Crédit Agricole announced on Wednesday that its quarterly profit fell 16.4%, as the second largest listed French bank increased the value of provisions almost three times to protect itself from loan defaults due to the coronavirus crisis.
The net profit in the Q1 2020 fell to € 638 million euros from € 763 million a year earlier. Revenue rose 7.1% to € 5.2 billion.
Provisions for potential loan losses increased to € 621 million from € 225 million a year earlier.
The bank said that this took into account the risks related to retail banking services and corporate portfolios in the targeted sectors, including tourism, automotive and energy.
Crédit Agricole's revenues from market activities, which focus on fixed income rather than trading stocks or derivatives, increased by 13.7%.
"The strong performance reflects the fact that the investment bank’s strategy was geared towards helping its corporate clients get the financing they needed using the bank’s balance sheet or markets, rather than providing investors with investment products," said CFO Jerome Grivet.
On the other hand, Its French rivals BNP Paribas and Societe Generale posted losses from stock trading in Q1 2020.
Both BNP and Societe Generale are two of the biggest players in equity derivatives and corporate payments, however, they observed a down turn, especially in Europe where companies canceled pidends.
Meantime, Crédit Agricole's pidend cancellation had a € 10 million negative impact on its revenue.
Shares of the French bank lost 2.32% in today's trading, as the STOXX Europe 600 went down 0.37%.
It is noteworthy that Crédit Agricole had previously addressed property insurance companies operating in the Egyptian market to cover the bank's assets, which amounts to EGP 2.7 billion.
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