)
- Underlying GOI stable in Q2 (€2,130bn, -0.5%
Q2/Q2), due to revenue stability (+0.1%) and very tight cost
control (-1.9%)
- Improvement in the cost/income ratio of +1.2pt
Q2/Q2 to 57.4%; positive jaws effect (+2.0pp)
- Underlying net income Group share down (-10.9%) as a result of
increased provisioning (x2.5)
- Underlying earnings per share : Q2-20: €0.36, -10.1% Q2/Q2;
H1-20; €0.53, -15.5% H1/H1
Sustained activity in loans,
deposits and insurance, strong recovery across all Crédit Agricole
S.A. business lines at quarter end
- High level of customer acquisition (+145,000
self-employed and individual customers in 2020 for LCL and +55,000
for CA Italia)
- Q2/Q2 increase in AuM (+7.1%), life insurance
(+1.6%), loan outstandings excluding State guaranteed loans at LCL
(home loans +7%, loans to small businesses +11%, and loans to
corporates +6%), outstanding loans at CA Italia (+4.9%) and
consolidated consumer finance outstandings (+2.2%).
- Increase in inflows at LCL (increase in
on-balance sheet deposits of +13.6% and stability of off-balance
sheet savings at -1.2%), and at CA Italia (increase in AuM of +5.4%
and on-balance sheet deposits of 4.6%)
- Increased share of UL products in gross inflows (+12.4pp
June/June to 41.6%) and in outstandings (+0.5pp June/June to
22.7%). Major rebound in post-lockdown property and casualty
business, revenues proving resilient (-0.8% Q2/Q2)
- Strong commercial activity in capital markets
(+44%) and robust activity in financing activities (+5.7%); prudent
risk management (moderate VaR at €14m at 30 June)
- Renewal of the partnership between Amundi and Société
Générale for five years.
Increase in provisioning (x2.5),
with half related to provisioning for proven risks and half to
provisioning for performing loans
- Stable NPL ratio (3.2%), higher
coverage ratio (73.4%, +0.9pp vs. March 20); loan loss
reserves of €10.1bn, of which 24% related to provisioning for
performing loans; diversified loan book with 46% in corporate loans
and 27% in home loans; 73% of EAD (exposure at default) investment
grade
- Increase in provisioning (€908m, of which
€236m for stage 1 and €667m for stage 3, x2.5 Q2/Q2, +46.2%
Q2/Q1)
- H1-20 annualised cost of risk/outstandings 74bp
Robust
solvency
- Phased-in CET1 ratio up sharply (+0.6pp) to 12.0%, +4.1
above SREP requirement (+0.6pp June/March), incorporating
ECB regulatory adjustment measures (Quick Fix for +41bp) and the
impact of the market upturn in the quarter on unrealised gains
and/or losses on securities portfolios (+19bp). Provision for Q2
dividends of €0.16 per share. Fully loaded ratio at
11.7%. Pro forma phased-in ratio at 12.0% for the
two-month period of SGLs.
- RWA stable during the quarter: decline in
risk-weighted assets in the business lines (particularly SFS), with
regulatory adjustment measures including supporting factor
(-€2.6bn) and adjustements carried out by Crédit Agricole Corporate
and Investment Bank (-€1.5bn) offsetting the increase in the
equity-accounted value of Insurance (+€2.1bn). Pro forma for the
two-month period of SGLs, decline in RWA of -€2.3bn.
Increase in
liquidity
- €405bn in reserves at 30/06, up €67bn vs. 31/03/2020.
Increase in the LCR: 134.4%.8
- In June 2020, significant drawdown of €90bn on the
TLTRO III facility to support loan activity and benefit
from competitive refinancing costs; repayment of the TLTRO II
(partially) and LTRO drawdowns.
- 96% of the €12bn MLT market funding programme completed at
end-July.
Switch activated because of
tensions in the equity and bond markets during the half
year.
- Positive
impact on Crédit Agricole S.A.’s cost of risk, restated for
specific items, in the amount of €65 million (+€44m in net
income Group share); impact on solvency non-material. Crédit
Agricole S.A.’s Board of Directors, chaired by Dominique Lefebvre,
met on 5 August 2020 to examine the financial statements for the
second quarter and first half of 2020.
Credit Agricole S.A. – Stated and
underlying results, Q2-20 and Q2-19
€m |
Q2-20 stated |
Specific items |
Q2-20 underlying |
Q2-19 stated |
Specific items |
Q2-19 underlying |
Q2/Q2 stated |
Q2/Q2 underlying |
|
|
|
|
|
|
|
|
|
Revenues |
4,897 |
(288) |
5,185 |
5,149 |
(30) |
5,179 |
(4.9%) |
+0.1% |
Operating
expenses excl.SRF |
(2,980) |
(5) |
(2,976) |
(3,033) |
- |
(3,033) |
(1.7%) |
(1.9%) |
SRF |
(79) |
- |
(79) |
(6) |
- |
(6) |
x 13.8 |
x 13.8 |
Gross operating income |
1,838 |
(293) |
2,130 |
2,111 |
(30) |
2,140 |
(12.9%) |
(0.5%) |
Cost of risk |
(842) |
65 |
(908) |
(358) |
- |
(358) |
x 2.4 |
x 2.5 |
Equity-accounted
entities |
88 |
- |
88 |
108 |
- |
108 |
(18.3%) |
(18.3%) |
Net income on
other assets |
82 |
- |
82 |
(1) |
- |
(1) |
n.m. |
n.m. |
Change in value
of goodwill |
- |
- |
- |
- |
- |
- |
n.m. |
n.m. |
Income before tax |
1,166 |
(227) |
1,393 |
1,861 |
(30) |
1,890 |
(37.3%) |
(26.3%) |
Tax |
(86) |
72 |
(158) |
(485) |
9 |
(494) |
(82.3%) |
(68.1%) |
Net income from
discont'd or held-for-sale ope. |
(0) |
- |
(0) |
8 |
- |
8 |
n.m. |
n.m. |
Net income |
1,080 |
(155) |
1,235 |
1,384 |
(20) |
1,404 |
(21.9%) |
(12.0%) |
Non controlling
interests |
(126) |
2 |
(129) |
(161) |
0 |
(162) |
(21.9%) |
(20.5%) |
Net income Group Share |
954 |
(153) |
1,107 |
1,222 |
(20) |
1,242 |
(21.9%) |
(10.9%) |
Earnings per share (€) |
0.31 |
(0.05) |
0.36 |
0.39 |
(0.01) |
0.40 |
(22.0%) |
(10.1%) |
Cost/Income ratio excl. SRF (%) |
60.9% |
|
57.4% |
58.9% |
|
58.6% |
+2.0 pp |
-1.2 pp |
|
|
|
|
|
|
|
|
|
Net income Group Share excl. SRF |
1,020 |
(153) |
1,173 |
1,227 |
(20) |
1,247 |
(16.8%) |
(6.0%) |
Results
In the second quarter of
2020, Crédit Agricole S.A.’s stated
net income Group share amounted to
€954 million versus €1,222 million in the
second quarter of 2019. This quarter, specific
items generated a net negative impact of
-€153 million on net income Group share.
Excluding these specific items, the
underlying net income Group share9 was
€1,107 million, down -10.9% compared to second
quarter 2019. This decline was mainly due to the increased cost of
risk. Half of that increase was related to provisioning for proven
risks and the other half to the updating of the parameters for
calculating provisioning for performing loans in the current
context.
This quarter, specific items
for this quarter (-€153 million on net income Group share)
include the impact of the cooperative support given to SME and
small business customers with business interruption insurance
amounting to -€2 million in LCL revenues and
-€143 million in insurance revenues (impact on net income
Group share of respectively -€1 million and -€97 million), and
the impact of the cash adjustment on the Liability Management
transaction carried out by Crédit Agricole S.A. at the beginning of
June 2020 (-€41 million in revenues and -€28 million in
net income Group share). The recurring accounting volatility items
are to be added with a net negative impact of -€68 million on
net income Group share, namely DVA (Debt Valuation Adjustment, i.e.
gains and losses on financial instruments related to changes in the
Group’s issuer spread), in addition to which the Funding Valuation
Adjustment (FVA) portion associated with the change in the issuer
spread, which is not hedged, totalling -€5 million, the hedge
on the Large Customers loan book for -€50 million, and
the change in the provision for home purchase savings
plans for -€14 million. Specific items also include integration
costs for entities recently acquired by CACEIS (Kas Bank and S3)
for -€5 million in operating expenses and -€2 million in
net income Group share. The activation of the Switch guarantee in
second quarter 2020 generated a positive impact on cost of risk
amounting to +€65 million in the Asset gathering business
line. In second quarter 2019, specific items had a net
negative impact of ‑€20 million on net income Group share;
they included only recurring accounting volatility items such as
the Debt Valuation Adjustment (DVA, i.e. gains and losses on
financial instruments related to changes in the Group’s issuer
spread) amounting to -€3 million, the hedge on the
Large Customers loan book for -€6 million, and the
change in the provisions for home purchase savings
schemes in the amount of -€11 million.
Sub-division results were impacted in second
quarter 2020 by the two-month lockdown related to the COVID-19
crisis in France and in most European countries, which generated a
near-shutdown of economies at the end of the first quarter 2020 and
beginning of the second quarter. Nevertheless, gross
operating income stood firm in the quarter at €2,130
million (-0.5% compared to second quarter 2019) thanks to stable
revenues (+0.1% at €5,185 million) and tight cost control by
the business lines (-1.9% at €2,976 million). This attests for
the excellent operational efficiency of the Crédit Agricole S.A.
business lines, with the cost/income ratio improving by 1.2
percentage points in second quarter 2020 compared to second quarter
2019. Underlying net income Group share was,
however, down by -10.9%. This decline was due to the increase in
the cost of risk, which amounted to €908 million in second
quarter 2020 (x2.5 compared to second quarter 2019), half of it due
to the increase in provisioning for proven risks and half to the
updating of the parameters for calculating provisioning for
performing loans. The Large customers business line, despite strong
growth in gross operating income (+26.7%), was impacted by the
five-fold increase in the cost of risk. It ended by posting a
decrease in net income Group share of -5.3%. The Retail banking and
Specialised financial services business lines were heavily impacted
by the two-month lockdown and substantial increases in the cost of
risk. They posted declines in their net income Group share of -39%
and -27.9% respectively. By contrast, the Asset Gathering business
line recorded an increase in its net income Group share for the
quarter (+11.0%), benefiting from more favourable market conditions
during the period which offset the adverse impact of the first
quarter.
In the second quarter 2020, underlying
revenues stood at €5,185 million, relatively unchanged
from second quarter 2019 (+0.1%). The Asset Gathering business line
recorded a moderate increase in revenues of +1.5%: insurance posted
a sharp increase of +13.5%, benefiting from a market effect that
was more positive in the second quarter than the first
(€140 million in second quarter), while asset management
(-7.5%) was adversely impacted by a drop in net management fee and
commission income despite a solid level of performance fee and
commission income and better financial results. Retail activities
(Retail banking and Specialised financial services) were heavily
impacted by the near-shutdown of economies and respectively
recorded a drop in their underlying revenues of -6.6% and -11.7%.
Conversely, activity for Corporates and Institutionals was
particularly buoyant this quarter, generating high levels of
revenues for the Large Customers business line. The exceptional
activity in Capital Markets generated an increase in revenues of
+44% in second quarter 2020 compared to second quarter 2019.
Financing activities also saw a strong level of activity in the
period, recording a revenue increase of +5.8%. Lastly, activity for
the asset servicing was up +23.9% due to the addition of new
customers and a scope effect related to acquisitions at year-end
2019. Recurring revenues, i.e. revenues attached to an inventory
item (outstanding loans/customer assets, assets under management)
or an insurance policy (property and casualty insurance, death and
disability insurance), accounted for 77% of total revenues.
Underlying operating expenses excluding
SRF were down -1.9% for the period, resulting in
indicators showing excellent levels of operating efficiency: the
cost/income ratio was 57.4%, an improvement of +1.2
percentage points compared to second quarter 2019, while the
jaws effect was positive at 1.3 percentage points. With the
exception of the Large Customers business line, which posted an
increase of +7.0% in its expenses excluding SRF (primarily related
to a base effect in Corporate and Investment Banking: a provision
write-back on staff costs in the second quarter 2019 and a scope
effect related to the latest acquisitions in Asset servicing), all
other business lines recorded a decrease in their expenses
excluding SRF for the quarter. The Asset Gathering business line
recorded a decrease of -3.7%, driven by Asset Management (-7.5% due
to a decrease in variable compensation and ongoing cost synergies
achieved following the integration of Pioneer), which offset the
increase recorded by Insurance (+4.1%, related mostly to an
increase in headcount to support sub-division development). The
Retail Banking business line posted a decrease in its expenses
excluding SRF for the quarter (-4.6%), as a result of lower
personnel expenditure in France and savings achieved on external
expenditure and travel in Italy. Similarly, Specialised financial
services saw their expenses excluding SRF fall by -6.2% in the
quarter, due in particular to strict cost control at CA Consumer
Finance. Of the €57 million reduction in underlying expenses
excluding SRF between the second quarter 2019 and
second quarter 2020, the COVID-19 crisis generated a fall
in expenses of -€23 million, comprising -€80 million in
avoided expenditure (travel and external expenses) and
+€57 million in increased expenditure for employee safety. SRF
contribution has been completed this quarter by additional
€+79 million (vs. €6 million in the
second quarter 2019).
Accordingly, underlying gross operating
income came in high at €2,130 million, down slightly by
-0.5% compared to second quarter 2019, but nevertheless resilient
given the context of the public health crisis and the two-month
lockdown in France and Italy: +20.9% for the Large customers
business line, +6.5% for Asset gathering, -11.7% for Retail banking
and -16.7% for Specialised financial services. Excluding the SRF
contribution, the underlying gross operating income was up +2,9% to
€2,209 million, compared to the
second quarter 2019.
