- Posts record Q2 earnings, sales
- Agrees to acquire wealth manager Degroof Petercam
- Top investor to buy 1 bln euros worth of shares
Finance
Credit Agricole’s Q2 results beat estimates on insurance, consumer finance
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FILE PHOTO-A woman walks past a Credit Agricole logo outside a bank office in Reze near Nantes, France, May 12, 2021. REUTERS/Stephane Mahe/File Photo
PARIS, Aug 4 (Reuters) – Credit Agricole SA (CAGR.PA), France’s second-biggest listed bank, posted better-than-expected quarterly earnings on Friday, driven by a strong performance of its insurance and consumer finance divisions.
The listed entity of Credit Agricole Group, controlled by 39 French mutual banks, also announced it had agreed to buy a majority stake in Belgian wealth manager Degroof Petercam for an undisclosed amount in a move that would increase the scope of its Indosuez Wealth Management division by roughly 50%.
Credit Agricole’s second-quarter net income group share jumped by 25% from a year earlier to 2.04 billion euros, well above the 1.39 billion-euro average of analyst estimates compiled by the company.
Quarterly sales rose by 19% to 6.68 billion euros, also beating the consensus of 5.9 billion euros for the three-months period ending in June.
The cost of risk – money set aside for failing loans – more than doubled to 534 million euros, because of “a market significant case” and a higher risk on retail banking and consumer credit.
Both sales and earnings reached record highs in the second quarter, the bank said, driven notably by the insurance business and its so-called special financial services (SFS) unit.
The latter comprises the lender’s consumer finance activities, whose sales were notably boosted by the addition of a joint venture with carmaker Stellantis (STLAM.MI) dedicated to car leasing.
In a call with reporters, Xavier Musca, the head of Credit Agricole’s investment bank, said the lender aimed to own 80% of Degroof Petercam following the acquisition of a number of family-held stakes.
Flemish family Cigrang would retain 20% under the acquisition plan, Musca said, adding that Degroof Petercam had about 35 billion euros under management, and about 30,000 clients.
Separately, Credit Agricole said SAS Rue La Boetie, the investment vehicle of Credit Agricole Group’s 39 mutual banks, planned to further invest 1 billion euros in the listed entity, thus increasing its stake from its current 60.2% stake.
(This story has been corrected to change the impact of Degroof acquisition on Indosuez in paragraph 2)
Reporting by Mathieu Rosemain
Editing by Ingrid Melander, Augustin Turpin
Our Standards: The Thomson Reuters Trust Principles.
Japanese Finance Minister Shunichi Suzuki on Friday stressed the need for foreign exchange rates to move stably by reflecting economic fundamentals, saying that excessive fluctuations should be rectified.
Speaking at a press conference during his visit to Georgia, Suzuki declined to comment on whether Japan intervened in the currency market when the yen spiked in a short span of time Wednesday in New York.
Japanese authorities have threatened to take action against excessive volatility in the currency market, with the yen falling sharply against the U.S. dollar.
Japanese Finance Minister Shunichi Suzuki (C) and Bank of Japan Deputy Governor Ryozo Himino (R) give a press conference in Tbilisi on May 3, 2024. (Kyodo)
“Foreign exchange rates should be determined by market forces, reflecting fundamentals. It’s desirable that they move stably,” Suzuki told a press conference in the Georgian capital of Tbilisi on the fringes of meetings related to the Asian Development Bank.
Suzuki added that rapid changes cause negative impacts for households and businesses in making plans. “It may become necessary to smooth out excessive moves,” he said.
Despite market talk of currency interventions by Japanese authorities, Japanese government officials have remained silent, leaving traders in the dark.
“Stealth interventions” are used to make traders jittery and prevent them from making bold moves.
Based on data from the Bank of Japan and market sources, Japan likely spent around 8 trillion yen ($52 billion) this week to step into the market and slow the yen’s decline.
