CREDIT AGRICOLE SA: Results for the Q4 & 2020 - A solid Group,
determined to support the economy as a whole
A solid Group, determined to support the economy as a
whole |
GCA and
Crédit Agricole S.A. STATED AND UNDERLYING DATA 2020
Very strong results; prudent provisioning of performing
loans; high capital level |
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CRÉDIT AGRICOLE GROUP |
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CRÉDIT AGRICOLE S.A. |
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Stated |
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Underlying |
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Stated |
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Underlying |
Revenues |
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33,596
m€+0.9% 12M/12M |
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34,035
m€+0.7% 12M/12M |
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20,500
m€+1.7% 12M/12M |
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20,764
m€+2.1% 12M/12M |
Expenses |
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21,266
m€-0.6% 12M/12M |
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21,169
m€-0.9% 12M/12M |
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12,452
m€+0.3% 12M/12M |
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12,366
m€-0.3% 12M/12M |
Gross
operating income |
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11,768
m€+2.5% 12M/12M |
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12,304
m€+2.6% 12M/12M |
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7,609
m€+2.9% 12M/12M |
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7,959
m€+4.8% 12M/12M |
Cost of
risk |
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3,651
m€x2.1 12M/12M |
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3,651
m€x2.1 12M/12M1 |
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2,606
m€X2.1 12M/12M |
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2,606
m€X2.1 12M/12M 2 |
Net
income Group share |
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4,689 m€-34.9% 12M/12M |
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6,129 m€-14.8% 12M/12M |
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2,692 m€-44.4% 12M/12M |
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3,849 m€-16.0% 12M/12M |
Cost/income ratio (excl.SRF) |
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63.3%-0.9 pp 12M/12M |
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62.2%-1.0 pp 12M/12M |
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60.7%-0.9 pp 12M/12M |
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59.6%-1.4 pp 12M/12M |
UNDERLYING DATA Crédit Agricole S.A. 2020 Gross
operating income: +7.8% Q4/Q4 to €2,090m; cost of risk : x1.5 Q4/Q4
to -€500m Net income Group share: -26.0% Q4/Q4 to €975mCost/
income ratio (excl. SRF) : 60.5% (-2.0 pp Q4/Q4) |
Dividend
policy adjusted for the current exceptional
circumstances |
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CRÉDIT AGRICOLE GROUP |
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CRÉDIT AGRICOLE S.A. |
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Phased-in CET1 |
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17.2% |
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+0.2 pp Q4/Q3 |
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13.1% |
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+0.5 pp Q4/Q3 |
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+8.3 pp
above SREP requirements |
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+5.2 pp
above SREP requirements |
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€438 bn in
liquidity at end Dec. 2020 |
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Dividend of
€0.80/share with a scrip dividend optionUnwinding
of 100% of Switch by 2022Underlying ROTE :
9.3% |
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Post-lockdown rebound in activities; overall strong
momentum over the full year, reflecting the strength of the global
relationship model |
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CRÉDIT AGRICOLE GROUP |
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CRÉDIT AGRICOLE S.A. |
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French retail
banking: loans outstanding: +5.0% excl.
SGL+1,500,000 new retail banking customers in
2020 |
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Asset gathering: strong net inflowsCIB:
strengthened leading positions |
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HIGHLIGHTS |
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The Group is fully committed
to supporting its customers through the crisis: €31.5 bn in
SGLs in France, €2.4 bn in Italy; 552,000 moratoria in 2020 in
France. Beginning of normalization (98% of expired payment holidays
have resumed payments in the Regional Banks), but the Group
continues to support its customers in difficulty
The crisis confirms the
relevance of the Group project and the differentiating nature of
the global relationship model.
- Digitisation: app utilisation rate up (+3.3 pp to 68.2%
for Regional banks and +7.1pp to 53.4% for LCL,
year-on-year)
- Customer satisfaction: NPS +7 points in Retail banking
in France, Top 25 of brands having proven their utility during the
lockdown
- Empowered local teams for customers: 80% ERI
participation rate, managerial and organisational
transformation
- Innovative solution ranges (Youzful, Blank,
Up2Pay)
- The Group supports societal transitions and is
committed to regions and to climate
- Amundi: €22 bn in green and social loans in
2020
- CACIB: €11 bn green loans outstanding and #2
worldwide in green, social and sustainability bonds ($28 bn
arranged) in 2020
- LCL: an LCL impacts climat green investment range, CAA
contrat solidaire
- PRI: A+ for Amundi; CDP: A- for the Crédit Agricole
Group
- Continued development initiatives in Europe and Asia,
through business line partnerships (Asset management, Insurance,
Consumer finance) and in Retail banking in Italy.
