Financial Results

Private Bank, Amundi Assets Rise At Credit Agricole; Overall Profit Hit By Banco Espirito Santo Troubles

Stephen Little Reporter London 6 August 2014

Private Bank, Amundi Assets Rise At Credit Agricole; Overall Profit Hit By Banco Espirito Santo Troubles

Credit Agricole has reported a rise in its private banking arm as well as its global asset management business Amundi for the six months to the end of June. The firm has also seen its overall group net profit plummet after writing off its stake in struggling Portuguese Banco Espirito Santo.

Credit Agricole has reported a rise in assets at its private banking arm as well its global asset management business Amundi for the six months to the end of June. Across the entire group, meanwhile, net profit fell sharply after it wrote off its stake in struggling Portuguese Banco Espirito Santo.

(Amundi is the business formed by Credit Agricole and Societe Generale in 2010.)

Credit Agricole said in a statement that assets under management in the private banking arm rose 2.4 per cent for the half to €135.5 billion ($181.3 billion), up from €132.2 billion at the end of last year, due mainly to a positive market effect that offset net asset outflows of €0.6 billion in the first half of 2014.

Amundi saw its assets under management rise to €821.4 billion for the six months to end of June, up 5.7 per cent from the end of December last year. Over the period, net inflows totalled €12.6 billion.

Long assets accounted for €17.7 billion of inflows in active and passive investments, driven by all customer segments, including institutions (+€6.9 billion), third-party distributors (+€4.3 billion) and international branch networks (+€1.9 billion).

In the French branch networks, net outflows were limited to -€0.3 billion euros excluding money market funds. The market and currency effect was €31.7 billion over the period, with international markets accounting for €8.1 billion of inflows over the first half.

Amundi logged a 4.6 per cent year-on-year growth in gross operating income in the first half and 12.1 per cent in the second quarter.

“Results reflect this good momentum as well as the favourable trends in the financial markets since the beginning of the year,” the statement said.

“This good performance was driven by growth in revenues, which were boosted by high performance fees in the second quarter, coupled with good control over costs, with the cost/income ratio maintained at 54.8 per cent in the first half,” the statement added.

Earlier this year, Credit Agricole revealed plans to increase assets under management in Amundi to €1 trillion by 2016, partly through the acquisition of smaller rivals.

Amundi was formed in 2010 when Credit Agricole merged its asset management business with that of France's Societe Generale.

Profits hit

Credit Agricole SA reported a substantial 98 per cent fall in net income to €17 million for the second quarter, down from €696 million a year ago, after writing off the value of its stake in troubled Portuguese Banco Espirito Santo to zero.

In a statement for the three months to the end of June, Credit Agricole said that excluding this charge, profits were boosted to €1 billion.

The Portuguese government announced last week it was stepping in with a €4.9 billion bailout plan to rescue Banco Espirito Santo after it posted a first half loss of €3.6 billion. Credit Agricole said its share of this loss was €502 million and that it had recorded a €206 million impairment charge on the value of the stake.

Last month, Espírito Santo Financial Group agreed to sell its Swiss private banking subsidiary’s client portfolio for the Iberian and Latin American regions to Swiss-based private bank Compagnie Bancaire Helvétique Group for an undisclosed sum.

Banco Espirito Santo Group, which is headquartered in Luxembourg, has been plagued by scandal in the past year.  Last month, its head, Ricardo Salgado, left after being arrested for alleged tax fraud and money laundering after an audit conducted by Portugal's central bank found a number of financial irregularities at the firm.

"Our second quarter results confirm the trends seen in the first three months of the year. Despite the situation at BES and its impacts on our quarterly results, the group is on track with the path set when we unveiled our medium term plan last March, leveraging its strengths and financial robustness while continuing its efforts to cut costs," said chief executive Jean-Paul Chifflet.

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