May 20, 2008 10:46 ET

CREDIT AGRICOLE SA : Q1 2008 results

PARIS--(Marketwire - May 20, 2008) - Crédit Agricole S.A. announces a EUR 5.9 billion rights issue

- to reinforce Crédit Agricole S.A.'s capital ratios

- to allow for organic growth of its businesses

1st quarter 2008 net income (Group share): EUR 892 million

Crédit Agricole S.A.'s Board of Directors met on 14 May 2008, chaired by René Carron, to review the results for the three months ending 31 March 2008 and to vote on an action plan designed to contend with the current financial crisis and changing regulatory environment, which includes a EUR 5.9 billion rights issue.

In a climate of severe disruption in the financial markets, Crédit Agricole S.A. reported net income (Group share) of EUR 892 million for the first quarter of 2008, reflecting:

- A solid base of recurring earnings from Retail Banking and Specialised business lines (Specialised Financial Services, Asset Management, Insurance and Private Banking);

- A negative contribution of EUR (795) million from Corporate and Investment Banking, due to further substantial write-downs caused by the US residential mortgage market.

The action plan, which was announced on 13 May, was approved by the Board of Directors.

It includes a rights issue to strengthen Crédit Agricole S.A.'s prudential ratios. Considering reinforced regulatory constraints in terms of capital base and pro cyclicity effect of Basle II framework, Crédit Agricole S.A. has decided to target a sustainable 8.0% to 8.5 %Tier 1 ratio. In order to factor in the uncertainties and risks in the economic and market environment, sizing of the rights issue aims at reaching a pro forma Tier one ratio of 8.5%. Crédit Agricole S.A. intends to maintain this level throughout the crisis.

This issue will strengthen the pro forma Crédit Agricole S.A. Core Tier 1[1] ratio to 6.4%, thus making the Crédit Agricole Group one of the most robust banking groups in Europe.

The EUR 5.9bn new rights issue takes account of:

- the decision to raise Crédit Agricole S.A.'s Tier 1 ratio to 8.5%;

- the assumption, for the sake of simplicity, that shareholders will waive their rights to receive their dividends in shares (impact estimated at EUR 1.1 billion). In view of the proposed new rights issue, the Board will recommend that shareholders reject the resolution giving them the option of receiving their dividends in shares to be voted at the annual general meeting on 21 May

- the net income impact (decline in results compared with forecasts and impact of crisis related write-downs) of Corporate and Investment Bank in the first quarter results, which reduces financial capacity for the funding of the announced but not completed acquisitions (EUR 1.1 billion) and for the Tier 1 financing of the minority interest under Basel II (bn 0.8 billion)

The rights issue will be launched before the summer, subject to market conditions.

Crédit Agricole S.A.'s majority shareholder, SAS Rue La Boétie, has indicated that it intends to subscribe by irrevocable entitlement in respect of the rights held (54.4% of the issue) and to subscribe to any amount not subscribed for, with and without irrevocable rights..

These measures to strengthen capital adequacy ratios will be accompanied by measures to control costs, aiming at::

- An increase in 2008 costs of less than 1% on a comparable basis for all business lines;

- More specifically for Corporate and Investment Banking, a reduction of about 10% in the cost base, with an effect of at least EUR 150 million in 2008.

A detailed action plan for Corporate and Investment Banking will be presented in September 2008. This plan will be designed to refocus the activity on core expertise and clients and to reduce the proportion of allocated capital[2],.

The Group also intends to sell up to EUR 5 billion of assets, as and if required, over an 18-month period depending on market opportunities. It has confirmed the decision to freeze any major new acquisitions as announced when the annual results were presented.

These measures will be accompanied by a strong capital discipline in order to contain growth of risk-weighted assets.

Once the financial conditions are stabilised, the objective is to improve the pay-out ratio in line with European standards.

All these measures will contribute to maintain Crédit Agricole S.A.'s competitive advantage and underpins its long term profitable growth strategy.


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2008 financial reporting timetable

21 May 2008 Annual General Meeting of shareholders

27 May 2008 Ex-dividend date

23 June 2008 Dividend payment date

28 August 2008 Publication of 2nd quarter 2008 results

13 November 2008 Publication of 3rd quarter 2008 results

[1] Core Tier 1 capital comprises shareholders' equity (Group share) less goodwill

[2] Based on unchanged allocation calculation rules

Contact :

Press Contacts
M: Communications
Louise Tingström – T +44 (0) 789 906 6995
Crédit Agricole S.A.
Anne-Sophie Gentil - T. + 33 (0)1 43 23 37 51

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