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Dominique Lefebvre, Chairman of SAS Rue La
Boétie and Chairman of the Crédit Agricole S.A. Board of
Directors “Facing Covid-19, Crédit Agricole demonstrates the
strength of its model and the relevance of its action.” |
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Philippe Brassac,Chief Executive Officer of Crédit
Agricole S.A. “Thanks to our solid results, we are committed
to support the economy as a whole over the long term.” |
Crédit Agricole
Group
The Group is fully committed to supporting its
customers through the crisis
Group commitment through the
crisis
Thanks to its capital position and resilient
model, since the beginning of the public health crisis, the Group
has been fully committed to supporting its customers through the
crisis and to fostering societal transitions.
Since the introduction of
State-Guaranteed Loans (SGLs) on 25 March 2020,
the Group has processed over 211,000 applications from SMEs and
small businesses and corporates, for a total of
€31.5 billion3, i.e. close to 27% of all SGLs requested in
France. With an acceptance rate exceeding 97%, the Group thus
supports its customers in all its regions through its various
networks (three quarters for Regional banks4). In Italy, CA Italia
also granted €2.4 billion in SGLs to 40,000 customers. SGL
outstandings within the Group rose slightly in the fourth quarter
in France (+6.6% compared to 16 October 2020 for the SGLs), but
more noticeably in Italy (+32.7% compared to end September
2020).
At the same time, the Group continues to support
the economy by implementing loan repayment
moratoria, notably for corporate, SME and small
business customers, whose activities have been impacted by the
economic consequences of the COVID-19 public health crisis. After a
high of 552,000 payment holidays granted, for €4.2 billion in
maturities extended in June 2020, as at 15 January 2021, a total of
95,300 payment holidays were still active at the
Regional Banks and LCL, representing €0.7 billion in
deferred maturities (of which 70% for SME and small business and
corporate customers and 30% for households, and 87% at the
Regional Banks and 13% at LCL5). This corresponds to total of
remaining capital of €10.7 billion, of which €5.1 billion
due from corporates, SMEs and small businesses and farmers.
A return to normal is thus gradually taking
shape and several indicators point to certain risks steadily
decreasing. Accordingly, the number of loans with a deferred
maturity has very significantly decreased in the final quarter of
2020 (-45% since end September and -83% compared to end June 2020).
Furthermore, in the specialised markets (corporate customers, SMEs
and small businesses and farmers), in the Regional Banks, more than
98% of deferred maturities that expired at 31 December 2020 resumed
payments, reflecting the Group’s prudent policy in matters of risk
management. At Crédit Agricole Consumer Finance, payments have
resumed on 98% of expired payment holidays. Lastly, CACIB reported
a return of drawdowns on liquidity facilities to pre-crisis levels
(19% in December 2020, at the same level as in February 2020, but
after a 32% peak recorded in March and April 2020) and regulatory
VaR at 31 December 2020 was back to a low of €9.2 million,
versus €22.2 million at 31 March 2020.
Along with these actions, the Group mobilised
more than €300 million in the form of solidarity donations for
its most vulnerable customers. Thus, in April 2020, the Group
provided an extra-contractual mutualist stimulus (geste mutualiste)
in the amount of €239 million to multi-risk business insurance
policyholders with business interruption cover. Moreover, the
various Group entities provided nearly €70 million in
solidarity donations. Accordingly,
-
Crédit Agricole Assurances paid €39 million into the
solidarity fund set up for the very small businesses and
independent workers in particularly hard hit sectors;
- Crédit
Agricole in Italy made a €2 million donation to the Italian
Red Cross and to hospitals;
- Crédit du
Maroc contributed €8 million to the national COVID-19
solidarity fund
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Collectively, the Crédit Agricole Group contributed
€20 million to the financing of the protection of the
elderly.
Despite the return to normal gradually taking
shape, the Group continued its actions intended for its customers
in greatest difficulty, by setting up targeted facilities. For
individual customers, insurance coverage is preserved even in the
event of late payment; for SMEs and small businesses, electronic
payment subscriptions (payment terminal fees) are reimbursed for
customers whose shops are closed; for the aerospace sector, the
Group is the only bank with a €100 million contribution to the
Ace investment fund dedicated to mid-caps and SMEs in the sector.
Lastly, the Group extended by one year the first year of the SGL in
accordance with public regulations.
