Credit Agricole leaps free of Greek debacle

Credit Agricole bank, free of big millstones in Greece and Italy, reported a leap in net profit for the second quarter on Tuesday, and its shares also jumped. The bank, which had already reported an improvement in the first quarter, turned in a second-quarter net figure of 696 million euros ($923 million) compared with 111 million euros in the same period of last year. This comparison is after adjustment of the size of the company for the disposal of assets in Emporiki bank in Greece, and other assets in Italy. Credit Agricole, which had made an expansion into Greece, got severely burnt by the Greek debt crisis and write-downs or haircuts on the value of Greek bonds. In the first quarter the bank had announced a net profit of 469 million euros after two quarters of losses. The price of shares in the bank was showing a gain of 3.80 percent to 8.14 euros in early trading. The overall CAC 40 index was up 0.28 percent. At Credit Suisse brokers, analysts commented that the results were \"robust\". One broker in Paris, who declined to be named, commented that \"cleaning out the balance sheet has borne fruit\" and that the second-quarter results were \"sharply higher than expected and now include little in the way of exceptional items.\" The managing director of Credit Agricole Jean-Paul Chifflet told a telephone press conference that the second-quarter result was in line with the trend in the first quarter and that the bank was on track towards its objectives.\"We are lined up to deliver a lasting performance and a significantly positive result in 2013,\" he said. However, the economic climate remained fragile and banks were operating under unduly restrictive constraints. Consequently, he said, it was right to be cautious in the medium and long term. In the second quarter of last year write-downs in Italy and charges for disposing of the Greek subsidiary Emporiki had cost the bank nearly 800 million euros. Credit Agricole said that at the end of June its ratio of core shareholder capital to loans made was 10.0 percent on the basis of the new Basle III standard which takes full effect at the beginning of 2019. This was in line with the target set by the bank for the end of 2013 The bank expressed satisfaction that it had reduced the percentage of bad or doubtful loans for which it had made provisions by 13.9 percent to 680 million euros. Net banking income, a key measure of bank performance registering the difference between the cost of deposits and the price charged for loans, fell by 0.9 percent to 4.39 billion euros. But the bank cut its operating costs by 2.9 percent to 2.9 billion euros in the quarter, owing to a cut in the workforce of 9.0-10.0 percent from one quarter to the next and also to a reorganisation of the bank which intends to cut costs by 650 million euros by 2016. French bank BNP Paribas has already reported a slight fall in second-quarter profit to 1.76 billion euros and Societe Generale bank has more than doubled its net figure to 955 million euros.