Company Reports

Credit Agricole S.A. is, in many ways, unique among European banks. It has a more diverse mix of operations. Its lower reliance on traditional banking activities reduces its exposure to credit and interest-rate risk, which could support greater earnings stability. But, it also means Credit Agricole S.A. stands to gain less from the return to positive interest rates. The relationship with its parent, the Credit Agricole Group, is a double-edged sword. It creates cross-selling opportunities, but makes Credit Agricole S.A. a complex bank to understand.

Nuveen’s all-cash bid of GBP 5.90 per share for Schroders has been making headlines and overshadowed the firm’s strong second-half results, where adjusted operating profit surged 43%, and efficiency gains pushed its cost/income ratio below guidance.

CASA reported a 5.6% revenue increase and a 6.2% rise in pretax income for the third quarter of 2025, mainly driven by corporate center gains, including the revaluation of minority stakes and the reversal of minority interest payments following a recent acquisition. Shares fell 3% on Oct. 30.

Shares of BNP Paribas, Crédit Agricole, and Société Générale plunged 8%–10% on Aug. 27, as renewed political instability gripped France. The spread of French 10-year bonds over German bunds spiked by 14 basis points to 82 basis points —just shy of its November 2024 highs.

Credit Agricole S.A. (CASA) reported weak results across all operating segments, with revenue growth driven primarily by dividends received in the corporate center. Shares fell 2% intraday on July 31.

Credit Agricole S.A. is, in many ways, unique among European banks. It has a more diverse mix of operations. Its lower reliance on traditional banking activities reduces its exposure to credit and interest-rate risk, which could support greater earnings stability. But, it also means Credit Agricole S.A. stands to gain less from the return to positive interest rates. The relationship with its parent, the Credit Agricole Group, is a double-edged sword. It creates cross-selling opportunities but makes Credit Agricole S.A. a complex bank to understand.

Credit Agricole S.A. is, in many ways, unique among European banks. It has a more diverse mix of operations. Its lower reliance on traditional banking activities reduces its exposure to credit and interest-rate risk, which could support greater earnings stability. But, it also means Credit Agricole S.A. stands to gain less from the return to positive interest rates. The relationship with its parent, the Credit Agricole Group, is a double-edged sword. It creates cross-selling opportunities but makes Credit Agricole S.A. a complex bank to understand.

Credit Agricole saw 7% growth in revenue for the first quarter of 2025, but also a 4% decline in the bottom line due to a higher pace of growth for its cost base and reflected the French tax surcharge introduced last year. This sent the stock down by 4% at the market open on April 30.

Investors dumped European banks for a second day on April 4 as concern over US tariffs spreads. The 22 banks we cover declined by 11% over the last two days. UniCredit (minus 16%) and Barclays (minus 15%) led the decline, while Svenska Handelsbanken and Credit Agricole fared better, each down 7%.

No-moat Credit Agricole SA reported solid results, contributing to the positive momentum European banks gained in the fourth quarter of 2024. The bank achieved a record quarter by revenue, comfortably ahead of the company-compiled consensus, reflecting a 17% year-over-year growth in revenue and a 27% increase in net income. Full-year figures also remained strong, with an 8% rise in the top line and a 12% increase in the bottom line compared with 2023. We maintain our fair value estimate of EUR 14.50 per share and see shares as fairly valued at current levels.

No-moat Credit Agricole reported pretax profits of EUR 2.4 billion for the third quarter of 2024, 15% lower than the second quarter and 6% below the company-compiled consensus estimate. Revenue declined by 5% quarter on quarter, which was more than the consensus expected.

Despite the increased political risks, 4-star-rated BNP remains one of our top picks in the European banking sector, trading at a 26% discount to our fair value estimate. BNP trades at a 40% discount to the European banking sector's average price/tangible book ratio and it offers a juicy 7.5% dividend yield. While we expect BNP's midcycle profitability to lag the sector somewhat, we do not believe it justifies such a steep discount, especially if we consider BNP's remarkable historical earnings stability. France contributed only about 25% of BNP's revenue in 2023, compared with 40% for Societe Generale and 46% for Credit Agricole. BNP has deployed some excess capital into several small bolt-on acquisitions that should support incremental earnings growth. The increased volatility in European capital markets due to the French elections may be a positive for BNP's investment banking franchise as its clients will look to hedge risks on rates and currency, supporting volume, and wider spreads will support trading margins.