The crisis confirms the relevance of the Group
Project and the differentiating nature of the global relationship
model.
- Firstly,
as part of the Customer Pillar of its Group Project, presented in
June 2019, the Group ramped up the digitisation of its offerings in
the interests of customer satisfaction. Thus, the utilisation rate
of Group apps (active profile on the apps or connection on the
website in the last month) sharply increased, posting a rise in
both banks of the Regional Banks and LCL (respectively +3.3
percentage points compared to end-2019 to 68.2% and by
+7.1 percentage points to 53.4%). Likewise, the Group
rolled out new digital tools intended for its customers to make
their activities easier during lockdown, such as the Up2Pay Range
(enabling remote payment through a digital loyalty program) and
Click & Collect to support retailers in the new methods of
consumption. Innovative non-banking services were also set up for
young people and small businesses (Youzful, Blank, Agilauto).
- This
translated into a sharp improvement in the Group's positioning in
terms of customer satisfaction: the Group is thus the only bank
among the 25 brands which have proven their utility during the
lockdown6, while the Net Promoter Score (NPS) was up in 2020
compared to 2019, both in the Regional Banks and at LCL (+7 points,
to respectively +8 and +27) and at CA Italia (+8 points
compared to 2019), which became this year the second Italian bank
in terms of customer satisfaction.
- This
success was made possible as a result of the full commitment of
Group employees and to strengthened local customer relations. The
sharp increase in the participation rate of employees in the ERI
(Engagement and Recommendation Index) survey to 80% (+3 points
compared to 2019 and +21 points compared to 2016) illustrates
this well. In addition, the Group launched innovative initiatives
in managerial transformation, supported by organisational
transformation, to ramp up our employee empowering process, aimed
at creating more value for customers.
The Group supports societal transitions, and is
more than ever committed for regions and for
climate.
Green finance and SRI
As part of the human and societal pillars of the
Group Project, the Group supports the societal transitions that its
customers have requested and are experiencing. Accordingly, thanks
to its leading position in SRI matters, through its various
entities, the Group is able to offer its customers all the green
and social solutions that they may need.
Accordingly, 100% of the funds opened by Amundi
present a SRI score that is higher than their benchmark; at
year-end 2020, Amundi exceeded its target for “green solutions”
funds, which increased from €12.3 billion to €21.9 billion at
year-end 2020. (2022 target: €20bn). In addition, Amundi has been
selected to manage a eurozone equity index fund aligned with the
Paris Agreement on climate change, on behalf of 12 institutional
investors on the Paris stock exchange who are launching an
unprecedented initiative to promote climate issues. It is the first
investment solution that is fully eligible for the future European
“Paris Aligned Benchmark” label. Crédit Agricole Assurances and
Amundi launched “Energies Vertes”, the first energy transition fund
eligible for life-insurance policies.
CACIB saw its green loan outstandings increase
from €7.1 billion to €11.7 billion in one year (2022 targets:
€13bn). CACIB also ranks second worldwide in terms of green, social
and sustainable bonds ($28 billion arranged in 2020). This year,
the Federal Republic of Germany has entrusted the emission of its
first green bond, for €6.5 billion, to the Crédit Agricole Group.
It represents approximately 10% of the volume of sovereign green
bonds outstanding and will be used to finance Germany’s climate and
environmental strategy. CACIB took part in this historic
transaction as associate bookrunner and also acted as exclusive
adviser for Germany in the structuring of its Green Bonds program
published in August 2020.
Meanwhile LCL rolled out a green investment
range, LCL Impact Climat.
Finally, the Group reached its medium term
objective in terms of green social or sustainable outstandings in
the liquidity portfolio, with €9.3 bn outstandings end 2020.
These efforts were rewarded. The Group received
two positive assessments from agencies in 2020: the international
climate reference agency, the Carbon disclosure project (CDP)
raised the Group’s rating from C to A-, and the annual evaluation
of the Principles for Responsible Investment (PRI) led to Amundi
being awarded a maximum rating of A+ for its SRI strategy and
management.
As it committed to do under the Medium-Term Plan
as launched in June of 2019, the Group has set up a global
governance to drive its extra-financial performance. It is
supported by a scientific committee of high-level experts. A SRI
steering platform was developed in 2020. Unique in its kind, it
enables the collection of external and internal extra-financial
data in order to calculate the main societal impact indices for all
Group entities. Based on public data, it generates a unique climate
transition rating for listed companies. Amundi and Crédit Agricole
CIB have been using this rating as a commercial tool for dialogue
since 2020. In 2021, the transition rating will be expanded to
include unlisted companies.
