Credit Agricole Q1 profit falls 16% as it triples provisions

[PARIS] Credit Agricole reported on Wednesday a 16.4 per cent decline in quarterly profit, as France's second-biggest listed bank almost tripled the amount of provisions to protect itself from potential loan defaults caused by the coronavirus crisis.

Credit Agricole avoided equity trading losses that hit its French rivals BNP Paribas and Societe Generale which have a big market share in the business. Its markets activities that are focused on fixed income trading rose by 14 per cent.

Net profit slid to 638 million euros (S$979.1 million) from 763 million euros a year ago. Revenue rose by 7.1 per cent to 5.2 billion euros.

"Our results are good, and allowed us, this quarter, to absorb a multiplication of the cost of risk by three," chief executive philippe Brassac said in a press statement, adding that the bank was prudent in its assumptions.

Its cost of risk, which reflects provisions against potential loan losses, rose to 621 million euros from 225 million euros a year ago.

The level of provisions took into account risks related to its retail banking portfolios, as well as corporate ones in some targeted sectors, such as tourism, automotive, aerospace, retail textile, energy and supply chain, it said.

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REUTERS