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The higher interest rates have resulted in “the best semester ever” for Crédit Agricole, the bank’s president, Licínio Pina.
Crédito Agrícola (CA) was the last bank to publish its first-half accounts and revealed a consolidated net profit of €224.4 million for the year ended June 2024, equivalent to a year-on-year increase of €50.4 million (+28.9%).
Return on equity was 17.7%.
Licínio Pina, president of the Crédito Agrícola Group, stressed in the report that “the Crédito Agrícola Group has shown good financial performance in the first half of 2024”, saying that “it is the best semester ever in terms of performance, in line with the path observed in recent years, with a return on equity of 17.7%, resulting in a profit of 224.4 million euros”.
The CA Group’s insurance companies contributed €9.3 million to the consolidated profit, with CA Seguros contributing €6 million and CA Vida €3.3 million, compared with a total contribution of €8.1 million in the year before, an annual increase of 15.4%.
In the income statement, the focus is on the increase in revenue. Core banking products totaled €520.6 million in the semester, up €64.6 million (+14.2%) year-on-year, mainly due to an increase in financial margin of €64.4 million (+19.3% year-on-year). In the same period last year) it increased to €398.9 million.
Rising interest rates helped the performance of the bank led by Licinio Pina.
The 28.9% year-on-year change in net profit was also impacted by an increase in insurance contract results of €3.8 million (+8.9%) to €47.1 million, as well as by a €20.4 million decrease in provisions and impairment charges compared to the same period last year, which equates to an increase of €7.5 million in the first half of the year, compared to an increase of €28 million in the same period last year.
This performance was also driven by an improvement in the performance of other assets by €2.6 million to €0.9 million.
Conversely, CA Group’s results were impacted by a year-on-year decrease in net commissions of €3.7 million (-4.7%) to €74.6 million.
Net commissions decreased compared to the same period last year due to the suspension of commissions under the mortgage lending measure until the end of 2024 and no increase in price lists.
“The evolution observed is mainly due to a decrease in commissions for credit, commissions for establishment business and commissions for checks and OTC transactions, with a combined effect of -2.5 million euros compared to the first half of 2023, partially offset by an increase in commissions due to payment methods, which increased by 1.8 million euros compared to the same period last year”, the bank explained in a statement.
It is also worth highlighting that the financial operating result fell by €8 million to €2.5 million compared to the €10.6 million recorded in June last year.
The result was also impacted by a 6.0% increase in structural costs to €219.6 million (+€12.5 million compared to the same period last year), mainly due to the CA Group’s efforts to reduce personnel costs by 7.3% compared to the same period last year (+€9.2 million), also due to the impact of increased credit renegotiations requested by customers in response to higher interest rates on credit contracts.
The bank also justified this result with an increase in tax revenues, which amounted to 67.4 million euros, or 23.5% compared to the same period in 2023.
Due to the good development of bank income, the efficiency ratio increased by 2.5 percentage points year-on-year to 42%, compared with 44.5% in the same period last year.
In the balance sheet, the customer credit portfolio (gross) increased by €54.4 million (+0.5%) compared to December 2023, reaching €12.113 billion, “similar to the overall market growth rate, with a market share of 5.8% in agricultural credit”.
Customer deposits reached €20,889 million at the end of June 2024, compared to €20,004 million in December 2023 (up 4.4%), keeping Crédit Agricole’s market share at 8.0% in June 2024.
Licínio Pina stressed that “the customer credit portfolio grew by 0.5% compared to the end of 2023, reaching 12.113 billion euros, thanks to the commitment and commitment of the Group’s employees and the trust of its clients and counterparties”.
“We believe that it’s not money that makes the world go round, but the good that can be done with it, which is why we have been supporting companies and families in navigating an uncertain environment with knowledge, local presence and a comprehensive range of financial and protection solutions. This is our sustainable way of helping our clients and communities make a difference”, said Crédito Agrícola CEO.
Credit Agricole also detailed that as of June 30, 2024, the CET1 capital to total equity ratio was 23.2% (including current net profit), the leverage ratio was 9.8% (including current net profit), the liquidity coverage ratio (LCR) reached 671.4%, and the stable funding ratio (NSFR) reached 168.8%, “all comfortably above the minimum recommended or required levels,” the bank revealed.
“The level of equity of €2.482 billion (including a net profit within the prudent range of €218 million) enables the Group to exceed the minimum requirement of MREL TREA + CBR (25.28%) effective from January 1, 2024, with a comfort margin of 3.07 percentage points as of June 30, 2024,” CA Group added.
The bank stressed that “the insurance companies of Grupo Crédito Agrícola, CA Seguros and CA Vida have all recorded the lowest complaint rates in the Market Conduct Supervision and Regulation Report – 2023 of the Insurance and Pension Funds Superintendency (ASF)”.
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