To monitor the extra-financial performance of
unlisted companies, the Group also set up a standard SRI
questionnaire that is currently being rolled out at LCL, the
Regional Banks and in some international entities.
Inclusive finance
The Group also demonstrated its inclusive
commitment by supporting regions and the young. For example, in
2020, the Group recruited 18,000 new employees8, 30% of whom are
under 30 years of age, as well as 4,700 work-study students
(i.e.+50% in two years). The Group also posted a sharp increase in
its attractiveness in higher education institutions for the last
three years (ranked 47th out 130 (+23)) in business schools and
85th out of 130 (+17) in engineering schools9. Thus, the Group
ranked 1st place in financial services in France among Diversity
Leaders, the FT’s European ranking (ranking 133rd out of
70010).
The Group also supports the solidarity economy
through several initiatives: the Amundi Solidarité fund recorded
€331 million at end 2020 and this year, Amundi launched
CPR invest social impact, the first global equity fund to
place reducing inequalities at the center of its investment
process; lastly, Crédit Agricole Assurances created
“Contrat solidaire”, the first Finansol-certified social
multi-vehicle life insurance policy. Crédit Agricole S.A.
also completed its first social bond issue, for local, sustainable
and inclusive growth in the regions. For the amount of €1 billion
and subscribed 2.5 times, this bond is designed to finance
businesses in areas with unemployment rates that exceed the
national average, digital tools for the regions, development of the
health sector, and the improving social cohesion.
The Group strengthens its universal
customer-focused banking model, open to multi-business
partnerships
The Group strengthened its universal customer
focused banking model through the rollout of several internal
projects. Thus, LCL sold to Crédit Agricole Assurances a home loan
book for €445 million, making it possible to optimise the
refinancing of LCL and to diversify the investment portfolio of
Crédit Agricole Assurances; CACIB and
CA Indosuez Wealth Management in turn created a
joint team to assist high net worth customers and family holding
companies. Finally, a Group level multi-business Group division was
created for mid-cap corporates, and will be managed by CACIB. In
the area of IT expenses, for the full year 2020 the Group allocated
to the technological transformation €8 billion11, of which 38%
in investments notably for datacentricity or information system
overhaul.
The rollout of synergies within
Crédit Agricole Group is also reflected in the continued
improvement in the equipment of retail banking customers with
property and casualty insurance products12: 41.7% of Regional Bank
customers (+1.0 point year-on-year), 25.5% of LCL customers
(+0.5 point) and 17.1% of Crédit Agricole Italia
customers (+1.7 point) have a property and casualty insurance
policy with the Group.
The Group continued to open its universal
customer-focused banking model in Europe through multi-business
line partnerships in Europe and in Asia.
In Europe, Amundi, number one asset manager in
Europe, finalised in January the Sabadell AM acquisition and
entered into a strategic partnership with Banca Sabadell; in
October, Crédit Agricole Assurances finalised the acquisition
of 100% de GNB Seguros and along with this came the signature
of a 22-year distribution partnership for non-life insurance
products with Novo Banco in Portugal;
Crédit Agricole Italia announced at the end of November
the launch of a cash takeover bid for Credito Valtellinese and
CACF announced in December the strengthening of its partnership
agreement with Banco BPM. Furthermore, CACF printed an
agreement with Bankia to buy back the 49% of capital owend by
Bankia in their joint-venture in Spain (subject to Bank of Spain’s
approval). Lastly, Azqore, a subsidiary of Indosuez Wealth
Management, signed an agreement with Société Générale, in January
2021, to perform the back-office operations and a large percentage
of the IT services internationally for the private bank Société
Générale.
In Asia, Amundi and Bank of China created in
September the first Wealth Management company in China with an
international shareholder holding a majority stake. Furthermore,
Amundi signed a technological alliance with BNY Mellon January 2021
in the field of asset management and the custody of securities.
Furthermore, the Group continued its refocusing
outside the non-strategic entities. Thus, CACIB finalised the sale
of its remaining stake in the capital of
Banque Saudi Fransi in September; CACF announced the sale
in progress of its subsidiary in the Netherlands;
CA Indosuez Wealth Management initiated a planned
sale of its private banking activities in Miami and Brazil, and
Crédit Agricole S.A. announced the signature of an
agreement to sell its Romanian subsidiary Crédit Agricole Bank
Romania S.A. to Vista Bank Romania S.A.