As of 30 June 2020, risk indicators
once again attested for Crédit Agricole S.A.'s
assets‘quality and the level of its risk coverage. The loan
portfolio is diversified, largely oriented on large corporates (46%
of gross outstandings at Crédit Agricole S.A. level) and
housing loans (27%). The doubtful loan ratio was still low at 3.2%
(+0.1 percentage point compared to 31 March 2020), while the
coverage ratio was 73.4% (up +1.0 percentage point for the quarter
with total loan loss reserves of €10.1 billion). Of these loan
loss reserves, 24% were for provisioning for performing loans.
Cost of risk was up significantly
(x2.5/-€550 million to ‑€908 million, versus
‑€358 million in second quarter 2019 and ‑€621 million in
first quarter 2020). Of this increase, 48% was due to additional
provisioning for performing loans (Stages/Buckets 1 and 2)
triggered by the application of IFRS 9 rules and an updating of the
provisioning parameters, and 52% was due to increased provisioning
for proven risks (Stage/Bucket 3). The expense of
‑€908 million in second quarter 2020 consisted of provisioning
for performing loans (Stages 1 and 2) for -€236 million
(versus a write-back of -€26 million in second quarter 2019
and an allocation of -€223 million in
first quarter 2020) and provisioning for proven risks
(Stage 3) for -€667 million (versus
-€371 million in second quarter 2019 and ‑€382 million in
first quarter 2020). The cost of risk relative to
outstandings in the first half was 74 basis points annualised (55
basis points over a rolling four-quarter period and
86 basis points for the
second quarter annualised). The four business lines that
contributed the most to the cost of risk show similar variations.
LCL’s cost of risk stood at ‑€117 million (x2.3 compared to second
quarter 2019 and +16.3% relative to first quarter 2020), with cost
of risk relative to outstandings increasing to 33 basis points on
an annualised half-year basis (26 basis points over a rolling
four-quarter period and 35 basis points for the
second quarter 2020 annualised) ; CA Italia recorded
a cost of risk of -€146 million in second quarter 2020, or 2.4
times the level of second quarter 2019, and an increase of +77.5%
over first quarter 2020, with its cost of risk relative to
outstandings increasing to 102 basis points on an annualised
half-year basis (79 basis points over a rolling
four-quarter period and 129 basis points for the
second quarter 2020 annualised); Crédit Agricole Consumer
Finance posted a +85.1% increase in its cost of risk to
-€218 million compared to second quarter 2019 (and +32.8%
compared to first quarter 2020), with a cost of risk relative to
outstanding also increasing to 211 basis points on an annualised
half-year basis (172 basis points over a rolling
four-quarter period and 241 basis points for the second
quarter 2020 annualised). Lastly, in financing activities, the cost
of risk for the quarter stood at -€312 million, versus an
allocation of just -€39 million in second quarter 2019, which
was 2.3 times the level of first quarter 2020. The cost
of risk relative to outstandings for financing activities was
therefore 78 basis points on an annualised half-year basis
(50 basis points over a rolling four-quarter period and
102 basis points for the second quarter 2020
annualised).
Starting in the first quarter of 2020, the
context and uncertainties related to the global economic conditions
were gradually taken into account and the expected effect of public
measures were incorporated to anticipate future risks. Provisioning
levels were established to reflect the sharp deterioration in the
environment, taking into account several weighted economic
scenarios and applying flat rate adjustments for the retail banking
portfolios and corporates portfolios and specific additions for
some targeted sectors, namely tourism, automotive, aerospace,
retail textile, energy, and supply chain. Several weighted economic
scenarios were used to determine the provisioning of performing
loans, of which a more favourable scenario (GDP at -7% in France in
2020, +7.3% in 2021 and +1.8% in 2022) and a less favourable
scenario (GDP at -15.1% in France in 2020, +6.6% in 2021 and +8% in
2022).
The contribution of equity-accounted
entities was down -18.3% to
€88 million, reflecting in particular the reduction in the
contribution from the joint ventures to consumer finance (-22.7% in
second quarter 2020 compared to the same quarter in 2019, largely
related to an increase in the cost of risk at Wafasalaf amounting
to €26 million), despite a slight increase in the contribution
from joint ventures to asset management (+26.6%).
Net income on other assets
showed a positive impact of +€82 million in the quarter which
was mostly due to the gain recorded by CA Italia on the sale of a
real estate asset for +€65 million.
Underlying income10 before tax,
discontinued operations and non-controlling interests thus
decreased by -26.3% to €1,393 million. The
underlying effective tax rate stood at
12.1%, down -15.6 percentage points
compared to second quarter 2019, while the underlying tax
charge fell -68.1% to -€158 million. The 2020 second quarter tax
rate was impacted in particular by the decrease in the tax rate in
France effective 1 January 2020 (32.02% instead of 34.43%), by the
positive effect of international subsidiaries being subject to a
lower tax rate than in France and by a €63-million tax refund for
Agos related to Italy’s affrancamento tax redemption scheme. The
underlying net income before non-controlling interests
was therefore down -12.0%.
Net income attributable to
non-controlling interests was down -20.5% to
€129 million. This was due to several opposing effects:
firstly, the decline in minority interests primarily in the case of
Amundi (‑9.7%) and CA Italia (-57.0%), and secondly, the increase
in the share attributable to non-controlling interests in favour of
Santander in the case of CACEIS (+79.0%).
Underlying
net income Group share was down
-10.9% from second quarter 2019 to
€1,107 million. Excluding SRF contribution,
it is down by -6.0%.
Credit Agricole S.A. – Stated and
underlying results, H1-20 and H1-19
€m |
H1-20 stated |
Specific items |
H1-20 underlying |
H1-19 stated |
Specific items |
H1-19 underlying |
H1/H1 stated |
H1/H1 underlying |
|
|
|
|
|
|
|
|
|
Revenues |
10,097 |
(225) |
10,322 |
10,004 |
(78) |
10,081 |
+0.9% |
+2.4% |
Operating
expenses excl.SRF |
(6,235) |
(65) |
(6,170) |
(6,136) |
- |
(6,136) |
+1.6% |
+0.5% |
SRF |
(439) |
- |
(439) |
(337) |
- |
(337) |
+30.0% |
+30.0% |
Gross operating income |
3,423 |
(290) |
3,713 |
3,530 |
(78) |
3,607 |
(3.0%) |
+2.9% |
Cost of risk |
(1,463) |
65 |
(1,529) |
(582) |
- |
(582) |
x 2.5 |
x 2.6 |
Equity-accounted
entities |
178 |
- |
178 |
193 |
- |
193 |
(7.7%) |
(7.7%) |
Net income on
other assets |
87 |
- |
87 |
22 |
- |
22 |
x 4 |
x 4 |
Change in value
of goodwill |
- |
- |
- |
- |
- |
- |
n.m. |
n.m. |
Income before tax |
2,226 |
(224) |
2,450 |
3,163 |
(78) |
3,240 |
(29.6%) |
(24.4%) |
Tax |
(347) |
55 |
(401) |
(880) |
23 |
(903) |
(60.6%) |
(55.6%) |
Net income from
discont'd or held-for-sale ope. |
(1) |
- |
(1) |
8 |
- |
8 |
n.m. |
n.m. |
Net income |
1,879 |
(170) |
2,048 |
2,291 |
(54) |
2,346 |
(18.0%) |
(12.7%) |
Non controlling
interests |
(287) |
3 |
(290) |
(307) |
1 |
(308) |
(6.4%) |
(5.6%) |
Net income Group Share |
1,592 |
(167) |
1,758 |
1,985 |
(53) |
2,038 |
(19.8%) |
(13.7%) |
Earnings per share (€) |
0.47 |
(0.06) |
0.53 |
0.61 |
(0.02) |
0.63 |
(22.4%) |
(15.5%) |
Cost/Income ratio excl.SRF (%) |
61.7% |
|
59.8% |
61.3% |
|
60.9% |
+0.4 pp |
-1.1 pp |
|
|
|
|
|
|
|
|
|
Net income Group Share excl. SRF |
1,984 |
(167) |
2,151 |
2,297 |
(53) |
2,350 |
(13.6%) |
(8.5%) |
Stated net income Group share in the
first half of 2020 amounted to €1,985 million, compared
with €2,038 million in
the first half of 2019, a decrease of
-19.8%.
Specific items in the
first half of 2020 had a negative impact of
-€167 million on stated net income Group
share. In addition to the second quarter items already
mentioned above, first quarter 2020 items had a negative
impact of -€54 million and corresponded to recurring
accounting volatility items, i.e. the DVA for -€14 million, hedges
of the Large customers loan book for +€81 million, and changes
in the provision for home purchase savings plans for -€7 million at
LCL and -€20 million in the Corporate Centre business line.
Specific items in the
first half of 2019 had a negative impact of
-€53 million on net income Group share. Compared to specific
items in second quarter 2019 already mentioned above, these
items had an impact of -€33 million on net income Group share
in first quarter 2019 and corresponded to recurring accounting
volatility items, i.e. the DVA for -€6 million, hedges of the Large
Customers loan book for ‑€14 million, and changes in the
provision for home purchase savings plans for
-€5 million at LCL and -€8 million in the Corporate
Centre business line.
Excluding these specific items,
underlying net income Group share amounted
to €1,758 million, down
-13.7% compared to the first half of 2019.
Underlying earnings per share came to
€0.53 per share, a decrease of -15.5%
compared to the first half of 2019.
Annualised RoTE11 (return on
tangible equity Group share excluding intangibles) net of coupons
on Additional Tier 1 securities stood at 8.5% in the
first half of 2020, lower than in financial
year 2019 (11.0%). Annualised RoNE (Return on Net Equity) of
the business lines was stable or down this half year compared to
2019, in line with the decline in results.
Underlying revenues were up
+2.4% from first half 2019, due to
significant growth in revenues in the Large customers business line
(+15.0%). Retail activities, on the other hand, were severely hit
by the public health crisis (Retail banking -3.0% and Specialised
financial services -8.3%) and revenues of the Asset gathering
business line were heavily impacted by a negative market impact
(-4.3%).
Underlying operating expenses
were stable overall (limited growth of +0.5%,
excluding the SRF contribution, which was up significantly by
+30.0% to €439 million in first half 2020 versus
€337 million in first half 2019). The
underlying cost/income ratio excluding SRF
was 59.8%, an improvement of
+1.1 percentage point. Excluding the SRF contribution,
the underlying gross operating income was up +5.3% to
4,152 million, compared to the
first half-year 2019.
Lastly, cost of risk was up
sharply (x2.5/-€947 million, to -€1,529 million versus
‑€582 million in first half 2019).
Activity
Business remained buoyant throughout the
quarter, due to the positive performance of Asset under management
in Asset management (+7.1%) and life insurance (+1.6%), of
outstanding loans in retail banking (+7% at LCL excluding State
guaranteed loans and +4.9% at CA Italia) and of consolidated
consumer finance outstandings (+2.2%). Inflows increased at LCL
(increase in on-balance sheet deposits of +13.6% and stability of
off-balance sheet deposits at -1.2%), and at CA Italia (increase in
AuM of +5.4% and on-balance sheet deposits of 4.6%). The share of
UL products in gross inflows was up (+12.4 percentage points from
second quarter 2019 to 41.6%), as was the share in outstandings to
22.7% (+0.5 percentage point from second quarter 2019). Revenues
from personal protection insurance held firm (-3.5% compared to
second quarter 2019), as did that from property and casualty
insurance (-0.8% compared to second quarter 2019). Gross customer
acquisition showed strong momentum (+145,000 small businesses and
individual customers in 2020 at LCL and +55,000 customers at CA
Italia) and the customer base continued to expand (+10,000
customers at LCL in 2020 and +1,500 at CA Italia). Commercial
activity was exceptionally buoyant in capital markets (+44%
compared to second quarter 2019) and robust in financing activities
(+5.7%), while risk management remained cautious (moderate VaR at
€14m at 30 June).
Business picked up sharply in June, with
an increase in home loan simulations at LCL (+38.8% between March
and June 2020), a rise in commercial production in Specialised
financial services (+170% for CA Consumer Finance and +90% in
leasing for CAL&F between April and June 2020) and an increase
in the volume of new business in property and casualty insurance
(+63% between March and June 2020).
- In
Savings/Retirement, outstandings (savings, retirement and
death & disability) were up +1.6% compared to June 2019 at
€302.1 billion, including €68.5 billion in unit-linked contracts,
up +3.9% year-on-year. Unit-linked contracts accounted for 22.7% of
outstandings, up +1.2 percentage point compared to first quarter
2020. Premium income increased to €3.8 billion for the second
quarter 2020 (down -51.8% compared to the second quarter 2019), and
total net inflows were negative at -€0.9 billion, down -€4.3
billion compared to the second quarter 2019. The quarter was
nonetheless characterised by outflows in euros (-€1.8 billion) and
positive net inflows in unit-linked contracts (+0.9 billion). UL
contracts accounted for 41.6% of gross inflows in the quarter, up
+12.4 percentage points compared to second quarter 2019
and +0.3 percentage point compared to the previous
quarter. The solvency of Crédit Agricole Assurances is at a
comfortable level, exceeding 233%, well above the upper limit of
our control range 160%-200%. The Policy Participation Reserve (PPE)
reached €11.5 billion as of 30/06/2020, i.e. 5.5% of total
outstanding, increased by €0.6 billion. This PPE can be used to
support the average annualised rate of return on assets for
euro-denominated contracts, which reached 2.50%12 as at 30/06/2020,
i.e a level still significantly above the average guaranteed
minimum rate (0.28% at end-2019).
