ACA Credit Agricole SA

   By Pietro Lombardi 
 

Credit Agricole SA (ACA.FR) shares trade lower after the lender's fourth-quarter net profit missed expectations despite double-digit growth.

France's second-largest listed bank by assets said on Wednesday fourth-quarter net profit rose 33% to 387 million euros ($477.2 million) from a year earlier, when a write-down on its domestic retail arm hit the bottom line. Revenue rose 1.6% to EUR4.65 billion.

Analysts had expected the Paris-based lender to post a net profit of about EUR600 million, according to FactSet.

Shares in Credit Agricole were down 2.6% at 1010 GMT.

"The results for the fourth quarter of 2017 were penalized by a high tax burden in connection to changes in tax rules in France and, to a lesser extent, the U.S.," the bank said. The tax adjustments had a negative impact of EUR384 million on the quarterly profit, it said.

Underlying net income, which strips out one-off items, decreased 8.4% to EUR878 million.

"This decrease stemmed mainly from the return to a more normal effective tax rate," the bank said.

On an underlying basis, revenue grew by 5.4%, supported by the integration of Pioneer and organic growth, the lender said.

"Revenues increased, at constant scope, at twice the rate expected by the 2020 Strategic Ambition Plan," Chief Executive Philippe Brassac said.

Credit Agricole's core Tier 1 ratio, a key measure of capital strength, was 11.7% in December, compared with 12% as of September.

The lender said it would pay shareholders a dividend of EUR0.63 a share, up from EUR0.60 for 2016. However, this is below expectations of EUR0.65, according to UBS analysts, who said results were hurt by a number of exceptional items.

"Underlying trends aren't bad," UBS said, but noted the dividend and lower core Tier 1 ratio missed expectations.

Credit Agricole also said it would compensate shareholders eligible for the loyalty dividend, which is to be discontinued in line with a European Central Bank ruling.

The bank will award eligible shareholders one new ordinary share for 26 registered shares entitled to a loyalty dividend.

"The value of the compensation amounts to approximately 56 cents per share," it said.

Write to Pietro Lombardi at pietro.lombardi@dowjones.com

(END) Dow Jones Newswires

February 14, 2018 05:42 ET (10:42 GMT)

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