Group activity
The fourth quarter 2020 was marked by a
new lockdown in France during the month of November. Its impact on
the economy has been more limited compared to the first lockdown in
the second quarter. Accordingly, the volume of payments at
merchants, recorded by the Regional Banks and LCL during November,
represented 1.5 times the volumes recorded in April. In the fourth
quarter, the Group’s business lines showed strong momentum despite
this new lockdown, and in 2020, business was generally good, thanks
to rebounds after each lockdown.
Thus,
Crédit Agricole Assurances reported a strong rebound in
activities in the fourth quarter 2020 (+19% in fourth quarter
compared to third quarter) with very strong UL inflows levels
(+26.9% in fourth quarter 2020 compared to fourth quarter 2019 and
+24.3% compared to third quarter 2020). In asset
management, Amundi also reported strong net inflow levels
(+€29.8 billion, excl. JVs). In Retail Banking, all loan,
deposit and insurance product equipment activities grew in France
and Italy. Loans outstanding in Retail Banking for all networks
combined, in France and Italy and excluding SGL, thus reported a
+4.9% increase at end December 2020 year-on-year. Similarly CACF
recorded a net rebound in production at the end of the second
lockdown, with production for the month of December up +16.8%
compared to that of the month of November. In CIB, CACIB
strengthened its leading syndicated loan and bond issue positions
(world’s 2nd largest arranger of green, social and sustainable
bonds), in a context of normalizing markets.
Gross customer capture remained strong
over the full year; the Group recorded +1,500,000 new customers
between 2019 and 2020, with over +1,000,000 for the Regional Banks,
+300,000 for LCL and close to +120,000 for CA Italia. Against this
backdrop, the customer base continued to rise markedly during the
year (+148,000 net additional customers in 2020).
Overall, the levels of activity of the
Group’s business lines demonstrated good resilience over the full
year: accordingly, the overall home loan production in the Regional
Banks and LCL for full year 2020 was 96% of the full year 2019
level; the volume of new business in property and casualty
insurance represented 91% of the 2019 volume, while consumer
finance production in 2020 represented 86% of the 2019
volume.
Group results
In the fourth
quarter 2020,
Crédit Agricole Group’s stated net income Group
share was €530 million, versus
€2,186 million in fourth quarter 2019. This quarter,
specific items generated a net negative impact of
-€898 million on net income Group share.
Specific items this quarter
included CA Italia’s impairment of goodwill, with a negative impact
of -€884 million on net income Group share. Also included
under specific items is the reclassification of entities held for
sale (CACF NL, CA Bank Romania) and the ongoing disposal project of
the Private banking activities in Miami and Brazil, for a total de
-€97 million on net income Group share, including on the one
hand -€66 million for CACF NL and -€7 million for CA Bank
Romania, and, on the other hand, -€24 million for Private
banking. Specific items also included exceptional contributions
related to the COVID-19 crisis: CAA's exceptional contribution for
supplementary healthcare contributions in the amount of
-€15 million in net income Group share and CA Italia's
exceptional contribution to the Italian banks safeguard plan for
-€7 million. Also included under specific items is the
reversal of the provision AGCM (Italian Competition Authority)
addressed to FCA Bank for +€89 million. The impact of the
better fortune adjustment on the activation of Switch 2 was
neutralised at Group level. The recurring accounting volatility
items are to be added with a net positive impact of
+€27 million in revenues and +€19 million in net income
Group share, namely DVA (Debt Valuation Adjustment, i.e. gains and
losses on financial instruments related to changes in the Group’s
issuer spread), totalling +€13 million, the hedge on the
Large customers loan book amounting to -€21 million, and
the variation in the provision for home purchase savings
plans amounting to +€26 million. During the fourth quarter
2019, specific items had a negative net impact of
‑€200 million on net income Group share and included
the recurring accounting volatility items, namely a DVA (Debt
Valuation Adjustment, i.e. gains and losses on financial
instruments related to changes in the Group’s issuer spread) for
-€4 million, the hedge on the Large customers loan book
amounting to -€12 million and the change in the provision for
home purchase savings plans amounting to
‑€119 million, as well as the positive impact of the outcome
of the Emporiki litigation in the amount of +€1,038 million,
LCL’s goodwill impairment in the amount of -€664 million, Kas
Bank’s badwill in the amount of +€22 million, the
reclassification of CA Bank Romania to assets held-for-sale in the
amount of -€46 million and Kas Bank’s integration /
acquisition costs in the amount of -€16 million.