In property and casualty
insurance, Crédit Agricole Assurances recorded a
slight decrease in premiums, down -0.8% in the second quarter 2020
compared to the second quarter 2019. Pacifica recorded a net
increase of +43 000 contracts over the quarter, reaching nearly
14.2 million contracts at end-June 2020, or a +3.1% increase
year-on-year. The equipment rate for individual customers13
increased in the LCL network (25.2% at end-June 2020, i.e. a
+0.6 percentage point increase since June 2019) and the Regional
Banks networks (41.0% at end-June 2020, i.e. a +1.0 percentage
point increase since June 2019), as well as in CA Italia (15.9% at
end-June 2020, i.e. a +1.3 percentage point increase since June
2019). The combined ratio remained under control at 97.7%, a slight
increase of +2.5 percentage points year-on-year. In death
& disability/creditor and group insurance, turnover
reached nearly €958 million this quarter, down -3.5% compared to
second quarter 2019.
- This quarter, Asset management (Amundi)
recorded limited net outflows, despite the unprecedented context
(-€0.8 billion), and a good momentum in inflows on medium and
long-term (MLT) assets (+€3.5 billion). MLT inflows from retail
customers (excluding Joint Ventures) remained resilient at -€1.7
billion with good resistance in the networks (in France with +€1.2
billion and internationally with -€0.1 billion); in the Third Party
Distributors segment, outflows in the quarter (-€2.7 billion) were
concentrated in April, and inflows returned to positive in June.
Net inflows were good in Joint Ventures (+€3.1 billion) and dynamic
in institutional and corporate MLT (+€4.6 billion), due to a
recovery in risk appetite among institutional and sovereign
customers. Assets under management thus remained at a
high level at €1,592 billion at end-June 2020, up +7.1% compared to
end-June 2019. The market effect on assets under management was
+€64.9 billion compared to March 2020. This quarter also saw the
renewal of the partnership between Amundi and Société Générale for
another five years.
- Retail banking maintained a good resilience of
its activity. Home loan production was down for LCL (-9.8% in
second quarter 2020 compared to second quarter 2019), but remained
stable for CA Italia (-0.8% this quarter, but home loan production
clearly recovered in June, up +26.9% compared to April 2020).
However, outstanding loans continued to increase in Retail banking:
in France, for LCL, with a +11.2% increase in loans at end-June
2020 compared to end-June 2019, driven in particular by home loans
(+8.5%), corporate loans (+18.0%) and small businesses (+27.3%), as
well as in Italy, for CA Italia, with a +4.9% increase in loans at
end-June 2020 compared to end-June 2019, driven by loans to
individuals (+4.2%) and loans to small businesses (+1.5%), in
addition to loans to large corporates and SMEs (+8.9%), and,
finally, for all International retail banking excluding Italy, with
loan growth of +1.8% at end-June 2020 compared to end-June 2019,
driven in particular by Egypt (+19.0%14) and Morocco (+3.8%14),
despite a decline in Ukraine (-10.8%14) and Poland (-3.4%14). In
France, renegotiations on LCL home loans were down this quarter to
€0.6 billion outstanding for the quarter, compared to €0.9 billion
in first quarter 2020, i.e. a difference of €0.3 billion, and
remained well below the high point of €5.2 billion of fourth
quarter 2016. Off-balance sheet deposits remained stable for LCL
(-0.7%), affected by a still negative market impact, despite an
upturn this quarter, and were up for CA Italia (+4.6%). On-balance
sheet deposits were up in all markets, from +13.1% compared to June
2019 for LCL in France, in particular stemming from an increase in
personal savings driven by demand deposits (+28.2%) and passbooks
(+4.9%). They went up +4.6% for CA Italia, driven in particular by
the increase in deposits from corporates since the beginning of the
year; and lastly, up +5.5% for all International retail banking
excluding Italy, driven by Morocco (+7.5%14) and Ukraine
(+11.4%14). The equipment rate in automotive, multi-risk household,
healthcare, legal or accident insurance is up for LCL at 25.2%
(+0.6 percentage point) and CA Italia 15.9% (+1.3 percentage
point).
- Within the Specialised financial services
business line, commercial sales at CA
Consumer Finance totalled €7.1 billion, down 40% compared
to second quarter 2019, notably due to a decline at
Agos (-51%) and automotive
partnerships (-43%, of which -51% at FCA Bank). The
contributions of the Regional Banks and of
LCL also fell sharply (-41.3% and -40%, respectively). The
slowdown in activity at GAC Sofinco was more moderate, with a -10%
decline in commercial business compared to second quarter 2019.
More generally, activity has been buoyant again since
June, with CA Consumer Finance's commercial production up
+170%/+€2.3 billion between April 2020 and June 2020 (219% in
France and 145% internationally). More specifically, production in
China increased by +97% between March 2020 and June 2020. CA-CF
also continued to support their customers during this period by
granting 40,000 moratoria. Against this backdrop, gross
managed loans totalled €88.4 billion and were down -2.4%
compared to second quarter 2019, with a lower contribution from
automotive partnerships (-6.6%) and a higher
contribution from Group entities (+1.9%). Gross
consolidated loans were stable compared to second
quarter 2019 (+0.2%) at €34.3 billion. CAL&F's
production also declined compared to second quarter 2019.
Indeed, commercial production in factoring was
down (-9.2% to €3.8 billion) notably in France
(-51% to €1.8 billion). By contrast, international
production increased by €1.6 billion to €1.9 billion, due to the
start of major contracts in Germany. In this context,
factored revenues were down over the period
(-24.6% compared to second quarter 2019 at
€15.5 billion). Moreover, new commercial production in
leasing reached €1 billion, down -23.9% compared to second
quarter 2019, particularly in France and
Poland (-€215 million and -€84 million,
respectively) although business has been picking up since June with
a +90% increase in production between April 2020 and June 2020.
Lastly, leasing outstandings settled at €15.1
billion, an increase of +2.2% compared to second quarter 2019.
- The activity of the Large customers business
line was very dynamic this quarter, with underlying
revenues up in second quarter 2020 compared to
second quarter 2019 (+20.9% at €1.8 billion) especially in
Capital Markets and Investment banking (+38% at
€780 million, of which +44% for Capital Markets) due to a
strong contribution from all the sub-divisions.
Bond originations showed record
activity, with business volumes doubling compared to
second quarter 2019. Crédit Agricole Corporate and
Investment Bank's leading positions were confirmed in this
segment (No.1 in All French Corporate bonds, No.1 in Global Green,
Social and Sustainability bonds15). The Fixed Income Credit
and Change (FICC) sub-division also delivered a
very good performance (+44% growth in revenues
including CVA in second quarter 2020 compared to second quarter
2019), demonstrating the effectiveness of our relationship
model. Regulatory VaR at 30 June 2020 was
up moderately and remains at a low level, in line
with our prudent risk management (€14 million as
of 30 June 2020 vs. €22.2 million as of
31 March 2020, average regulatory VaR: €18.8 million in
Q2-2020 compared to €11.4 in Q1-2020). Financing
activities reported higher underlying revenues (+5.8%
compared to second quarter 2019) at €720 million due to its ability
to mobilise the full range of financing solutions for
customers (underwriting, club deal and bilateral loans).
In particular, the performance was very good on syndicated
loans. Crédit Agricole Corporate and Investment Bank
strengthened its market share in this business
(7.6% compared to 6.9% at end-June 201916) and thus became the
second largest player in the EMEA syndicated loan
market. Overall, commercial banking
revenues rose +22.4% to €408 million. Structured
finance recorded a decline in revenues (-10.2%) due to the
economic slowdown in activity. Furthermore, in line with its
Originate to Distribute model, financing activities recorded an
average primary payout ratio over the last twelve months of 39%,
down -5 percentage points compared to second quarter 2019.
- Lastly,
Asset servicing (CACEIS) recorded good
levels of assets under custody (€3,873 billion at end-June
2020, up +35% year-on-year) and assets under
administration (€2,005 billion, up +10% year-on-year) this
quarter, due to acquisition of new customers,
which compensates for an unfavourable market effect (+€173 billion
in AuC and +€36 billion in AuA) and due to the
consolidation of KAS Bank and Santander Securities
Services (+€826 billion in AuC and +€150 billion in
AuA).
Analysis of the results of Crédit Agricole
S.A.’s divisions and business lines
Asset gathering
The Asset gathering (AG) business line posted
underlying net income Group share of €551 million in
second quarter 2020, up +11.0% from second quarter 2019.
The business line contributed by 50% to the underlying net income
Group share of the Crédit Agricole S.A. core businesses
(excluding the Corporate Centre division) in second quarter 2020
and 28% to underlying revenues excluding the Corporate Centre
division.
The Asset gathering (AG) business line posted
underlying net income Group share of €907 million in
first half 2020, down -4.4% from first half 2019.
At 30 June 2020, capital allocated to Asset
Gathering amounted to €10.0 billion, including €8.5 billion for
Insurance, €1.1 billion on Asset Management, and €0.5 billion on
Wealth Management. Risk weighted assets of Asset Gathering account
for €40.9 billion including €24.8 billion on Insurance, €11.1
billion on Asset management and €5.0 billion on Wealth
Management.
Exclusively for asset gathering, risk-weighted
assets are calculated net of the effect of the “Switch” guarantee,
allowing the Crédit Agricole S.A. Group to save €22 billion17 in
risk-weighted assets on the prudential treatment of the Insurance
business line. It generates a negative impact of around -€33
million as for the second quarter 2020 on the division’s net
income.
The underlying RoNE (Return on Normalised
Equity) stand at 21.4% for the first semester 2020, versus 27.5% on
the full year 2019.
Insurance
Underlying revenues were up +13.5%, driven
notably by positive market effects in second quarter 2020 (+€140
million) partly offsetting the negative market impact in first
quarter 2020. Underlying costs increased by +4.1%, mainly due to
the increase in headcount to support the development of the
sub-division. Thus, the underlying cost/income ratio excluding SRF
was 23.8%, an improvement of +2.2 percentage points versus second
quarter 2019, and the underlying gross operating income increased
by +16.8% compared to second quarter 2019. The tax charge for first
quarter 2020 rose +4.6% to -€152 million. The Insurance
sub-division's underlying net income Group share was up +20.6%
compared to second quarter 2020.
Underlying revenues reached €1,212 million in
the first half of the year, marked by the market effects of the
first quarter. It was down -2.7% compared to first half 2019. Costs
increased by +5.5%, resulting in a slight deterioration in the
cost/income ratio by -2.7 percentage points, to 34.2% in first half
2020. Underlying GOI decreased by -6.6%. Finally, the tax charge
for first quarter 2020 was down -20.7% compared to first half 2019,
due to lower pre-tax income and a lower tax rate in France. As a
result, net income Group share was €590 million, a moderate decline
of -2.5% compared to first half 2019.
Asset management
Underlying revenues were down -7.5% to €607
million in second quarter 2020. Net management revenues were down
(-7.7%), mainly due to the market environment. Net management fee
and commission income was affected by the average level of the
markets (down Q2/Q2) and by a less positive mix effect
(products/customers); performance fees remain at a good level
(€34m, in particular in Equity and Diversified assets); Lastly,
financial revenues were up +12.0% due to the recovery of the
markets from end-March to end-June (affecting the mark to market
valuation of the voluntary investment and seed money portfolio).
Underlying expenses decreased by -7.3% to €325 million, thanks to
the adjustment of variable compensation and the last IT cost
synergies related to the integration of Pioneer. Underlying gross
operating income decreased by -7.1% and the underlying cost/income
ratio excluding SRF was 53.5%, stable over the past year (+0.1
percentage point). The contribution of equity-accounted entities,
comprising in particular income from Amundi’s joint ventures in
Asia, was up by +26.6%. Corporate income tax was down -9.7% to €70
million this quarter. In conclusion, underlying net income Group
share was down by -10.3% to €146 million.
In the first half year, revenues fell by -7.2%,
due to market and product mix effects. Costs decreased by -4.6%.
The underlying cost/income ratio excluding SRF remained at a very
good level 54.9%, despite a 1.5 percentage point deterioration in
the first half year. GOI decreased -10.3%. The net income of
equity-accounted entities increased by +17.6%, in particular thanks
to the Indian JV. Lastly, net income Group share decreased by
-13.9% to €274 million.
Wealth management
Underlying revenues dropped -6.0% to €194
million in second quarter 2020, in line with the decline in wealth
management assets of -3.6% between end-June 2019 and end-June 2020.
Underlying costs excluding SRF remain controlled (-3.7%) and
reached €174 million in second quarter 2020. The underlying
cost/income ratio excluding SRF thus deteriorated by
2.1 percentage points to 89.9% for second quarter 2020.
Underlying GOI decreased -16.6% to €20 million. A tax benefit of
+€3 million was nonetheless recorded this quarter, compared to an
expense of -€4 million in second quarter 2019, as second quarter
2020 is subject to a tax credit on an earlier tax dispute and a
reduction in Swiss cantonal tax rates. As a result, underlying net
income Group share was up +42.7% to €19 million in second quarter
2020.
Underlying revenues for the first half year were
stable at +0.2% compared to first half 2019, as were costs, which
showed a slight decrease of -0.3%. As a result, GOI was up +5.9%
and taxes, benefiting from the positive effects described above,
recorded income of €1 million. As a result, net income Group share
increased by +62.9% to €44 million for the first half year.
Retail banking
French retail banking
Underlying revenues were slightly down -3.6% at
€857 million in second quarter 2020. They were in particular
affected by the decline in fee and commission income (-3.0%) due to
a business that was very strongly impacted by the context, as well
as by the decline in the net interest margin (NIM), down -4.0%
mainly due to valuation effects. Thanks in particular to LCL's
continued operational efficiency policy, underlying costs excluding
SRF fell by -5.1% to €544 million in second quarter 2020, resulting
in an improvement in the underlying cost/income ratio excluding SRF
by +1.0 percentage point, to 63.4%. The decrease in underlying
gross operating income is therefore contained, from -2.7% to €306
million. Provisioning increased sharply (x2.3) to -€117 million in
second quarter 2020. This increase notably includes €29 million
pertaining to provisioning for performing loans. The annualised
cost of risk on oustandings over the half year thus stands at 33
basis points. Lastly, underlying net income Group share was down by
-25.3% to €128 million in second quarter 2020.
