The chief executive of Crédit Agricole has launched a broadside against the economic policies of France’s socialist government, as two of the country’s leading banks reported earnings weighed on by the weak national economy.
Crédit Agricole, the country’s largest domestic lender, and Société Générale both reported higher net profit in the third quarter on the back of lower bad loan provisions, but both cited desultory economic conditions in their home markets.
SocGen’s revenues from French retail declined by 3.2 per cent to €2bn and net income fell 2.7 per cent to €305m. For Crédit Agricole, net income from its regional banking network fell 10 per cent to €212m.
Shares in SocGen, which also saw a slump in equity trading, fell as much as 2.5 per cent, but recovered later in the day. Shares in Crédit Agricole were down as much as 6 per cent after results fell far short of analysts’ expectations.
Jean-Paul Chifflet, chief executive of Crédit Agricole, said on Thursday: “The absence of a clear vision [by the government] and lack of coherence in economic policies is weighing on confidence and therefore investment and economic activity.
“Signs of recovery are proving elusive, unemployment is high, the real estate market is in correction, the public deficit continues to overshoot amid insufficient spending cuts.”
The comments come at a sensitive moment for François Hollande, the most unpopular French president in history, who is set to deliver a significant speech on Thursday evening to mark the halfway point of his five-year mandate.
Earnings in the French banking sector were up overall, however, Because of cost control and lower bad loan provisions. SocGen said net profit rose 57 per cent to €836m in the third quarter, while at Crédit Agricole it increased 4 per cent to €758m.
This came as SocGen’s cost of risk fell 41 per cent to €642m from a year earlier, when the bank took a €200m legal provision. Crédit Agricole’s cost of risk fell 8 per cent to €581m.
Revenues at SocGen’s global markets business fell 13 per cent to €1bn in the quarter while equities trading revenue dropped 25 per cent.
Market confidence was hit in the period by signs of increasing fragility in the eurozone and investor concern about the effects of the end of monetary stimulus by the US Federal Reserve.
Both SocGen and Crédit Agricole easily passed last month’s European Central Bank stress tests, which showed that even in a deteriorating economy they would have enough capital to shoulder potential losses.
SocGen reported a core tier one capital ratio, a measure of balance sheet strength, of 10.4 per cent at the end of September. Crédit Agricole said its ratio stood at 10.1 per cent.
Mr Chifflet on Thursday ruled out any potential acquisitions in Italy, where the ECB tests deemed Monte dei Paschi di Siena to have a €2.1bn capital shortfall. “We won’t interfere in Italy, no matter what happens,” he said.
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