Credit Agricole S.A. is, in many ways, unique among European banks. It has a more diverse mix of operations. Its lower reliance on traditional banking activities reduces its exposure to credit and interest-rate risk, which could support greater earnings stability. But, it also means Credit Agricole S.A. stands to gain less from the return to positive interest rates. The relationship with its parent, the Credit Agricole Group, is a double-edged sword. It creates cross-selling opportunities but makes Credit Agricole S.A. a complex bank to understand.

Credit Agricole's fourth-quarter 2023 net profit declined year on year and quarter on quarter. Results also fell short of consensus estimates. Adverse weather conditions significantly hit its insurance operations, leading to a 47% year-on-year decline in revenue in its insurance division and depressing overall revenue growth. Certain charges Credit Agricole views as nonrecurring led to higher expenses. It remains on track to achieve 2025 growth and profitability targets. Our fair value estimate remains steady at EUR 14.50 per share and we retain our no moat rating.

No-moat Credit Agricole posted a 29% year-on-year increase in attributable net income for the third quarter of 2023; earnings also came in 28% ahead of the company-compiled consensus estimate. Credit Agricole has more minor exposure to French retail banking than its listed French peers. As such, its results suffered less from the regulated nature of French mortgage and deposit interest rates, which has constrained the revenue growth of its peers.

The most damaging impact of the surprise windfall tax announcement by the Italian government will not be the hit to the earnings of Italian banks, but the higher risk premium that investors will demand to compensate them for the risk of future government intervention. The haphazard manner of the announcement, where the government changed the terms of the tax at least three times in one day, will do little to restore investor confidence. Many investors already view European banks as seminationalised institutions, and we believe this goes a long way to explain the continued steep discount that European banks trade at relative to the broader market. Following a similar windfall tax in Spain and a ban on dividend payments during the coronavirus pandemic, investors will be even more concerned about the risk of arbitrary intervention from governments and regulators. We do not expect other major European governments to follow Italy and Spain, especially after seeing the fallout from the Italian debacle. We estimate that the hit to FactSet 2023 consensus earnings estimates will be 10% for Intesa Sanpaolo and 6% for UniCredit. BNP Paribas and Credit Agricole are the other European banks we cover with the most significant exposure to Italy. We calculate that the impact on group earnings for both would be below 2%. We do not plan to change our fair value estimates for BNP Paribas (EUR 76/share) and Credit Agricole (EUR 14.50/share). We have not resumed coverage of Intesa Sanpaolo and UniCredit yet.

No-moat Credit Agricole posted very strong results for the second quarter of 2023, with attributable net income of EUR 2 billion, 25% higher than a year earlier and materially ahead of the EUR 1.4 billion company-compiled consensus. Credit Agricole's investment banking business performed much better than anticipated and bucked the declining revenue trend of its peers. Credit Agricole is now on track to reach its EUR 6 billion net income target two years ahead of schedule. Credit Agricole's management did not provide detailed and updated guidance. We understand this. Investment banking revenue is at an all-time high for Credit Agricole and, in a low-volatility environment, could be under pressure in the future. Management indicated that it expects the recovery of French retail net interest margins to only start in the second half of fiscal 2024. We maintain our EUR 14.50 per-share fair value estimate.

We resume coverage of Credit Agricole S.A. with a no-moat rating and a fair value estimate of EUR 14.50 per share; its current share price implies a 25% discount to our fair value. It trades at 0.8 times its 2022 tangible book value, in line with its average market rating over the past decade, but at 7 times its 2023 earnings, its forward PE ratio is meaningfully below its 9 times long-term average. Credit Agricole S.A.’s valuation is in line with the average European bank that we cover. Given its lower interest rate sensitivity, Credit Agricole S.A. could be an interesting option for investors with a more dovish view on interest rates and investors with a broader allocation to European banks could consider including Credit Agricole S.A. as a natural hedge in their portfolio to offset the rate sensitivity of other European banks.

Credit Agricole S.A. is, in many ways, unique among European banks. It has a more diverse mix of operations. Its lower reliance on traditional banking activities reduces its exposure to credit and interest-rate risk, which could support greater earnings stability. But, it also means Credit Agricole S.A. stands to gain less from the return to positive interest rates. The relationship with its parent, the Credit Agricole Group, is a double-edged sword. It creates cross-selling opportunities but makes Credit Agricole S.A. a complex bank to understand.

We are dropping coverage of some of our European banks and asset managers. We will no longer be reporting on Santander, Credit Agricole, Julius Baer, Unicredit, Intesa Sanpaolo, Mediobanca, Amundi, KBC, DWS Group, BBVA, and Schroders. We provide broad coverage of more than 1,500 companies globally and periodically adjust our coverage according to investor interest and staffing.