Credit Agricole SA, France?s No. 3 bank, said profit in the third quarter dropped 65 percent, hurt by provisions on Greek sovereign debt.
Net income fell to 258 million euros ($350 million) from 742 million euros a year earlier, the bank, based near Paris, said in a statement today. That missed the 552 million-euro average estimate of eight analysts surveyed by Bloomberg. The company booked a 905 million-euro pretax writedown on Greek sovereign debt in the period.
Credit Agricole, while absorbing losses from its Greek consumer-banking unit, faces more collateral damage in Italy, where austerity measures and spiraling refinancing costs threaten economic growth in the bank?s second-largest market after France. The company, along with BNP Paribas SA, is among the biggest foreign holders of the country?s sovereign debt.
Concern about French banks? debt holdings in Europe?s troubled countries — Greece, Portugal, Ireland, Spain and Italy — has weighed on their stocks. Credit Agricole has fallen 47 percent this year in Paris trading, reducing its market value to 12.5 billion euros. BNP Paribas, France?s largest bank, has dropped 36 percent in 2011, while Societe Generale SA, the second biggest, has slid 55 percent.
Credit Agricole follows its bigger French competitors in reporting earnings crimped by writedowns on Greek debt. BNP Paribas reported a 72 percent decline in third-quarter profit last week, hurt by a 2.26 billion-euro markdown on the country?s sovereign debt, while Societe Generale said Nov. 8 that net income in the period fell 31 percent. It took a 333 million-euro writedown on Greek government bonds.
Italy and Greece are key for Credit Agricole to reach its annual net income target of 6 billion euros to 7 billion euros in 2014. Chief Executive Officer Jean-Paul Chifflet, 62, is counting on a rebound at its international retail-banking business to attain the bank?s 2014 profit goal.
Losses from Emporiki Bank of Greece SA, Credit Agricole?s Athens-based unit, doubled to 397 million euros in the third quarter. The French lender, which spent about 2.2 billion euros in 2006 to amass a controlling stake in the division, said July 28 that it was more difficult to reach Emporiki Bank?s goal for breakeven by the end of 2012. [Bloomberg]