SOURCE: Credit Agricole

November 16, 2005 12:35 ET

CREDIT AGRICOLE : Strong earnings growth

Paris -- (MARKET WIRE) -- November 16, 2005 -- Paris, 16 November 2005

Strong earnings growth

2005 nine-month results

(Change 9 months 2005/9 months 2004)

- Gross operating income E3,319 million (+ 19.4%)

- Net income (Group share) E2,885 million (+ 40.0%)

- Cost/income ratio 66.8% (- 2.8 points)

- Annualised ROE 15.8%

2005 third-quarter results

(Change 3rd quarter 2005/ 3rd quarter 2004)

- Gross operating income E1,088 million (+ 39.7%)

- Net income (Group share) E1,020 million (+ 59.4%)

Net income (Group share) for the first nine months of 2005 came to E2,885 million, an increase of 40.0% compared with the same period of 20041. Excluding integration-related costs, net income was up 33.4% to E2,997 million.

Gross operating income rose by 19.4% to E3,319 million, driven by two factors:

- net banking income up 9.6% to E10,011 million resulting from strong business momentum and re-established growth dynamics across all business lines;

- operating expenses contained to E6,692 million, an increase of 5.4% due to organic growth across all business lines, partly offset by synergy effects.

Consequently, the cost/income ratio improved by 2.8 percentage points compared with the first nine months of 2004, falling to 66.8%.

Risk-related costs came to E438 million in a continued favourable risk environment, an increase of 4.8% compared with the same period of 2004.

The contribution from equity affiliates rose by 31.9% to E1,140 million. This robust growth was driven by the Regional Banks, which increased their contribution by 15.9%, and by international retail banking, with a 41.2% increase (compared to 9M-04), principally from Banca Intesa.

Pre-tax income totalled E4,061 million, an increase of 23.8% compared with the same period of 2004. Integration-related costs recognised in the first nine months came to E172 million, a sharp reduction of E100 million compared with the same period of 2004.

Synergies achieved (E620 million for the full year 2005 as of 30 September 2005) are in line with this year's targets.

Net income (Group share) before integration-related costs came to E2,997 million, giving an annualised ROE of 15.8%.

During the third quarter of 2005, business was very dynamic in all divisions, generating strong growth of income compared to the same period of last year particularly in asset management and in corporate and investment banking, which benefited as well from a favourable base effect. Net income (Group share) for the third quarter of 2005 amounted to E1,020 million, an increase of 59.4% on the third quarter of 2004, confirming the excellent trend of the first half. This performance was driven by strong growth in gross operating income, which rose by 39.7% compared with the third quarter of 2004 to E1,088 million. Risk-related costs were up but remain very low. The contribution from equity affiliates rose by 41.5%, due mainly to an excellent performance from Banca Intesa.

During the quarter, a capital gain linked with the establishment of CACEIS (E88 million) and a goodwill depreciation (E83 million) relating to EFL and Finaref Nordic were recorded as a result of changes in their economic environment.

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