August 3, 2018 / 5:12 AM / in 3 months

Credit Agricole banks forecast-beating rise in second-quarter profits

PARIS (Reuters) - French bank Credit Agricole (CAGR.PA) delivered a rise in second-quarter profits on Friday that beat market forecasts and lifted its shares, driven by a good performance in Italy and its investment bank and asset management units.

FILE PHOTO: The branch of Credit Agricole bank is seen in Warsaw, Poland, July 3, 2018. Picture taken July 3, 2018. REUTERS/Marcin Goclowski

Net profit rose 6.4 percent to 1.44 billion euros ($1.7 billion), above an average forecast of 1.04 billion euros delivered by a poll of analysts by Inquiry Financial on behalf of Reuters.

Revenues rose 9.8 percent to 5.17 billion euros, also beating an average forecast for 4.92 billion.

The results lifted Credit Agricole's shares by 1.9 percent in early session trading, making it the second best performer on the CAC 40 index .FCHI.

This was a “strong set of results showing the flexibility of the group,” wrote brokerage Jefferies, commenting on Credit Agricole’s earnings.

Credit Agricole chief executive Philippe Brassac was upbeat, saying he expected recent acquisitions — most notably in Italy — would bear fruit in the coming quarters.

“Beyond the excellent quarterly performance, the numbers confirm the group is on an excellent track,” he told reporters.

He said the bank’s priority was to grow organically through its existing businesses, rather than necessarily seeking out new acquisitions.

“We’ve made a few exceptions, particularly over asset management as we consider it is a business in consolidation,” said Brassac.

Credit Agricole’s asset manager Amundi (AMUN.PA) reported higher second quarter profits earlier this week, partly thanks to recent acquisitions.

Like its French rivals Societe Generale (SOGN.PA) and BNP Paribas (BNPP.PA), which also reported solid profits this week, Credit Agricole benefited from growth at its foreign operations.

Net profit at Credit Agricole’s Italian banking arm rose 28 percent during the period.

NO PLANS TO SELL POLISH BUSINESS

Brassac added that his bank planned to strengthen its position in Poland, denying reports that Credit Agricole was considering selling its unit in that country.

“We are definitely not sellers,” he said.

He declined to comment on whether he was looking at Societe Generale’s unit in that country.

The corporate and investment banking unit’s performance also stood out compared to its rivals as Credit Agricole booked two ‘jumbo deals’ in merger and acquisitions, featuring one major acquisition by engineering company Altran (ALTT.PA) and another takeover by U.S. oil services company McDermott (MDR.N).

Credit Agricole’s investment bankers also handled several profitable syndications during the period, which contributed to a 33 percent rise in net profits at the company’s investment banking division.

Reporting by Inti Landauro; Editing by Sudip Kar-Gupta and Jan Harvey

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