• Net Profit: 20% above target.
• Return on Tangible Equity: 14%, 2 percentage points above target.
• Cost-Income Ratio: Below the target ceiling of 58%.
• Dividend Proposal: EUR1.1, a 5% increase from 2023.
• Revenue Growth: 17.4% increase on a stated basis, 18.2% on an underlying basis.
• Home Loan Production in France: Up 18% compared to Q4 2023.
• Insurance Premium Income: EUR43.6 billion for 2024.
• Amundi Net Inflows: EUR55 billion for the full year.
• Assets Under Management: EUR2.240 trillion.
• Cost Increase: 5.6% on a stated basis, 4.4% on an underlying basis.
• Cost of Risk: Increase mainly due to IFRS 9 provisions.
• Solvency Ratio: Stable at 11.7%, target is 11%.
• Liquidity Coverage Ratio: 131% for Credit Agricole SA, 127% for the group.

• Warning! GuruFocus has detected 4 Warning Signs with CRARF.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Credit Agricole SA (CRARF) exceeded its 2025 profitability targets a year early, with net profit 20% above target and return on tangible equity 2% points above target.
• The company reported a record level of profit for both the fourth quarter and the full year of 2024, driven by a high level of revenues.
• The capital and liquidity positions are very strong, with a proposed dividend increase of 5% compared to 2023.
• There was a significant increase in loan production, particularly in home loans in France, which rose by 18% compared to the last quarter of 2023.
• Asset management and insurance activities posted record levels, with Amundi achieving EUR55 billion in net inflows and insurance activities reaching EUR43.6 billion in net premium income for 2024.

Negative Points

• There is an apparent increase in the cost of risk, primarily driven by IFRS 9 provisions, although Stage 3 provisions have decreased.
• The solvency ratio decreased by 10 basis points over the full year, despite organic growth and M&A operations.
• The macro hedging strategy at LCL led to a decrease in net interest income in the fourth quarter, with only a slight increase expected in 2025.
• The company faces potential legal risks in the UK related to car loans, although its market share is small.
• There is no immediate plan to change the 50% payout policy, despite having excess capital and ongoing M&A activities.

Q & A Highlights

Q: Do you think the bank has structurally shifted to a materially higher Return on Tangible Equity (ROTE) versus previous plans? A: Jerome Grivet, Deputy CEO, explained that while the bank has achieved a high ROTE of 14% for 2024, the future medium-term plan will be updated by the new CEO, likely in the fourth quarter of this year. The bank aims to maintain a ROTE above 12% for 2025, considering both tailwinds and headwinds. The structural shift will be part of the new medium-term plan, taking into account Basel IV impacts and business breakdown modifications.

Q: What are your plans for using excess capital, and are you considering larger deals or bolt-on acquisitions? A: Jerome Grivet stated that the bank focuses on bolt-on acquisitions rather than transformational ones, as they are easier to integrate and align with current operations. The bank does not pre-decide acquisition targets but looks for opportunities that complement existing business lines and geographical footprints.

Q: Can you provide insights into the current situation in Italy and your strategic position there? A: Jerome Grivet mentioned that Credit Agricole aims to defend its interests in Italy and sees opportunities to leverage its stake. However, the reshaping of the banking landscape in Italy is not solely in their hands. The bank is actively monitoring the situation and is prepared to act in its best interest.

Q: Why is there no interim dividend, and what is your stance on this compared to peers? A: Jerome Grivet explained that the decision on interim dividends is not immediate and does not create additional value. The bank will observe competitors' actions and decide accordingly, but there is no inherent opposition or inclination towards interim dividends.

Q: What is your view on the competition in active fixed income funds compared to equities? A: Jerome Grivet noted that competition is increasing in all asset management categories. The key is to be a low-cost producer, and size can be an advantage if managed well. Amundi and Credit Agricole Assurance focus on maintaining low costs and leveraging their size to remain competitive.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.