Revenues remained stable in first half 2020, at
€1,746 million compared to first half 2019. Underlying expenses
excluding SRF decreased by -3.2%, due in particular to a continued
improvement in external expenses, which resulted in a -1.7
percentage point improvement in the cost/income ratio to 64.6%.
Gross operating income thus rose +2.6% but was largely offset by a
sharp rise in provisioning (x2.3), to -€218 million. All in all,
the business-line’s contribution to net income Group share was down
-21.7%.
The underlying RONE (return on normalized
equity) of LCL stands at 7.8% for the first half year 2020,
compared to 10.8% for 2019.
International retail
banking
International retail banking revenue fell by
-10.5% to €640 million in second quarter 2020. The underlying
expenses excluding SRF are down, albeit contained (-4.0%), to reach
€418 million, and there was an additional contribution to SRF of €9
million. Hence, the gross operating income decreased by -22.0%.
Provisioning multiplied by 2.4 to -€146 million this quarter (in
particular due to the provisioning of performing loans). All in
all, the net income Group share of International retail banking
stands at €37 million, down -62.8% compared to second quarter
2019.
For the first half year, underlying revenues
decreased -5.8% to €1,310 million. Underlying operating expenses
excluding SRF are down -1.9% to €840 million, resulting in a 2.6
percentage point deterioration in the underlying cost/income ratio,
to 64.7%. Provisioning increased by 82.3% to reach
€314 million for the half year. This translates into a net
income Group share of €178 million for first half 2020.
Italy
Revenues fell -10.8% to €431 million in second
quarter 2020 as a result of the decline in activity during the
lockdown. Net interest margin was impacted by the renegotiations
and the decline of rates, affecting both floating-rate loans
outstandings and new loan production. Fee and commission income was
also down this quarter (-15%). Underlying costs excluding SRF were
down -2.3%, due in particular to savings on external expenditure
and mobility. As this decline was less rapid than the fall in
revenues, the underlying cost/income ratio excluding SRF was 67.0%,
deteriorating by +5,8 percentage points compared to 2019.
Provisioning multiplied by 2.4, reaching -€146 million, as a result
both of provisioning of performing loans (-€30 million) and a
significant increase in provisions for proven risks in order to
prepare for the disposal of non-performing loans. The annualised
cost of credit risk on outstandings for the half year was therefore
102 basis points. The non-performing loans ratio improved
to 7.4% this quarter (-0.6 percentage points June/June) and the
coverage ratio was +2.5 percentage points higher, at 62.9%. Also
noteworthy this quarter was a capital gain (on net income on other
assets line of the income statement) for the disposal of a building
for €65 million before tax.
For the first half year, revenues were down
-6.4% and settled at €875 million. Operating expenses excluding SRF
were down by only -2.1%, resulting in a deterioration in the
underlying cost/income ratio excluding SRF, which stands at 64.8%,
an increase of +2.9 percentage points June/June. Lastly, the
sub-division contribution to net income Group share was down
-41.8%.
The underlying RoNE (return on normalized
equity) of CA Italia stands at 4.2% for the first half year 2020,
compared to 9.3% for 2019.
Crédit Agricole Group
in Italy
The Group’s results in Italy were €257 million
in first half 2020, i.e. a -25% decrease from first half 2019 due
to the increase in the cost of risk.
IRB – excluding Italy
Underlying revenues declined in second quarter
2020 compared to second quarter 2019 (-9.8%), mainly due to NII
impacted by a fall in key interest rates in Egypt, Poland, Ukraine
and Morocco, and fee and commission income that was affected by the
sharp slowdown in commercial activity. Underlying costs excluding
SRF were also down -7.7% this quarter and were declining in all
subsidiaries except CA Egypt (+5%). The underlying cost/income
ratio excluding SRF of the IRB outside Italy therefore declined by
only 1.5 percentage points to 62.1% for second quarter
2020. Underlying gross operating income thus decreased by -13.1%
and the provisioning increased (x2.3) to -€52 million in second
quarter 2020. Lastly, underlying net income Group share was
€12 million, i.e. a strong decrease of -70.3%.
By country:
- CA Egypt(18): underlying gross operating income was down -16%
in second quarter 2020 compared to second quarter 2019, with
underlying revenues (-13%) penalised by lower rates. The risk
profile remained good with a low NPL ratio of 2.6% and a high
coverage ratio of 169%.
- CA Poland(18): underlying revenues recorded a decline this
quarter (-10%), penalised by the drop in reference interest rates.
This drop was partially offset by a fall in expenses of -10%.
Underlying gross operating income fell by -9% and provisioning
increased, resulting in a lower net income Group share, which was
negative in first half 2020 (-€4 millions ).
- CA Ukraine(18): underlying revenues were down this quarter
(-11%), mainly due to the drop in the reference interest rate, as
well as the fall in fee and commission income (-30%). The NPL ratio
was 4.4% and the coverage ratio was high at 180%.
- Crédit du Maroc(18): revenues were slightly down this quarter
by -3%, but expenses remained under control (+1%). Provisioning
remains prudent, with the coverage ratio reaching 96%.
In first half year 2020, revenues are down by
-4.6% at €435 million. Underlying expenses excluding SRF decreased
only by -1.4%, which resulted a deterioration of the cost/income
ratio at 62.7%, up by 2.0 percentage points. All in all, the
business-line’s contribution to net income Group share was down
-56.4%.
The underlying RONE (return on normalized
equity) of other IRB excluding Italy stands at 12.1% for the first
half year 2020, compared to 19.3% for 2019.
The International retail banking business line
contributed for 4% to the underlying net income Group share of
Crédit Agricole S.A.'s core businesses (excluding the
Corporate Centre division) in the second quarter 2020 and 13% to
underlying revenues excluding the Corporate Centre.
The entire Retail banking business line
contributed for 15% to the underlying net income Group share of
Crédit Agricole S.A.'s core businesses (excluding the
Corporate Centre division) in the second quarter 2020 and 29% to
underlying revenues excluding the Corporate Centre.
As of 30 June 2020, the capital allocated to the
division is €9.1 billion including €5.1 billion for French retail
banking, €3.9 billion for International retail banking.
Risk-weighted assets are €95.5 billion including
€54.1 billions for French retail banking and
€41.3 billions for International retail banking.
Specialised financial
services
In second quarter 2020, the
net income Group share of the Specialised
financial services business line was €149 million, down -27.9%
compared to second quarter 2019, due in particular to a decline in
revenues in a context of a slowdown in business
and an increase in provisioning.
In first half 2020,
net income Group share was
€258 million, a decrease of -35.7%.
The business line contributed 12% to the
underlying net income Group share of
Crédit Agricole S.A.'s core businesses. (excluding
Corporate Centre division) in first half 2020 and 12% to
underlying revenues excluding Corporate Centre
division.
At 30 June 2020, the capital
allocated to the Specialised Financial Services business
line was €4.9 billion and risk-weighted assets
were €51.7 billion.
RoNE (return on normalised
equity) of the business line stood at 10.1% in first half 2020 (vs
16% for 2019).
Consumer finance
In the second quarter 2020, CA
Consumer Finance's revenues totalled €485 million
and were down compared to second quarter 2019 against a backdrop of
a slowdown in activity due in particular to the health crisis (-12%
including -€19 million on insurance revenues). Costs
excluding SRF fell thanks to rigorous cost management
(-7.1% at €240 million) limiting the decline in gross
operating income (-15.5%). The cost/income
ratio decreased by -2.6 percentage points to 49.5%.
Contribution from equity-accounted entities was
down (-22.7%) due to an increase in provisioning at Wafasalaf (+€24
million). Provisioning for CA Consumer Finance was
up +85.1%, 37% of the increase of which was related to the
provisioning of performing loans. The underlying
tax contribution has been decreasing since second
quarter 2019 (-€113 million), as CA Consumer Finance benefited from
a favourable tax regime in Italy (Affrancamento, +€39 million)
following the commercial agreement signed in 2019 between Agos and
Banco BPM. Thus, CA Consumer Finance's net income Group
share was €131 million and decreased -23.3% compared
to second quarter 2019.
Revenues decreased -8.1%
compared to first half 2019, as did gross operating
income (-14.1%). The cost/income ratio
deteriorated (+3.3 percentage points to 51.5%) despite a decrease
in costs excluding SRF (-1.8% to
€517 million). The contribution from equity-accounted
entities decreased (-15.4%) and the
provisioning increased (+78.4% to €382 million).
As a result, with a lower underlying tax
contribution (-€73 million), the contribution of the sub-division
to the underlying net income Group share was down
-31.5%.
Leasing & Factoring
In the second quarter 2020,
CAL&F's underlying revenues were €122 million,
down -10.4% compared to second quarter 2019 (of which -29% on
factoring), due to a slowdown in activity during the crisis, more
pronounced in factoring. Underlying costs
excluding SRF also fell (-2.9% to €69 million),
limiting the decline in underlying gross operating
income (-22%). The cost/income ratio
excluding SRF deteriorated by -4.4 percentage points to 56.3%.
Provisioning increased (x2.2 to €30 million), 79%
of the increase of which was related to the provisioning of
performing loans. All in all, CAL&F’s underlying net
income Group share was €18 million, down by -49.7%
compared to second quarter 2019.
Underlying revenues were down
-9.2% for first half 2020 compared to first half 2019, while
underlying costs excluding SRF
remained stable (-0.9% to €144 million). As a result, underlying
gross operating income decreased (-21.7%) and
underlying cost/income ratio deteriorated (+4.8
percentage points to 57.4%). With increased
provisioning (x2.3 at €56 million) the underlying
net income Group share decreased (-55.8% to €30
million).
Large customers
In the second quarter 2020,
underlying net income Group share of the Large
customers business line totalled €436 million, down -5.3% compared
to second quarter 2019, due to a significant increase in
provisioning in financing activities (x8, 47% of
the increase related to the provisioning of performing loans) and
despite a sharp rise in underlying gross operating
income (+26.7%) thanks to very buoyant business.
Underlying net income Group share
for first half 2020 was €644 million, down -7%.
The business line contributed 30% to the
underlying net income Group share
of Crédit Agricole S.A.'s core businesses. (excluding
Corporate Centre division) in first half 2020 and 31% to
underlying revenues excluding Corporate Centre
division.
At 30 June 2020, the capital
allocated to the Large customers business line was €12.5
billion and risk-weighted assets were €131.7
billion.
RoNE (return on normalised
equity) of the business line stood at 10% in first half 2020 (vs
12.7% for 2019).
Corporate and investment
banking
In second quarter 2020,
underlying revenues rose +20.3% to €1,500 million
as did underlying gross operating income (+27.1%,
at €802 million), due to the excellent performance in capital
markets. Underlying revenues of capital markets and investment
banking were up +37.7% to €780 million (of which +44% in capital
markets) with a strong contribution from all sub-divisions.
Underlying revenues for financing activities were also up (+5.8% at
€720 million), due to the excellent performance of commercial
banking (+22.4% at €408 million) and despite the negative impact of
the economic environment on structured finance (-10.2% at €311
million). Underlying expenses excluding
SRF were up +3.4% to €645 million compared to the second
quarter 2019 mainly due to a base effect, and remained under
control with a cost/income ratio of 43%. Thus, with higher
provisioning (x5) notably in financing activities
(x8, 47% of the increase of which is related to provisioning for
performing loans), the sub-division's contribution to the Group's
underlying net income Group share was down -4.2%,
to €400 million.
Underlying revenues increased
by +12.9% in first half 2020 compared to first half 2019, while
underlying costs excluding SRF increased
moderately (+3.1%). Thus, with a positive jaws effect (+9.8
percentage points), underlying gross operating
income was up (+20.6%) and the underlying
cost/income ratio improved (-4.6 percentage points
to 48.6%). Finally, with higher provisioning
(x9.4) during the half year, the sub-division's contribution to
net income Group share was down -7.4% to €585
million.
Asset servicing
In second quarter 2020, as a
result of the consolidation of KAS Bank and Santander
Securities Services, underlying revenues
increased by +23.9% to €288 million, while underlying costs
excluding SRF rose +20% to €207 million. Underlying
gross operating income rose +22.9% to €74 million
and benefited from a positive jaws effect (+3.9 percentage points).
The cost/income ratio excluding SRF improved by
+2.4 percentage points to 71.9%. Underlying net
income improved by +24.4%. In all, the contribution of the
sub-division to underlying net income Group share
was down -15.7% year-on-year, to €37 million, as a result of the
emergence of non-controlling interests in Santander for €17
million.
Underlying revenues increased
by +26.3% in first half 2020 compared to first half 2019, while
underlying costs excluding SRF increased by
+22.4%. With a positive jaws effect (+3.9 percentage points), the
underlying gross operating income increased
(+31.9%), and the underlying cost/income ratio
improved (-2.4 percentage points to 73.6%). As a result, underlying
net income increased by +43.6%. In conclusion, the
sub-division's contribution to net income Group
share is down -3.3% due to non-controlling interests (€29
million).
Corporate Centre
An analysis of the negative contribution of the
Corporate Centre looks at both the “structural” contribution and
other items. The “structural” contribution includes three types of
activities:
- the activities and the role of the corporate centre of Crédit
Agricole S.A. holding. This negative contribution reached
-€139 million in second quarter 2020, a significant improvement
compared to second quarter 2019 (-€260 million) due to improved
revenues following lower refinancing costs and lower staff costs
and travel expenses;
- the sub-divisions that are not part of the core businesses,
such as CACIF (private equity) and CA Immobilier: their
contribution of -€26 million in second quarter 2020 shows a
decline compared to second quarter 2019 (+€15 million), due to
the impact of negative valuations in private equity entities;
- the Group’s support functions: the second quarter 2020 recorded
a positive impact of +€10 million, slightly down compared to second
quarter 2019 (+€16 million). Their contribution, however, remains
essentially nil over a rolling 12-month period, as their services
are reinvoiced to the other Group business lines.
“Other items” recorded a negative contribution
of -€39 million this quarter, compared to a contribution of +€38
million in second quarter 2019. This negative variance is due to
the impact of the market upturn on intra-group transactions.