Excluding these specific items, Crédit
Agricole Group’s13 underlying
net income Group share amounted to
€1,429 million, down -28.1% from
fourth quarter 2019. Underlying GOI, at a solid level
(€3,093 million in fourth quarter 2020, up +1.9% from fourth
quarter 2019), made it possible to absorb the cost of risk (an
expense of -€919 million in fourth quarter 2020, i.e. x1.9
compared to fourth quarter 2019).
Crédit Agricole Group – Stated and underlying results,
Q4-2020 and Q4-2019
€m |
Q4-20
stated |
Specific items |
Q4-20
underlying |
Q4-19
stated |
Specific items |
Q4-19
underlying |
∆
Q4/Q4 stated |
∆
Q4/Q4 underlying |
Revenues |
8,665 |
5 |
8,660 |
8,399 |
(202) |
8,602 |
+3.2% |
+0.7% |
Operating expenses excl.SRF |
(5,585) |
(18) |
(5,567) |
(5,582) |
(15) |
(5,566) |
+0.1% |
+0.0% |
SRF |
- |
- |
- |
- |
- |
- |
n.m. |
n.m. |
Gross operating income |
3,080 |
(13) |
3,093 |
2,818 |
(218) |
3,035 |
+9.3% |
+1.9% |
Cost of risk |
(919) |
0 |
(919) |
(494) |
- |
(494) |
+86.1% |
+86.1% |
Equity-accounted entities |
163 |
89 |
74 |
83 |
- |
83 |
+96.4% |
(11.1%) |
Net income on other assets |
(26) |
- |
(26) |
15 |
(6) |
21 |
n.m. |
n.m. |
Change in value of goodwill |
(965) |
(965) |
- |
(642) |
(642) |
- |
+50.3% |
n.m. |
Income before tax |
1,334 |
(889) |
2,223 |
1,780 |
(866) |
2,646 |
(25.0%) |
(16.0%) |
Tax |
(634) |
4 |
(638) |
587 |
1,112 |
(525) |
n.m. |
+21.4% |
Net income from discont'd or
held-for-sale ope. |
(91) |
(98) |
7 |
(46) |
(46) |
(0) |
+98.0% |
n.m. |
Net income |
609 |
(983) |
1,592 |
2,320 |
200 |
2,120 |
(73.7%) |
(24.9%) |
Non controlling interests |
(80) |
84 |
(163) |
(134) |
- |
(134) |
(40.6%) |
+21.7% |
Net income Group Share |
530 |
(899) |
1,429 |
2,186 |
200 |
1,986 |
(75.8%) |
(28.1%) |
Cost/Income ratio excl.SRF (%) |
64.5% |
|
64.3% |
66.5% |
|
64.7% |
-2.0 pp |
-0.4 pp |
In the fourth quarter 2020, underlying
revenues increased by +0.7% compared to fourth quarter
2019, to €8,660 million, thanks to strong momentum across
most business lines. The Asset gathering and Large customers
business lines posted respectively increases of +2.1%
(+€35 million) and +1.0% (+€14 million) in revenues;
likewise for Retail banking in France, the Regional Banks posted an
increase of +0.3%, i.e. +€12 million and LCL an increase of
+4.5%, i.e. +€39 million. Specialised Financial Services have
proven resilient, indeed while the underlying revenues decreases by
-3.8%, excluding CACF NL the decrease in revenues remains limited
-1.1% (-€7 million) despite a strong sensitivity of this activity
to the economic environment. The International Retail Banking, in
turn, posted, a decline of -2.8% (-€19 million), due to the
drop in interest rates in Egypt, Poland and Ukraine.
Underlying operating expenses excluding
SRF (Single Resolution Fund) were stable
(+0.0%) compared to fourth quarter 2019 at
€5,567 million. The Asset gathering and International retail
banking business lines posted a drop in expenses for respectively
-1.5% (-€11 million) and -1.6% (-€8 million). Expenses
decreased in Specialised financial services by -3.8%
(-€12 million), including the reclassification of CA Consumer
Finance NL under IFRS 5 to activity held-for-sale. On a
like-for-like basis, expenses increase by +4.0% in relation with
the development of Specialised financial services in France and in
Europe. Expenses rose marginally over the period for French Retail
banking: +1.2% (+€36 million), and in the Large customers
business line: +2.0% (+€18 million). Overall, the Group posted
a positive +0.7 percentage points jaws effect. The contribution to
the Single Resolution Fund was nil this quarter, as in fourth
quarter 2019. The underlying cost/income ratio stood at
64.3%, an improvement of +0.4 percentage points
compared to the fourth quarter of 2019.