Japanese Finance Minister Shunichi Suzuki (5th from L) and Bank of Japan Deputy Governor Ryozo Himino (4th from L) are among the officials attending a meeting of finance ministers and central bank governors from Japan, China, South Korea and the members of the Association of Southeast Asian Nations in Tbilisi on May 3, 2024. (Kyodo)
The yen, which earlier this week tumbled past 160 to the dollar, has regained some of its strength. It rose to the 151 zone on Friday.
Still, the underlying trend of a weak yen remains intact, reflecting the wide interest rate differential between Japan and the United States.
The BOJ raised interest rates for the first time in 17 years in March, but rapid hikes are not considered likely. The U.S. Federal Reserve, for its part, is now expected to take a longer time before starting to cut interest rates.
Related coverage:
Yen briefly rises to 151 in N.Y. after weak U.S. labor data
Another suspected market intervention likely cost Japan 3 trillion yen
BOJ’s March minutes show no urgency to raise rates further
The Hong Kong Monetary Authority (HKMA) has issued a “green taxonomy” framework to help banks and investors determine the sustainability of economic activities, the de facto central bank’s latest effort to boost the city’s standing as a green finance centre.
“The release of the Hong Kong Taxonomy for Sustainable Finance marks a key milestone for Hong Kong’s sustainable finance landscape,” Eddie Yue Wai-man, CEO of HKMA, said in a statement on Friday.
“By providing a common language and framework for sustainable finance, we are equipping market participants with an important tool to make informed decisions, drive impactful cross-border investments and contribute to global efforts in combating climate change.”
The taxonomy covers 12 economic activities under four sectors: energy, transport, construction, and water and waste management.
Having a taxonomy is important to prevent “greenwashing”, the act of making unsubstantiated claims about the environmental benefits of a product or practice.
The HKMA plans to expand the taxonomy soon to cover other sectors like retail and services, said Arthur Yuen Kwok-hang, deputy CEO of HKMA, who added that the authority had received positive feedback following market consultations last May on preparing the taxonomy.
“We encourage the financial sector to use the taxonomy to assess the greenness of projects when they decide to make green loans to these companies,” Yuen said at a media briefing on Friday.
“A green taxonomy is an integral part of the green finance ecosystem. It enables investors to look for green investment opportunities and make informed decisions, thus easing the mainstreaming of sustainable finance flows.”
The taxonomy has adopted local elements such as listing out Hong Kong certifications and standards that could be used to prove the buildings or operations are environmentally friendly and also are in line with guidelines issued by mainland China and the EU.
“This will help companies operating in mainland China and Europe to consider borrowing green loans or raising green bonds in Hong Kong,” Yuen said, noting that Asia alone will require US$66 trillion in climate investments over the next 30 years.
“Addressing climate change requires the support of the financial industry, which in turn will bring about enormous opportunities,” he said. “Hong Kong, which is an international financial centre, is the ideal capital market to support these green financing activities.”
Investments on such a massive scale are needed to meet the global aim of containing global warming within 1.5 degrees Celsius of pre-industrial levels and avoid the worst effects of extreme climate events. Last year was the warmest year on record, according to the World Meteorological Organization.
“Extreme weather is clear evidence of accelerating climate change and a reminder for an urgent need for decarbonisation,” Yuen said.
02:01
What is climate finance, and why is it crucial to the global energy transition?
What is climate finance, and why is it crucial to the global energy transition?
The Hong Kong government’s decision to extend the US$100 billion Green and Sustainable Finance Grant Scheme for another three years will cover transition bonds and loans for companies to upgrade their equipment to save energy and cut down on pollution.
The move was announced by Financial Secretary Paul Chan Mo-po in his budget speech in February. The current scheme expires on May 10.
“The scheme will encourage more companies and industries in the region to make use of Hong Kong’s financing platform as they move towards decarbonisation,” Yuen said.
Separately, the HKMA will soon launch a cloud-based platform for banks to assess the potential impact of physical risks on residential and commercial buildings in Hong Kong under different climate scenarios, such as flooding and typhoons.
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