For first half 2020, the negative
contribution of the Corporate Centre division was -€375, an
improvement of +€103 million compared
to first half 2019. The structural component
improved significantly over the period (+€54 million), in
particular with regard to the activities and functions of the
corporate entity Crédit Agricole S.A.’s corporate centre
(+€109 million). The other items of the business line
contributed +€73 million over the half year, an improvement of +€49
million.As at 30 June 2020, risk weighted assets were
€27.1 billion and allocated capital was €2.6 billion.
* *
*
Philippe Brassac, Chief Executive Officer,
commented on the second quarter 2020 results and activity of Crédit
Agricole S.A. as follows: “Our Group emerges unharmed from a
disruptive quarter. The unprecedented health crisis has had an
automatic effect on the economy. As France’s leading bank, we have
massively supported our customers. Our results are strong, with
Gross operating income growing over the first half the year, a
sharp rise in CET1 ratios, and one of the best levels of risk
provisioning in Europe, and we are putting them to the benefit of
the recoveryˮ.
Financial
solidity
Crédit Agricole Group
Over the quarter,
Crédit Agricole Group maintain a high level financial
strength continuously, with a phased-in Common Equity Tier 1 (CET1)
ratio of 16.1% achieving today the objective of the 2022 Group
Project, up by +0.6 percentage points compared to
end-March 2020. The ratio fully loaded is 15.8%. This increase is
mainly due to the effect of +20 basis points of the retained
earnings including a dividend per share provision of €0.24 for the
first half year of 2020, methodology and regulatory effects (+59
basis points) linked in particular to IFRS 9 phasing (+27
basis points) and the additional SME factor (+24 basis points) as
well as unrealised gains and/or losses (+11 basis points). In
addition, the increase in risk-weighted assets over the period,
generating an unfavourable effect on the CET1 ratio of
‑21 basis points. In fact, risk weighted assets of the
sub-divisions increased by +€2.6 billion, notably in Retail
banking, of which €1.4 billion at LCL and €1.7 billion at the
Regional banks (+€7.6 billion in organic growth), partly offset by
the impact of the SME add-on factor -€6 billion and the impact of
the increase of Insurance Equity stake for €1.9 billion. Excluding
the effect of the 2-month waiting period for State-guaranteed
Loans, risk-weighted assets would have been €565 billion, and the
Group's phased-in CET1 ratio would have been 16.3%.
In the end, the Crédit Agricole Group posted a
substantial buffer of 7.2 percentage points between the level
of its CET1 ratio and the 8.9% SREP requirement for
Crédit Agricole Group, compared with 6.6 percentage
points at 31 March 2020.
The phased-in leverage ratio came to 5.3%,
stable compared to end-March 2020. The phased-in Tier 1 ratio was
17.0%, the phased-in overall ratio was 19.7% and the phased-in
average intra-quarter leverage ratio was 5.2%.
TLAC
The Financial Stability Board (FSB) has defined
the calculation of a ratio aimed at estimating the adequacy of the
bail-in and recapitalisation capacity of Global Systemically
Important Banks (G-SIBs). This
Total Loss Absorbing Capacity (TLAC) ratio provides
resolution authorities with the means to assess whether G-SIBs have
sufficient bail-in and recapitalisation capacity before and during
resolution. It applies to Global Systemically Important Banks, and
therefore to Crédit Agricole Group.
The elements that could absorb losses consist of
equity, subordinated notes and debts to which the Resolution
Authority can apply the bail-in.
The TLAC ratio requirement has been transposed
into European Union law via CRR2 and has been applicable since 27
June 2019. As from that date, Crédit Agricole Group must
comply with the following requirements at all times:
- a TLAC ratio above 16% of risk-weighted assets (RWA), plus – in
accordance with CRD5 – a combined capital buffer requirement
(including, for the Crédit Agricole Group, a 2.5% capital
conservation buffer, a 1% G-SIB buffer and the counter-cyclical
buffer). Considering the combined capital buffer requirement,
Crédit Agricole Group will have to adhere to a TLAC ratio of above
19.5% (plus the counter-cyclical buffer)
- a TLAC ratio of above 6% of the Leverage Ratio Exposure
(LRE).
As from 1 January 2022, the minimum TLAC ratio
requirements will increase to 18% of risk-weighted assets – plus
the combined buffer requirement at that date – and 6.75% of the
leverage ratio exposure.
At 30 June 2020, the
Crédit Agricole Group’s TLAC ratio stood at
23.8% of RWAs and 7.5% of leverage ratio exposure,
excluding eligible senior preferred debt. The TLAC ratio
increased by +120 basis points compared to first quarter 2020, in a
context of sharply rising TLAC debt issues. It exceeded the
required 19.5% of RWAs (according to CRR2/CRD5, plus, at 30 June
2020, the counter-cyclical buffer of 0.01%) and 6% of the leverage
ratio exposure, respectively, despite the fact that it was possible
at that date to include up to 2.5% of RWAs in eligible senior
preferred debt.
Achievement of the TLAC ratio is supported by a
TLAC debt issuance programme for 2020 of around €6 billion
to €8 billion in the wholesale market. At 30 June 2020,
€7.2 billion equivalent had been issued in the market; the amount
of the Crédit Agricole Group senior non-preferred debt taken
into account in the computation of the TLAC ratio was €23.2
billion.
MREL
The MREL (Minimum Requirement for Own Funds and
Eligible Liabilities) ratio is defined in the European “Bank
Recovery and Resolution Directive” (BRRD). This Directive
establishes a framework for the resolution of banks throughout the
European Union, with the aim of providing the resolution
authorities with shared instruments and powers to pre-emptively
tackle banking crises, preserve financial stability and reduce
taxpayer exposure to losses.
The ACPR, the national resolution authority
believes that the “single point of entry” resolution strategy is
the most appropriate for the French banking system. The Crédit
Agricole Group has adopted the SPE model. As the central body,
Crédit Agricole S.A. would be the single point of entry in a
situation of resolution of Crédit Agricole. Given the solidarity
mechanisms that exist within the Group, a member of the Credit
Agricole network or an entity affiliated with it cannot be resolved
individually.
The MREL ratio corresponds to the minimum
requirement of own funds and eligible liabilities that must be
available in order to absorb losses in the event of resolution. It
is calculated as the amount of own funds and eligible liabilities
expressed as a percentage of the institution’s total liabilities
and own funds, after certain prudential adjustments (TLOF19), or
expressed as risk weighted assets (RWA). Regulatory capital, as
well as subordinated notes, senior non-preferred debt instruments
and certain senior preferred debt instruments with residual
maturities of more than one year are eligible for the numerator of
the MREL ratio.
In 2020, the Single Resolution Board (SRB)
notified Crédit Agricole Group of the revision of its total
consolidated MREL requirement and of a new subordinated MREL
requirement. These are already applicable and have been met by the
Group since that time. These requirements will be reviewed
periodically by the resolution authorities and will include changes
to the European regulatory framework (i.e. BRRD2).
Crédit Agricole Group’s target is to
reach a subordinated MREL ratio (excluding eligible senior
preferred debt) of 24-25% of the RWAs by the end of 2022 and to
maintain the subordinated MREL ratio above 8% of TLOF.
This level would enable recourse to the Single Resolution Fund
(subject to the decision of the resolution authority) before
applying the bail-in to senior preferred debt, creating an
additional layer of protection for investors in senior preferred
debt.
At 30 June 2020, Crédit Agricole Group
posted an estimated MREL ratio of 11% of the TLOF and 8.2%
excluding eligible senior preferred debt. Expressed as a
percentage of risk weighted assets, the Crédit Agricole Group’s
estimated MREL ratio was approximately 32% at
end-June 2020. It was 23.8% excluding eligible senior
preferred debt.
Maximum Distributable Amount (MDA)
trigger
The transposition of Basel regulations into
European law (CRD4) has established a restriction mechanism of the
distributions applicable to dividends, AT1 instruments and variable
compensation. The Maximum Distributable Amount (MDA, the maximum
sum a bank is allowed to allocate to distributions) principle aims
to place limitations on distributions in the event the latter were
to result in non-compliance with combined capital buffer
requirements.
The distance to the MDA trigger is the lowest of
the respective distances to the SREP requirements in CET1 capital,
Tier 1 capital and total capital. As from 12 March 2020 and
considering the impact of the COVID-19 crisis, the European Central
Bank brought forward the effective date of application of Article
104a of CRD5 and allowed institutions under its supervision to use
Tier 1 and Tier 2 capital to meet the additional Pillar 2
requirement (P2R). Overall, the P2R can now be met with 75% Tier 1
capital including as a minimum 75% CET1 capital. The CET1
requirement of Crédit Agricole S.A. and Crédit Agricole Group has
thus decreased by -66 basis points since first quarter 2020.
At 30 June 2020, Crédit Agricole
Group posted a buffer of 636 basis points above
the MDA trigger, i.e. €36 billion in CET1 capital.
At 30 June 2020, Crédit Agricole
S.A. posted a buffer of 382 basis points above the
MDA trigger, i.e. €13 billion in CET1 capital.
Crédit Agricole S.A.
At end-June 2020, Crédit Agricole S.A. retained
a high level of solvency, with a phased-in Common Equity
Tier 1 (CET1) ratio of 12.0%, up +0.6 percentage point from
end-March 2020. The fully loaded ratio is
11.7%. During the quarter the CET1 ratio benefited from
the stated result, generating a positive impact of +27 basis
points; unrealised gains and/or losses that generated a positive
impact of +19 basis points, as well as a positive impact from
methodology and regulatory effects for +46 basis points,
which notably includes IFRS 9 phasing for +25 basis points (measure
authorising the neutralisation of part of the impact of the
first-time application of IFRS 9 and of net charges to provisions
on healthy loans outstanding), the additional SME factor effect
(extension of the SME support factor and introduction of a new
factor of 0,85 for exposures above the threshold of EUR 2,5
million) for +9 basis points and prudent valuation effect (adoption
by the EBA, before June 30 relating to the aggregation factor in
order to limit the impact of market volatility in the calculation)
for +7 basis points. The measures on software are not applicable as
of June 30, 2020. This impact also includes optimizations at CACIB,
which reduce weighted jobs by 1.5 billion euros. The solvency ratio
include this quarter a dividend per share provision of €0.16, €0.24
for the half year, which, coupled with the effect of the AT1
coupons, has a negative impact of 15 basis points. The solvency
ratio include a negative impact of -16 basis points on the “M&A
and other” item, mainly related to the acquisition of Sabadell
Asset Management for -9 basis points.
The impact of business line growth on the ratio
this quarter is neutral. In the end, Crédit Agricole S.A. had a
substantial buffer of 4.1 percentage points between the level
of its CET1 ratio and the 7.9% SREP requirement, compared with 3.5
percentage points at 31 March 2020.
The phased-in leverage ratio was 3.9% at
end-June 2020, stable compared to end-March 2020. The phased-in
average intra-quarter leverage ratio was 3.8%%, the phased-in Tier
1 ratio was 13.5% and the phased-in overall ratio was 17.6% and
the.
Risk weighted assets amounted to €347 billion at
end-June 2020, compared with €348 billion at end-March, i.e. a
limited decrease of -0.2% over one quarter. The impact on
risk-weighted assets of business growth was neutral overall, +€1.2
billion under the effect of an increase of €2.7 billion increase in
Retail banking, mostly at LCL related to the introduction of State
guaranteed loans, that was partially offset by a decline in
Specialised financial services (€2.1 billion). The increase in the
equity-accounted value of the insurance business had an upward
impact on risk weighted assets amounting to €2.1 billion, whereas
the regulatory effects had a downward impact on them (-€2.6 billion
in the case of SME supporting factor), as did the methodology
effects at Crédit Agricole Corporate and Investment Bank (-€1.5
billion). Pro-forma of State guaranteed loans 2 months’ waiting
period risk weighted assets were down -€2.6 billion in June
compared to March.
Liquidity and Funding
Liquidity is measured at
Crédit Agricole Group level.
In order to provide simple, relevant and
auditable information on the Group’s liquidity position, the
banking cash balance sheet’s stable resources surplus is calculated
quarterly.
The banking cash balance sheet is derived from
Crédit Agricole Group’s IFRS financial statements. It is based on
the definition of a mapping table between the Group’s IFRS
financial statements and the sections of the cash balance sheet as
they appear in the next table and whose definition is commonly
accepted in the marketplace. It relates to the banking scope, with
insurance activities being managed in accordance with their own
specific prudential constraints.
Further to the breakdown of the IFRS financial
statements in the sections of the cash balance sheet, netting
calculations are carried out. They relate to certain assets and
liabilities that have a symmetrical impact in terms of liquidity
risk. Deferred taxes, fair value impacts, collective impairments,
short-selling transactions and other assets and liabilities were
netted for a total of €62 billion at end-June 2020. Similarly, €96
billion in repos/reverse repos were eliminated insofar as these
outstandings reflect the activity of the securities desk carrying
out securities borrowing and lending operations that offset each
other. Other nettings calculated in order to build the cash balance
sheet relate to derivatives, margin calls,
adjustment/settlement/liaison accounts and to non-liquid securities
held by the Corporate and Investment Banking division, included in
the “Customer-related trading assets” section, for an amount
totalling €184 billion at end-June 2020.
It should be noted that deposits centralised
with CDC are not netted in order to build the cash balance sheet;
the amount of centralised deposits (€62 billion at
end-June 2020) is booked to assets under “Customer-related trading
assets” and to liabilities under “Customer-related funds”.
In a final stage, other restatements reassign
outstandings that accounting standards allocate to one section,
when they are economically related to another. As such, senior
issues placed through the banking networks as well as financing by
the European Investment Bank, the
Caisse des Dépôts et Consignations and other
refinancing transactions of the same type backed by customer loans,
which accounting standards would classify as “Medium long-term
market funds”, are reclassified as “Customer-related funds”.