Underlying gross operating
income was therefore up +1.9% to €3,093 million
compared to fourth quarter 2019.
Cost of credit risk was up,
albeit under control (x1.9 compared to fourth quarter 2019, with
93% of the increase attributable to performing loan provisioning in
the context of the COVID-19 crisis for all business lines. It stood
at €919 million (including €651 million in level 1 and 2
cost of risk and €334 million in level 3 cost of risk) versus
€596 million in third quarter 2020, and €494 million in
fourth quarter 2019. Asset quality remains good: the non-performing
loan ratio was down to 2.4% at end December 2020 (-0.2 percentage
point compared to third quarter 2020) and the coverage ratio14, up
to 84.0%, further strengthened this quarter (+3.6 percentage
points). The diversified loan book is mainly geared towards home
loans (47% of gross outstandings at Group level) and corporates
(32% of gross outstandings at Group level). Loan loss reserves
amounted to €19.6 billion at end September 2020, of which 34%
was for performing loans (Stages 1 and 2). Loan loss reserves were
down -€0.4 billion compared to September 2020 following the
disposal of non-performing loans recorded by CA Italia. Starting in
first quarter 2020, the context and uncertainties related to the
global economic conditions were gradually taken into account and
the expected effect of public measures were incorporated to
anticipate future risks. Provisioning levels were established to
reflect the sharp deterioration in the environment, taking into
account several weighted economic scenarios and
applying flat-rate adjustments for the retail banking portfolios
and corporates portfolios and specific additions for some target
sectors, namely tourism, automotive, aerospace, retail textile, and
energy. Several weighted economic scenarios were used to determine
the provisioning of performing loans, of which a more favourable
scenario (GDP at +7.1% in France in 2021 and +2.7% in 2022) and a
less favourable scenario (GDP at +3.0% in France in 2021 and +4.8%
in 2022). These scenarios have been revised since second quarter
2020. As a reminder, they previously included a more favourable
scenario with GDP at +7.3% in France in 2021 and +1.8% in 2022 and
a less favourable scenario with GDP at +6.6% in France in 2021 and
+8.0% in 2022.
Annualised cost of
risk/outstandings15 over the twelve months
of 2020 was 38 basis points
(37 basis points on a quarterly annualised basis). Cost
of risk for Stages 1 and 2 amounted to -€651 million, versus a
reversal of -€87 million in fourth quarter 2019 and
-€170 million in third quarter 2020. Stage 3 cost of
risk stood at -€334 million (versus -€602 million in
fourth quarter 2019 and -€428 million in third
quarter 2020).
Underlying pre-tax income stood at
€2,223 million, a year-on-year decrease of -16.0%
from fourth quarter 2019. In addition to the changes explained
above, underlying pre-tax income also included the contribution
from equity-accounted entities in the amount of €74 million
(down -11.1% notably due to CA Consumer Finance) and net income on
other assets, which stood at -€26 million this quarter versus
+€21 million in fourth quarter 2019, related to declassified
IT projects. The underlying tax charge
was up +21.4% over the period. The underlying tax
rate rose, due to a base effect (it had reached 20.5% in fourth
quarter 2019, and currently stands at 29.7%. However, the effective
tax rate is as usual not very representative on a quarterly basis,
and the full year is more relevant, so at end 2020 it stood at
26.6% (versus 28.7% at end 2019). Underlying net income before
non-controlling interests was down -25.0%. Non-controlling
interests rose by +21.7%, notably due to a change in Insurance in
the recognition methods used for subordinated debt (RT1) coupons,
without impact on net earnings per share, and following CACEIS’s
acquisitions of 2020. Lastly, underlying
net income Group share was €1,429 million, down
compared to fourth quarter 2019 (-28.1%).
Over full year 2020, underlying net
income Group share declined by -14.8% compared to 2019.
Underlying revenues were stable (+0.7%), while underlying operating
expenses excluding SRF were down -0.9%, resulting in a positive
jaws effect of +1.7 percentage points. Underlying gross operating
income totalled €12,304 million, up +2.6% compared to 2019.
Cost of credit risk increased 2.1-fold, gains or losses on other
assets rose 24.3% to €52 million and the tax charge was down
-21.3% compared to full year 2019.
