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26th August 2011

Credit Agricole S.A. profit up - underlying trend not so good
Opinion

Crédit Agricole S.A. (the listed part of the total group) reported first half net income attributable to the group of €1,339m (£1,174m $1,933m ¥148.0bn Y12,346m) UP 58%. For Credit Agricole Group the Q2 net attributable was €881m (£773m $1,272m ¥97.4bn Y8,123m) DOWN 1.8% and for the half year €2,408m (£2,112m $3,475m ¥266.1bn Y22,203m) UP 30%.


What appears a good result bears closer analysis. The Group's full accounts were not available. From the summary income statement for Crédit Agricole S.A., shown below, it can be seen that NII was up less than a half percent and commission income was down 10%. The net banking income line is only saved from showing a major decline because of the fall in other expense and a net benefit from fair value changes. Despite the 'net banking' description below, the other expense fall was due primarily to a significant fall in insurance claims and nothing to do with banking.


The bank was successful in almost holding expenses unchanged and benefited from lower loan impairments costs. It also wrote off €359m goodwill relating to Emporiki as well as increasing Emporiki's loan loss provisions by €148m.


Crédit Agricole S.A. Half Year income summary 2011 2010 Change
€m €m %
Interest income  17,348 16,164 7
Interest expense  -9,857 -8,710 13
Commissions (income)  5,296 5,476 -3
Commissions (expense)  -2,906 -2,829 3
Financial instruments at fair value change  1,342 661 103
Financial assets available for sale - change 631 2,322 -73
Income from other activities  14,520 16,666 -13
Other expense  -15,539 -19,457 -20
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NET BANKING  10,835 10,293 5
Operating expenses  -6,258 -6,216 1
Depreciation and impairment of tangible & Intangibles -348 -351 -1
GROSS OPERATING INCOME  4,229 3,726 13
Cost of risk  -1,947 -2,054 -5
________________________
OPERATING INCOME  2,282 1,672 36
Profit from equity interests 710 709 0
Net gains or losses on other assets  -7 -159 -96
Change in value of goodwill  -359 -418 -14
_______________________
PROFIT BEFORE TAX  2,626 1,804 46
Income taxes  -1,107 -729 52
Net profit from discontinued operations during  13 7 86
________________________
NET PROFIT 1,532 1,082 42
Minority interests  193 233 -17
_______________________
NET INCOME attributed to group 1,339 849 58