Note that for Central Bank refinancing
operations, outstandings related to the TLTRO (Targeted Longer-Term
Refinancing Operations) are included in “Medium long-term market
funds”. Indeed, the TLTRO II and TLTRO III operations do not allow
for early redemption at the ECB’s discretion; given respectively
their four-year and three-year contractual maturity, they are
deemed equivalent to long term secured refinancing, identical in
liquidity risk terms to a secured issue.
Medium/long-term repos are also included in
“Medium long term market funds”.
Finally, the CIB’s counterparties that are banks
with which we have a commercial relationship are considered as
customers in the construction of the cash balance sheet.
Standing at €1,487 billion at 30 June 2020, the
Group's banking cash balance sheet shows a surplus of
stable funding resources over stable application of funds of €241
billion, up +€109 billion compared to March 2020 and up
+€125 billion compared to June 2019.
In the context of the COVID-19 health crisis,
the Group made massive efforts to support its customers, in
particular through the implementation of State guaranteed loans and
extension on loans maturities. In order to meet customer demand and
benefit from competitive interest rate conditions, the Group took
part once again in June 2020 in the T-LTRO III medium-to-long-term
refinancing transactions of the European Central Bank for €90
billion, increasing its level of stable resources.
In addition, the Group benefited during the
quarter from a significant increase in financing activities and
retail banking inflows in France, partly stemming from the
liquidity return of State guaranteed loans financing. Indeed, over
the quarter, inflows were up +€47 billion, while loans were up +€16
billion, also contributing to the improvement of stable
resources.
This surplus of €241 billion, known as stable
resources position, allows the Group to cover the LCR deficit
generated by long-term assets and stable liabilities (customer,
tangible and intangible assets, long-term funds and own funds). It
meets the Medium Term Plan target of over €100 billion. The
ratio of stable resources over long term applications of
funds was 121.6%, up +9.5pp compared to
the previous quarter.
Furthermore, given the excess liquidity and the
gradual repayment over the quarter of drawings on central bank
facilities (notably LTRO), the Group moved into a short-term
lending position at 30 June 2020 (central bank deposits exceeding
the amount of short-term debt).
Medium-to-long-term market resources
were €311 billion at 30 June 2020, up +€83
billion compared to end-March 2020.
They included senior secured debt of
€184 billion, senior preferred debt of €84 billion,
senior non-preferred debt of €24 billion and Tier 2
securities amounting to €19 billion.
The significant increase in senior secured debt
is explained by the Group taking part in the T-LTRO
medium-to-long-term refinancing transactions of the European
Central Bank (drawings of TLTRO III and partial repayment of TLTRO
II). The decrease in preferred senior debt is explained by the
liability management operation carried out during the second
quarter.
The Group’s liquidity reserves, at
market value and after haircuts, amounted to €405 billion at
30 June 2020, up by +€67 billion compared to
end-March 2020 and +€128 billion compared to 30 June 2019.
They cover three times short-term debt.
In the context of the COVID-19 health crisis,
the Group strongly demonstrated its ability to mobilise collateral
to create additional liquidity reserves. At the same time, the
implementation in April of the ECB's collateral easing measures
also helped to increase the purchasing power of the Group’s central
bank.
The increase in central bank deposits is the
result of the replacement of significant excess liquidity. The
increase in the Group's asset encumbrance ratio is in line with
Central Bank’s drawings.
At end-June 2020, the numerator of the LCR ratio
(including the portfolio of HQLA securities, cash and central bank
deposits, excluding reserve requirements), calculated as an average
over 12 months, stood respectively at €256.2 billion for
the Crédit Agricole Group and €224.4 billion for Crédit
Agricole S.A. The denominator of the ratio (representing net cash
outflows), calculated as an average over 12 months, stood
respectively at €192.8 billion for the Crédit Agricole Group
and at €166.9 billion for Crédit Agricole S.A.
The average LCR ratios over 12 months for
Crédit Agricole Group and Crédit Agricole S.A.
were respectively 132.9% and 134.4% at end-June 2020. They exceeded
the Medium Term Plan target of around 110%. Credit Institutions are
subject to a threshold for this ratio, set at 100% from
1 January 2018.
In the context of the COVID-19 health crisis,
the increase in the level of LCR ratios of Crédit Agricole Group
and Crédit Agricole S.A. was in line with the recourse of the Group
to T-LTRO III drawings from the central bank.
The Group continues to follow a prudent policy
as regards medium-to-long-term refinancing, with a very diversified
access to markets in terms of investor base and products.
At 30 June 2020, the Group’s main
issuers raised the equivalent of €21.8 billion in
medium-to-long-term debt on the markets, 52% of which was
issued by Crédit Agricole S.A.
In addition, €3.3 billion was also
borrowed from national and supranational organisations or placed in
Crédit Agricole Group’s Retail banking networks (Regional Banks,
LCL and CA Italia) and other external networks at end-June
2020.
It should be noted that Crédit Agricole
Assurances (CAA) issued a 10-year Tier 2 bond for €1 billion in
July, to refinance subordinated intra-group debt.
At the end of July 2020,
Crédit Agricole S.A. completed 96% of its
€12 billion medium/long-term market funding programme for
the year. The bank had raised the equivalent of
€11.5 billion20, of which €5.2 billion equivalent in
senior non-preferred debt and €2.2 billion
equivalent in Tier 2 debt, as well as €4.1 billion
equivalent in senior preferred debt and in senior secured
debt.
The target of senior non-preferred and Tier 2
issues had been revised at €6 to €8 billion eq., an increase from
the initial target of €5 to €6 billion eq.
Note that in June 2020, Crédit Agricole S.A
completed a partial buyback of 11 sets of bonds denominated in EUR
and GBP, as well as a partial buyback of four sets of
USD-denominated bonds for a total of €3.4 billion eq. The purpose
of the buybacks was to optimise Crédit Agricole S.A.’s liability
structure and debt management in light of current and future
regulations and to provide liquidity to investors in the targeted
bond sets.
Corporate Social and Environmental
Responsibility of the Company
Social
The Crédit Agricole S.A. Group has been named
one of the top 50 companies in the SBF 120 ranking of the
representation of women on corporate decision-making bodies. The
Crédit Agricole S.A. Group has improved significantly in this
ranking, climbing 46 spots from the 90th position in 2015 to the
44th position in 2019. This annual ranking highlights the
commitment of 120 large French corporates to include more women on
their decision-making bodies and to promote gender equality at
work. This result reflects the proactive policy that the Group
adopted 4 years ago, leading in particular to a significant
increase in the number of women on the decision-making bodies of
the Crédit Agricole S.A. Group’s Executive Committee and on all of
the top decision-making bodies across the Group’s 11 business
lines. The Group aims for women to make up 30% of its entities’ top
decision-making bodies by 2022.
On 8 April 2020, in the light of the health
crisis caused by COVID-19, Crédit Agricole launched a solidarity
fund raising money to pay for essential measures to protect the
elderly and allow them to keep in touch with their close ones. At
the end of June, nearly 500,000 elderly people throughout the
country received assistance from Crédit Agricole thanks to this €20
million fund.
Climate financing
Crédit Agricole is setting up a new scheme to
drive its non-financial performance. The scheme is made up of two
major projects: the launch of a non-financial reporting platform to
cover the Crédit Agricole Group scope, and the roll-out of an
energy transition rating tool to be used for analysis and dialogue
with the Group’s large corporate clients. It is also helping the
Group to meet the 2021 European regulatory requirements.
Amundi has been selected to manage a eurozone
equity index fund aligned with the Paris Agreement on climate
change, on behalf of 12 institutional investors on the Paris stock
exchange who are launching an unprecedented initiative to promote
climate issues. This investment solution is expected to produce an
annual carbon intensity reduction of at least 7%, in line with the
IPCC’s* 1.5°C scenario. It is the first investment solution that is
fully eligible for the future “Paris Aligned Benchmark” European
label. The index will operate by gradually excluding corporates
that do not set any targets as defined by the Science Based Targets
initiative. The investment solution therefore encourages issuers to
embark on a transition.
*IPCC — the Intergovernmental Panel on Climate
Change is open to all UN member countries
Technique Solaire has put in place financing
activities of €111 million, calling on Unifergie (a subsidiary of
Crédit Agricole Leasing & Factoring) and Crédit Agricole de la
Touraine et du Poitou. These activities include firstly, the
refinancing of 120 existing solar power plants (so-called
“brownfield” financing, which relates to assets already in service)
and secondly the financing of a portfolio of projects representing
54 megawatts of electricity (so-called “greenfield” financing,
which concerns new construction projects), in addition to the
81-megawatt portfolio already underway for this client. In total,
these new installations will generate power equating to the annual
consumption of 24,000 homes in 23 French departments.
Non-financial performance
The Grameen Crédit Agricole Foundation published
its first impact report, a financial and non-financial assessment.
The Foundation has broadened its impact through its cooperation
with 30 Crédit Agricole regional banks and entities. With a
micro-financing fund that has brought together 21 Regional Banks, a
skills volunteering programme and innovative cooperation schemes,
today the Foundation is strengthening its leverage position for the
financial inclusion of the Group in around 40 countries. For more
information: http://impact-report.gca-foundation.org/
Biodiversity
The Crédit Agricole registered office has just
obtained the BiodiverCity® Life label awarded by the International
Biodiversity & Property Council (IBPC), which recognises
consideration for biodiversity on sites in service. For nearly two
years, the Crédit Agricole Immobilier operations teams and the CSR
management team at Crédit Agricole S.A. have put the site’s
ecological potential to the test and have now been awarded the
label following a compliance audit performed by Deloitte. Evergreen
is the result of a comprehensive look at environmental
conservation, including the well-being of its occupants, management
of natural resources and the development of biodiversity.
Appendix 1 – Specific items, Crédit Agricole
Group and Crédit Agricole S.A.
Credit Agricole Group - Specific items, Q2-20 and Q2-19,
H1-20 and H1-19
|
|
Q2-20 |
Q2-19 |
|
H1-20 |
H1-19 |
€m |
|
Gross impact* |
Impact on net income |
Gross impact* |
Impact on net income |
|
Gross impact* |
Impact on net income |
Gross impact* |
Impact on net income |
DVA (LC) |
|
(7) |
(5) |
(5) |
(3) |
|
(26) |
(19) |
(12) |
(9) |
Loan portfolio hedges (LC) |
|
(75) |
(51) |
(8) |
(6) |
|
48 |
32 |
(27) |
(20) |
Home Purchase Savings Plans (LCL) |
|
(4) |
(3) |
(3) |
(2) |
|
(15) |
(10) |
(11) |
(7) |
Home Purchase Savings Plans (CC) |
|
(16) |
(11) |
(15) |
(10) |
|
(46) |
(31) |
(28) |
(18) |
Home Purchase Savings Plans (RB) |
|
(58) |
(40) |
(19) |
(13) |
|
(133) |
(90) |
(98) |
(64) |
Liability management upfront payment (CC) |
|
(41) |
(28) |
- |
- |
|
(41) |
(28) |
- |
- |
Support to insured clients Covid-19 (AG) |
|
(2) |
(1) |
- |
- |
|
(2) |
(1) |
- |
- |
Support to insured clients Covid-19 (AG) |
|
(143) |
(97) |
- |
- |
|
(143) |
(97) |
- |
- |
Support to insured clients Covid-19 (RB) |
|
(94) |
(64) |
- |
- |
|
(94) |
(64) |
- |
- |
Total impact on revenues |
|
(441) |
(300) |
(49) |
(33) |
|
(452) |
(309) |
(175) |
(118) |
Covid-19 donation (AG) |
|
- |
- |
- |
- |
|
(38) |
(38) |
- |
- |
Covid-19 donation (IRB) |
|
- |
- |
- |
- |
|
(8) |
(4) |
- |
- |
Covid-19 donation (CC) |
|
- |
- |
- |
- |
|
(10) |
(10) |
- |
- |
Covid-19 donation (RB) |
|
- |
- |
- |
- |
|
(10) |
(10) |
- |
- |
S3 / Kas Bank integration costs (LC) |
|
(5) |
(2) |
- |
- |
|
(9) |
(4) |
- |
- |
Total impact on operating expenses |
|
(5) |
(2) |
- |
- |
|
(75) |
(67) |
- |
- |
Triggering of the Switch2 (AG) |
|
65 |
44 |
- |
- |
|
65 |
44 |
- |
- |
Triggering of the Switch2 (RB) |
|
(65) |
(44) |
- |
- |
|
(65) |
(44) |
- |
- |
Total impact on cost of risk |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
Total
impact of specific items |
