Credit Agricole(US:CRARY)2021-11-11 04:17Financial Data and Key Metrics Changes - The net profit for Crédit Agricole Group in Q3 2021 was approximately €2.2 billion, representing a 25% increase on a stated basis and a 15.6% increase on an underlying basis. For the first nine months, the net profit was €6.7 billion on a stated basis and €6.2 billion on an underlying basis [4][6]. - Crédit Agricole SA reported a net profit of €1.4 billion for the quarter, a 43% increase on a stated basis and a 27% increase on an underlying basis. For the first nine months, the net profit was €4.4 billion on a stated basis and nearly €4 billion on an underlying basis, marking an increase of close to 38% [6][4]. Business Line Data and Key Metrics Changes - The asset gathering and insurance business division saw a strong increase in its contribution to the net profit of the group, up 24% for the quarter [24]. - The insurance activities experienced strong inflows in savings and retirement, with a notable increase in unit-linked products [25]. - Amundi's asset management activities reported a significant quarter with a 44% increase in contribution to the net profit of the group [28]. Market Data and Key Metrics Changes - The top line increased by 7.6% in Q3 and 9.1% for the first nine months of the year, with a strong evolution compared to the same period in 2019 [11]. - The cost of risk decreased sharply compared to Q3 2020 and remained stable compared to Q2 2021, indicating strong asset quality [17][16]. Company Strategy and Development Direction - The company confirmed its commitment to shareholder remuneration with a second share buyback operation of €500 million and plans to repay the remaining €0.40 of dividend per share owed to shareholders [7][8]. - The company is focused on accompanying the transition to a decarbonized world, with a dedicated press conference planned for December 1 [9]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the robust commercial activity and customer acquisition, leading to strong revenue growth and profitability [7]. - The management noted that the cost of risk is expected to remain low, but future macroeconomic conditions could impact this [104][106]. Other Important Information - The company is preparing for the transition to IFRS 17, with a focus on ensuring a smooth transition and maintaining profitability [58][59]. - The integration of CreVal is expected to contribute positively to the top line and net profit, with no one-off impacts reported this quarter [36][37]. Q&A Session All Questions and Answers Question: Medium-term targets and IFRS 17 guidance - Management confirmed that new targets for the end of 2022 will be provided, with a focus on not updating targets too frequently to maintain clarity [55]. - Regarding IFRS 17, management indicated that it mainly reallocates the timing of profit recognition without changing the economic performance of the business [57]. Question: Insurance top line volatility and capital updates - Management explained that the insurance profits were supported by a significant capital gain taxed at a low rate, affecting the top line recognition [64]. - On capital, management noted that Basel IV impacts would be more significant at the group level than at Crédit Agricole SA, with further updates expected in the medium-term plan [73][75]. Question: Cost/income ratio and French retail outlook - Management stated that the current target is to maintain a cost/income ratio below 60%, with no immediate plans to set a lower target [79]. - The outlook for French retail is cautiously optimistic, with management emphasizing its importance as the core of the group's operations [84]. Question: Cost of risk and large customers' revenue growth - Management indicated that the revenue growth in large customer financing activities is broad-based and linked to a positive macroeconomic outlook [100]. - Regarding the cost of risk, management remains prudent and has not yet adjusted provisions despite favorable conditions, indicating preparedness for potential downturns [102][106].