|
(445) |
(302) |
(49) |
(33) |
|
(527) |
(376) |
(175) |
(118) |
Asset gathering |
|
(77) |
(53) |
- |
- |
|
(116) |
(91) |
- |
- |
French Retail banking |
|
(224) |
(152) |
(22) |
(14) |
|
(320) |
(221) |
(108) |
(71) |
International Retail banking |
|
- |
- |
|
- |
|
(8) |
(4) |
- |
- |
Specialised financial services |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
Large customers |
|
(86) |
(58) |
(12) |
(9) |
|
13 |
9 |
(39) |
(29) |
Corporate centre |
|
(58) |
(39) |
(15) |
(10) |
|
(97) |
(69) |
(28) |
(18) |
* Impact before
tax and before minority interests |
|
|
|
|
|
|
|
|
|
|
Crédit Agricole S.A. - Specific items, Q2-20 and Q2-19,
H1-20 and H1-19
|
|
Q2-20 |
Q2-19 |
|
H1-20 |
H1-19 |
€m |
|
Gross impact* |
Impact on net income |
Gross impact* |
Impact on net income |
|
€m |
|
Gross impact* |
Impact on net income |
DVA (LC) |
|
(7) |
(5) |
(5) |
(3) |
|
(26) |
(19) |
(12) |
(9) |
Loan portfolio hedges (LC) |
|
(75) |
(50) |
(8) |
(6) |
|
48 |
32 |
(27) |
(20) |
Home Purchase Savings Plans (FRB) |
|
(4) |
(2) |
(3) |
(2) |
|
(15) |
(10) |
(11) |
(7) |
Home Purchase Savings Plans (CC) |
|
(16) |
(11) |
(15) |
(10) |
|
(46) |
(31) |
(28) |
(18) |
Liability management upfront payment (CC) |
|
(41) |
(28) |
- |
- |
|
(41) |
(28) |
- |
- |
Support to insured clients Covid-19 (LCL) |
|
(2) |
(1) |
- |
- |
|
(2) |
(1) |
- |
- |
Support to insured clients Covid-19 (AG) |
|
(143) |
(97) |
- |
- |
|
(143) |
(97) |
- |
- |
Total impact on revenues |
|
(288) |
(195) |
(30) |
(20) |
|
(225) |
(154) |
(78) |
(53) |
Covid-19 donation (AG) |
|
- |
- |
- |
- |
|
(38) |
(38) |
- |
- |
Covid-19 donation (IRB) |
|
- |
- |
- |
- |
|
(8) |
(4) |
- |
- |
Covid-19 donation (CC) |
|
- |
- |
- |
- |
|
(10) |
(10) |
- |
- |
S3 / Kas Bank integration costs (LC) |
|
(5) |
(2) |
- |
- |
|
(9) |
(4) |
- |
- |
Total impact on operating expenses |
|
(5) |
(2) |
- |
- |
- |
(65) |
(57) |
- |
- |
Triggering of the Switch2 (AG) |
|
65 |
44 |
- |
- |
|
65 |
44 |
- |
- |
Total impact on cost of risk |
|
65 |
44 |
- |
- |
- |
65 |
44 |
- |
- |
Total
impact of specific items |
|
(227) |
(153) |
(30) |
(20) |
|
(224) |
(166) |
(78) |
(53) |
Asset
gathering |
|
(77) |
(53) |
- |
- |
|
(116) |
(91) |
- |
- |
French
Retail banking |
|
(6) |
(4) |
(3) |
(2) |
|
(17) |
(11) |
(11) |
(7) |
International Retail banking |
|
- |
- |
|
- |
|
(8) |
(4) |
|
- |
Specialised financial services |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
Large
customers |
|
(86) |
(57) |
(12) |
(9) |
|
13 |
9 |
(39) |
(28) |
Corporate
centre |
|
(57) |
(39) |
(15) |
(10) |
|
(97) |
(69) |
(28) |
(18) |
* Impact before tax and before minority
interests |
|
|
|
|
|
|
|
|
|
|
Appendix 2 – Credit Agricole Group: results by
business lines
Credit Agricole Group – Contribution by divisions -
Q2-20 & Q2-19
|
Q2-20 (stated) |
|
€m |
RB |
LCL |
IRB |
AG |
SFS |
LC |
CC |
Total |
|
|
|
|
|
|
|
|
|
Revenues |
3,163 |
851 |
664 |
1,360 |
607 |
1,706 |
(256) |
8,096 |
Operating expenses excl. SRF |
(2,023) |
(544) |
(439) |
(666) |
(309) |
(857) |
(199) |
(5,036) |
SRF |
(29) |
(7) |
(9) |
1 |
(0) |
(60) |
(2) |
(107) |
Gross operating income |
1,112 |
301 |
216 |
696 |
298 |
789 |
(458) |
2,953 |
Cost of risk |
(363) |
(117) |
(200) |
64 |
(248) |
(342) |
(2) |
(1,208) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
(1) |
- |
- |
15 |
60 |
3 |
- |
78 |
Net income on other assets |
(4) |
- |
65 |
(0) |
18 |
(0) |
(0) |
78 |
Change in value of goodwill |
(3) |
- |
- |
- |
- |
- |
- |
(3) |
Income before tax |
741 |
183 |
81 |
775 |
128 |
450 |
(460) |
1,898 |
Tax |
(226) |
(53) |
(17) |
(202) |
47 |
(47) |
189 |
(308) |
Net income from discont'd or
held-for-sale ope. |
- |
- |
(0) |
- |
- |
- |
- |
(0) |
Net income |
515 |
130 |
64 |
573 |
175 |
403 |
(272) |
1,590 |
Non controlling interests |
(0) |
(0) |
(22) |
(69) |
(26) |
(16) |
27 |
(107) |
Net income Group Share |
515 |
130 |
42 |
504 |
149 |
387 |
(245) |
1,483 |
Q2-19 (stated) |
€m |
RB |
LCL |
AG |
IRB |
SFS |
LC |
CC |
Total |
|
|
|
|
|
|
|
|
|
Revenues |
3,257 |
886 |
1,480 |
740 |
687 |
1,466 |
(30) |
8,485 |
Operating expenses excl. SRF |
(2,221) |
(573) |
(691) |
(455) |
(329) |
(797) |
(242) |
(5,308) |
SRF |
2 |
(1) |
(3) |
(7) |
(0) |
8 |
(3) |
(4) |
Gross operating income |
1,038 |
312 |
786 |
278 |
358 |
678 |
(275) |
3,174 |
Cost of risk |
(238) |
(51) |
(8) |
(87) |
(132) |
(69) |
(14) |
(598) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
4 |
- |
12 |
- |
78 |
(1) |
- |
94 |
Net income on other assets |
(7) |
(0) |
(0) |
(1) |
0 |
(0) |
0 |
(8) |
Change in value of goodwill |
- |
- |
- |
- |
- |
- |
- |
- |
Income before tax |
797 |
262 |
790 |
190 |
305 |
608 |
(289) |
2,662 |
Tax |
(247) |
(84) |
(222) |
(53) |
(73) |
(148) |
99 |
(728) |
Net income from discont'd or
held-for-sale ope. |
- |
- |
8 |
- |
- |
- |
- |
8 |
Net income |
550 |
178 |
576 |
137 |
232 |
460 |
(190) |
1,942 |
Non controlling interests |
0 |
(0) |
(76) |
(29) |
(25) |
1 |
(0) |
(130) |
Net income Group Share |
550 |
178 |
500 |
108 |
207 |
460 |
(190) |
1,813 |
Credit Agricole Group – Contribution by divisions –
H1-20 & H1-19
|
H1-20 (stated) |
€m |
RB |
LCL |
IRB |
AG |
SFS |
LC |
CC |
Total |
|
|
|
|
|
|
|
|
|
Revenues |
6,323 |
1,729 |
1,360 |
2,694 |
1,254 |
3,295 |
(192) |
16,462 |
Operating expenses excl. SRF |
(4,286) |
(1,128) |
(889) |
(1,471) |
(661) |
(1,741) |
(408) |
(10,584) |
SRF |
(123) |
(42) |
(25) |
(6) |
(20) |
(260) |
(86) |
(562) |
Gross operating income |
1,914 |
558 |
446 |
1,217 |
573 |
1,293 |
(686) |
5,316 |
Cost of risk |
(670) |
(218) |
(316) |
46 |
(438) |
(501) |
(39) |
(2,137) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
3 |
- |
- |
29 |
132 |
4 |
- |
168 |
Net income on other assets |
(4) |
0 |
66 |
3 |
18 |
(0) |
(0) |
84 |
Change in value of goodwill |
(3) |
- |
- |
- |
- |
- |
- |
(3) |
Income before tax |
1,240 |
340 |
195 |
1,294 |
286 |
796 |
(725) |
3,428 |
Tax |
(464) |
(109) |
(54) |
(328) |
18 |
(103) |
252 |
(789) |
Net income from discontinued or
held-for-sale operations |
- |
- |
(1) |
- |
- |
- |
- |
(1) |
Net income |
776 |
231 |
140 |
967 |
304 |
693 |
(473) |
2,638 |
Non controlling interests |
(1) |
(0) |
(40) |
(131) |
(46) |
(26) |
(4) |
(248) |
Net income Group Share |
775 |
231 |
101 |
835 |
258 |
667 |
(477) |
2,391 |
|
H1-19 (stated) |
€m |
RB |
LCL |
AG |
IRB |
SFS |
LC |
CC |
Total |
|
|
|
|
|
|
|
|
|
Revenues |
6,669 |
1,747 |
2,940 |
1,442 |
1,368 |
2,804 |
(287) |
16,682 |
Operating expenses excl. SRF |
(4,413) |
(1,166) |
(1,444) |
(894) |
(671) |
(1,616) |
(381) |
(10,585) |
SRF |
(88) |
(32) |
(7) |
(22) |
(18) |
(177) |
(81) |
(426) |
Gross operating income |
2,167 |
550 |
1,489 |
526 |
678 |
1,011 |
(749) |
5,671 |
Cost of risk |
(295) |
(95) |
(3) |
(175) |
(239) |
(59) |
(13) |
(879) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
9 |
- |
25 |
- |
156 |
(1) |
- |
188 |
Net income on other assets |
(7) |
1 |
(0) |
(1) |
1 |
3 |
7 |
3 |
Change in value of goodwill |
- |
- |
- |
- |
- |
- |
- |
- |
Income before tax |
1,874 |
456 |
1,510 |
350 |
596 |
953 |
(755) |
4,983 |
Tax |
(710) |
(153) |
(419) |
(99) |
(137) |
(277) |
219 |
(1,576) |
Net income from discontinued or
held-for-sale operations |
- |
- |
8 |
- |
- |
- |
- |
8 |
Net income |
1,164 |
302 |
1,099 |
251 |
459 |
676 |
(537) |
3,415 |
Non controlling interests |
(0) |
(0) |
(149) |
(53) |
(58) |
1 |
7 |
(253) |
Net income Group Share |
1,164 |
302 |
950 |
198 |
401 |
677 |
(530) |
3,163 |
Appendix 3 – Crédit Agricole S.A.: results by
business line
Crédit Agricole S.A. - Contribution by divisions - Q2-20
& Q2-19
Q2-20 (stated) |
€m |
AG |
BP (LCL) |
BPI |
SFS |
GC |
AHM |
Total |
|
|
|
|
|
|
|
|
Revenues |
1,359 |
851 |
640 |
607 |
1 706 |
(266) |
4 897 |
Operating expenses excl. SRF |
(666) |
(544) |
(418) |
(309) |
(857) |
(187) |
(2
980) |
SRF |
1 |
(7) |
(9) |
(0) |
(60) |
(2) |
(79) |
Gross operating income |
694 |
300 |
212 |
298 |
789 |
(456) |
1 838 |
Cost of risk |
64 |
(117) |
(199) |
(248) |
(342) |
(1) |
(842) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
15 |
- |
- |
60 |
3 |
10 |
88 |
Net income on other assets |
(0) |
- |
65 |
18 |
(0) |
(0) |
82 |
Change in value of goodwill |
- |
- |
- |
- |
- |
- |
- |
Income before tax |
773 |
183 |
78 |
128 |
450 |
(447) |
1 166 |
Tax |
(201) |
(53) |
(16) |
47 |
(47) |
185 |
(86) |
Net income from discontinued or
held-for-sale operations |
- |
- |
(0) |
- |
- |
- |
(0) |
Net income |
572 |
130 |
62 |
175 |
403 |
(262) |
1 080 |
Non controlling interests |
(74) |
(6) |
(25) |
(26) |
(23) |
29 |
(126) |
Net income Group Share |
498 |
124 |
37 |
149 |
379 |
(233) |
954 |
Q2-19 (stated) |
€m |
AG |
FRB (LCL) |
IRB |
SFS |
LC |
CC |
Total |
|
|
|
|
|
|
|
|
Revenues |
1,479 |
886 |
715 |
687 |
1,467 |
(85) |
5,149 |
Operating expenses excl. SRF |
(691) |
(573) |
(436) |
(329) |
(797) |
(207) |
(3,033) |
SRF |
(3) |
(1) |
(7) |
(0) |
8 |
(3) |
(6) |
Gross operating income |
786 |
312 |
272 |
358 |
679 |
(296) |
2,111 |
Cost of risk |
(8) |
(51) |
(84) |
(132) |
(69) |
(15) |
(358) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
12 |
- |
- |
78 |
(1) |
19 |
108 |
Net income on other assets |
(0) |
(0) |
(1) |
0 |
(0) |
0 |
(1) |
Change in value of goodwill |
- |
- |
- |
- |
- |
- |
- |
Income before tax |
790 |
262 |
187 |
305 |
609 |
(292) |
1,861 |
Tax |
(221) |
(84) |
(52) |
(73) |
(148) |
94 |
(485) |
Net income from discontinued or
held-for-sale operations |
8 |
- |
- |
- |
- |
- |
8 |
Net income |
577 |
178 |
135 |
232 |
460 |
(198) |
1,384 |
Non controlling interests |
(80) |
(8) |
(36) |
(25) |
(9) |
(3) |
(161) |
Net income Group Share |
496 |
170 |
98 |
207 |
452 |
(201) |
1,222 |
Crédit Agricole S.A. - Contribution by divisions – H1-20
& H1-19
H1-20 (stated) |
€m |
AG |
FRB (LCL) |
IRB |
SFS |
LC |
CC |
Total |
|
|
|
|
|
|
|
|
Revenues |
2,678 |
1,728 |
1,310 |
1,254 |
3,293 |
(167) |
10,097 |
Operating expenses excl. SRF |
(1,471) |
(1,128) |
(848) |
(661) |
(1,741) |
(385) |
(6,235) |
SRF |
(6) |
(42) |
(25) |
(20) |
(260) |
(86) |
(439) |
Gross operating income |
1,201 |
558 |
437 |
573 |
1,292 |
(638) |
3,423 |
Cost of risk |
46 |
(218) |
(314) |
(438) |
(501) |
(37) |
(1,463) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
29 |
- |
- |
132 |
4 |
13 |
178 |
Net income on other assets |
3 |
0 |
66 |
18 |
(0) |
(0) |
87 |
Change in value of goodwill |
- |
- |
- |
- |
- |
- |
- |
Income before tax |
1,279 |
340 |
189 |
286 |
795 |
(662) |
2,226 |
Tax |
(323) |
(109) |
(53) |
18 |
(103) |
224 |
(347) |
Net income from discontinued or
held-for-sale operations |
- |
- |
(1) |
- |
- |
- |
(1) |
Net income |
955 |
231 |
135 |
304 |
692 |
(439) |
1,879 |
Non controlling interests |
(139) |
(10) |
(47) |
(46) |
(39) |
(5) |
(287) |
Net income Group Share |
816 |
220 |
88 |
258 |
653 |
(444) |
1,592 |
H1-19 (stated) |
€m |
AG |
FRB (LCL) |
IRB |
SFS |
LC |
CC |
Total |
|
|
|
|
|
|
|
|
Revenues |
2,948 |
1,747 |
1,391 |
1,368 |
2,806 |
(256) |
10,004 |
Operating expenses excl. SRF |
(1,444) |
(1,166) |
(856) |
(671) |
(1,616) |
(384) |
(6,136) |
SRF |
(7) |
(32) |
(22) |
(18) |
(177) |
(81) |
(337) |
Gross operating income |
1,497 |
550 |
513 |
678 |
1,013 |
(721) |
3,530 |
Cost of risk |
(3) |
(95) |
(172) |
(239) |
(59) |
(13) |
(582) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
25 |
- |
- |
156 |
(1) |
13 |
193 |
Net income on other assets |
(0) |
1 |
(1) |
1 |
3 |
19 |
22 |
Change in value of goodwill |
- |
- |
- |
- |
- |
- |
- |
Income before tax |
1,518 |
456 |
340 |
596 |
955 |
(702) |
3,163 |
Tax |
(420) |
(153) |
(96) |
(137) |
(278) |
205 |
(880) |
Net income from discontinued or
held-for-sale operations |
8 |
- |
- |
- |
- |
- |
8 |
Net income |
1,106 |
303 |
243 |
459 |
677 |
(497) |
2,291 |
Non controlling interests |
(157) |
(14) |
(66) |
(58) |
(13) |
1 |
(307) |
Net income Group Share |
949 |
289 |
178 |
401 |
664 |
(496) |
1,985 |
Appendix 4 – Methods used to calculate earnings
per share, net asset value per share
Crédit Agricole S.A. – Data per share,
net book value per share and ROTE
(€m) |
|
Q2-20 |
Q2-19 |
|
H1-20 |
H1-19 |
|
VarQ2/Q2 |
Var H1/H1 |
Net income Group share - stated |
|
954 |
1,222 |
|
1,592 |
1,985 |
|
(21.9%) |
(19.8%) |
- Interests on
AT1, including issuance costs, before tax |
|
(72) |
(99) |
|
(229) |
(240) |
|
(27.2%) |
(4.5%) |
NIGS attributable to ordinary shares - stated |
[A] |
882 |
1,123 |
|
1,363 |
1,745 |
|
(21.5%) |
(21.9%) |
Average number shares in issue, excluding treasury shares (m) |
[B] |
2,882.4 |
2,864.1 |
|
2,882.7 |
2,863.3 |
|
+0.6% |
+0.7% |
Net earnings per share - stated |
[A]/[B] |
0.31 € |
0.39 € |
|
0.47 € |
0.61 € |
|
(22.0%) |
(22.4%) |
Underlying net income Group share (NIGS) |
|
1,107 |
1,242 |
|
1,758 |
2,038 |
|
(10.9%) |
(13.7%) |
Underlying NIGS attributable to ordinary
shares |
[C] |
1,035 |
1,143 |
|
1,529 |
1,798 |
|
(9.5%) |
(15.0%) |
Net earnings per share - underlying |
[C]/[B] |
0.36 € |
0.40 € |
|
0.53 € |
0.63 € |
|
(10.1%) |
(15.5%) |
(€m)
30/06/202030/06/2019Shareholder's
equity Group share
63,89561,216- AT1 issuances
(5,130)(6,094)- Unrealised gains and losses on
OCI - Group share
(2,291)(3,056)- Payout assumption on annual
results*
--Net book value (NBV), not revaluated,
attributable to ordin. sh.
[D]56,47452,066-
Goodwill & intangibles** - Group share
(18,502)(18,335)Tangible NBV (TNBV), not
revaluated attrib. to ordinary sh.
[E]37,97233,731Total
shares in issue, excluding treasury shares (period end, m)
[F]2,882.82,864.0NBV per share , after
deduction of dividend to pay (€)
[D]/[F]19.6
€18.2 €+ Dividend to pay
(€)
[H]0.0
€0.0 €NBV per share , before
deduction of dividend to pay (€)
19.6 €18.2
€TNBV per share, after deduction of dividend to
pay (€)
[G]=[E]/[F]13.2
€11.8 €TNBV per sh., before
deduct. of divid. to pay (€)
[G]+[H]13.2
€11.8 €
* dividend
proposed to the Board meeting to be paid |
** including
goodwill in the equity-accounted entities |
(€m) |
|
|
H1-20 |
H1-19 |
Net income Group share attributable to ordinary shares |
[H] |
|
2,725 |
3,490 |
Tangible NBV (TNBV), not revaluated attrib. to ord. sh. -
avg*** |
[J] |
|
36,022 |
32,572 |
Stated ROTE (%) |
[H]/[J] |
|
7.6% |
10.7% |
Underlying Net income attrib. to ord. shares (annualised) |
[I] |
|
3,058 |
3,596 |
Underlying ROTE (%) |
[I]/[J] |
|
8.5% |
11.0% |
*** including
assumption of dividend for the current exercise |
|
|
|
|
Alternative Performance
Indicators
NAVPS Net asset value per share – Net
tangible assets per share
One of the methods for calculating the value of
a share. NAV per share is net equity Group share restated from AT1
issues divided by the number of shares outstanding at the end of
the period.
Net tangible assets per share is tangible net
equity Group share, i.e. restated for intangible assets and
goodwill, divided by the number of shares outstanding at the end of
the period.
NBV Net Book Value
Net book value is net equity Group share,
restated for AT1 issues, HTCS hidden reserves and proposed
dividends on annual earnings.
EPS Earnings Per Share
Net income Group share (excluding AT1 issues
interests) divided by the average number of shares outstanding,
excluding Treasury shares. EPS indicates the portion of profits
attributable to each share (not the portion of earnings paid out to
each shareholder, which is the dividend). It may decrease, assuming
net income Group share remains unchanged, if the number of shares
increases (see Dilution).
Cost/income ratio
The cost/income ratio is calculated by dividing
expenses by revenues, indicating the proportion of revenues needed
to cover expenses.
Cost of risk/outstandings
Calculated by dividing cost of risk (over four
quarters on a rolling basis) by outstandings (over an average of
the past four quarters, beginning of the period). The cost of risk
on outstandings can also be calculated by dividing the annualised
cost of risk of the quarter by the outstandings as of beginning of
the period.
Since the first quarter 2019, loans
outstanding considered are only loans to customers, before
impairment
Impaired loans ratio
This ratio compares the gross impaired customer
loans to total gross customer loans outstanding.
Coverage ratio
This ratio compares the total loans loss
reserves to the gross impaired customer loans outstanding.
Net income Group share attributable to
ordinary shares – stated
Net income Group share attributable to ordinary
shares is calculated as net income Group share less interest on AT1
instruments, including issue costs before tax.
Underlying net income Group
share
Underlying net income Group share is calculated
as net income Group share restated for specific items (i.e.
non-recurring or exceptional items).
ROE Return on Equity
Indicator measuring the return on equity,
calculated by dividing a company’s net income by its equity.
RoTE Return on Tangible
Equity
Measures the return on tangible equity (the
bank’s net assets restated to eliminate intangibles and
goodwill).
Warning
The financial information on Crédit Agricole
S.A. and Crédit Agricole Group for second quarter and first half
2020 comprises this presentation and the attached appendices and
press release which are available on the website:
https://www.credit-agricole.com/finance/finance/publications-financieres.
This presentation may include prospective
information on the Group, supplied as information on trends. This
data does not represent forecasts within the meaning of EU
delegated regulation 2019/980 of 14 March 2019 (chapter 1, article
1, d).
This information was developed from scenarios
based on a number of economic assumptions for a given competitive
and regulatory environment. Therefore, these assumptions are by
nature subject to random factors that could cause actual results to
differ from projections. Likewise, the financial statements are
based on estimates, particularly in calculating market value and
asset impairment.
Readers must take all these risk factors and
uncertainties into consideration before making their own
judgement.
Applicable standards and
comparability
The figures presented for the six-month period
ending 30 June 2020 have been prepared in accordance with IFRS as
adopted in the European Union and applicable at that date, and with
prudential regulations currently in force. This financial
information does not constitute a set of financial statements for
an interim period as defined by IAS 34 “Interim Financial
Reporting” and has not been audited.
Note: the scopes of consolidation of the
Crédit Agricole S.A. and Crédit Agricole Groups have not
changed materially since the Crédit Agricole S.A. 2019
Universal Registration Document and its 2019 A.01 update (including
all regulatory information about the Crédit Agricole Group) were
filed with the AMF (the French Financial Markets Authority).
The sum of values contained in the tables and
analyses may differ slightly from the total reported due to
rounding.
Since 30 September 2019, Kas Bank has been
included in the scope of consolidation of Crédit Agricole
Group as a subsidiary of CACEIS. SoYou has also been included in
the scope of consolidation as a joint-venture between Crédit
Agricole Consumer Finance and Bankia. Historical data have not been
restated on a proforma basis.
Since 23 December 2019, Caceis and Santander
Securities Services (S3) have merged their operations. As of said
date, Crédit Agricole S.A. and Santander respectively hold 69.5%
and 30.5% of the capital of CACEIS.
On 30 June 2020, once all necessary regulatory
approvals were secured, Amundi acquired the entire share capital of
Sabadell Asset Management.
Since 30 June 2020, Menafinance has been wholly
owned by Crédit Agricole Consumer Finance and is fully consolidated
by Crédit Agricole S.A..
Financial Agenda
4 November 2020
Publication of the 2020 third quarter and first 9 months
results11 February 2021
Publication of the 2020 fourth quarter and
full year results7 May 2021
Publication of the 2021 first quarter results12 May
2021
Annual General Meeting in
Montpellier5 August 2021
Publication of the 2021 second quarter and the
first half year results10 November 2021
Publication of the 2021 third quarter and first 9 months
results
Contacts
CREDIT AGRICOLE PRESS
CONTACTS
Charlotte de
Chavagnac + 33 1 57
72 11
17
charlotte.dechavagnac@credit-agricole-sa.frOlivier
Tassain
+ 33 1 43 23 25
41
olivier.tassain@credit-agricole-sa.frBertrand
Schaefer
+ 33 1 49 53 43
76
bertrand.schaefer@ca-fnca.fr
CREDIT AGRICOLE S.A. INVESTOR
RELATIONS CONTACTS
Institutional
shareholders |
+ 33 1 43 23 04
31 |
investor.relations@credit-agricole-sa.fr |
Individual
shareholders |
+ 33 800
000 777 (freephone number – France only) |
credit-agricole-sa@relations-actionnaires.com |
|
|
|
Clotilde
L’Angevin |
+ 33 1 43 23 32
45 |
clotilde.langevin@credit-agricole-sa.fr |
Equity
investors: |
|
|
Toufik
Belkhatir |
+ 33 1 57 72 12
01 |
toufik.belkhatir@credit-agricole-sa.fr |
Joséphine
Brouard |
+ 33 1 43 23 48
33 |
Joséphine.brouard@credit-agricole-sa.fr |
Oriane Cante |
+ 33 1 43 23 03
07 |
oriane.cante@credit-agricole-sa.fr |
Emilie
Gasnier |
+ 33 1 43 23 15
67 |
emilie.gasnier@credit-agricole-sa.fr |
Ibrahima
Konaté |
+ 33 1 43 23 51
35 |
ibrahima.konate@credit-agricole-sa.fr |
Annabelle
Wiriath |
+ 33 1 43 23 55
52 |
annabelle.wiriath@credit-agricole-sa.fr |
|
|
|
Credit investors and rating agencies: |
|
Caroline
Crépin |
+ 33 1 43 23 83
65 |
caroline.crepin@credit-agricole-sa.fr |
Marie-Laure
Malo |
+ 33 1 43 23 10
21 |
marielaure.malo@credit-agricole-sa.fr |
Rhita Alami
Hassani |
+ 33 1 43 23 15
27 |
rhita.alamihassani@credit-agricole-sa.fr |
|
|
|
|
|
|
|
|
|
|
|
|
See all our press releases at: www.credit-agricole.com -
www.creditagricole.info
|
Crédit_Agricole |
|
Crédit Agricole Group |
|
créditagricole_sa |
1 Underlying, excluding specific items. See p.32 and onwards for
more details on specific items.
2 Based on SREP requirement of 8.9%
3 Based on SREP requirement of 7.9%
4 National Net Promoter Score for individuals in 2020:
difference between promoters and detractors
5 Underlying, excluding specific items. See p.32 and onwards for
more details on specific items.
6 Cost of risk on outstandings (in annualised basis points)
7 Underlying ROTE calculated based on first half 2020,
annualised
8 12-month average ratio
9 Underlying, excluding specific items. See p.23 and onwards for
more details on specific items.
10 See p.23 for more details on specific items related to Crédit
Agricole S.A.
11 See details on the calculation of the business lines’ ROTE
(return on tangible equity) and RONE (return on normalised equity)
on p.26
12 Predica rate
13 Equipment rate: percentage of individual banking customers
holding at least one insurance product (Pacifica estimates). Scope:
auto, home, health, life accidents and legal protection
insurance.
14 Excluding foreign exchange impact.
15 Sources: Refinitiv and Bloomberg
16 Source: Refinitiv T78
17 Including the partial dismantlement of the Switch recorded at
Q1 2020
18 Excluding forex effect
19 TLOF – Total Liabilities Own Funds, equivalent to the
prudential balance sheet after netting of derivatives
20 Gross amount before buy back and amortisation