Résultats consolidés du Groupe Crédit Agricole au
12M-2020 et au 12M-2019
€m |
2020 stated |
Specific items |
2020 underlying |
2019 stated |
Specific items |
2019 underlying |
∆ 2020/2019 stated |
∆ 2020/2019 underlying |
Revenues |
33,596 |
(439) |
34,035 |
33,297 |
(493) |
33,790 |
+0.9% |
+0.7% |
Operating expenses excl.SRF |
(21,266) |
(96) |
(21,169) |
(21,386) |
(15) |
(21,371) |
(0.6%) |
(0.9%) |
SRF |
(562) |
- |
(562) |
(426) |
- |
(426) |
+31.9% |
+31.9% |
Gross operating income |
11,768 |
(536) |
12,304 |
11,485 |
(508) |
11,993 |
+2.5% |
+2.6% |
Cost of risk |
(3,651) |
0 |
(3,651) |
(1,757) |
- |
(1,757) |
x
2.1 |
x
2.1 |
Equity-accounted entities |
419 |
89 |
330 |
356 |
- |
356 |
+17.6% |
(7.5%) |
Net income on other assets |
52 |
- |
52 |
36 |
(6) |
42 |
+46.0% |
+24.3% |
Change in value of goodwill |
(968) |
(965) |
(3) |
(642) |
(642) |
- |
+50.8% |
n.m. |
Income before tax |
7,620 |
(1,411) |
9,031 |
9,478 |
(1,156) |
10,634 |
(19.6%) |
(15.1%) |
Tax |
(2,165) |
152 |
(2,317) |
(1,737) |
1,208 |
(2,945) |
+24.7% |
(21.3%) |
Net income from discont'd or
held-for-sale ope. |
(262) |
(268) |
6 |
(38) |
(46) |
8 |
x
6.9 |
(21.2%) |
Net income |
5,193 |
(1,528) |
6,720 |
7,704 |
6 |
7,697 |
(32.6%) |
(12.7%) |
Non controlling interests |
(504) |
87 |
(591) |
(506) |
- |
(506) |
(0.4%) |
+16.9% |
Net income Group Share |
4,689 |
(1,440) |
6,129 |
7,198 |
6 |
7,191 |
(34.9%) |
(14.8%) |
Cost/Income ratio excl.SRF (%) |
63.3% |
|
62.2% |
64.2% |
|
63.2% |
-0.9 pp |
-1.0 pp |
Regional Banks
For Regional banks, the crisis led to an
acceleration and a strengthening of the transformation of their
distribution model, with a particular focus placed on the quality
of the customer relationship, confirmed by the 8 percentage points
improvement of the NPS (Net Promoter Score) over the full year. The
customer base over the full year, with 1.1 million new
customers, continued to grow and the actual attrition rate
(excluding deaths) was down to 2.9% for the full year. Accordingly,
note that the number of active demand deposits was up +0.7%
year-on-year, an increase exceeding France’s population growth rate
over the same period. The Group is also continuing to develop its
multi-channel model and recorded a +3.8-percentage point increase
year-on-year in the number of digital customers, taking it to
68.2%,16 as well as a +45% increase in online signatures
year-on-year.
Commercial activity at the
Regional Banks continued to be buoyant this
quarter, with growth in outstandings remaining
strong. Loans outstanding amounted to
€563.7 billion (€547.1 billion excluding SGLs), up +8.4%
from December 2019 (+5.2% excluding SGLs). There was a strong
increase in home loans (+6.6%) and loans
to corporates, SMEs and small businesses, and farmers
(+12.6%, +3.3% excl. SGLs). The increase in specialised market
loans excluding SGLs was particularly marked by corporate equipment
loans being up +8.5% over the full year. Loan
production was up compared to fourth quarter 2019 (+7.4%;
+2.6% excl. SGLs). The decrease in new specialised markets17 excl.
SGLs (-8%) and in consumer finance was offset by the home loan
momentum (+11%). On-balance sheet deposits stood
at €517.9 billion, representing an increase from December 2019
of +12.3% (of which +25.3% for demand deposits and +11.8% for
passbooks), while off-balance sheet deposits were
unchanged (+0.4% to €272.4 billion) with life insurance
outstandings up slightly (+0.5%; of which +6.3% unit-linked
outstandings) and outstandings linked to securities and
transferable securities stable (+0.2%) in line with the recovery in
the markets during the quarter.
In fourth quarter 2020,
underlying revenues of the Regional Banks amounted
to €3,373 million, down -1.2% from fourth quarter 2019.
Favourable refinancing conditions led to an increase in the
net interest margin (+4.0%), while the overall
level of fee and commission income was down in
line with the lower penalty-based fees. Operating
expenses were under control and slightly up over the
period (+1.5% compared to fourth quarter 2019) related to the
adjustment over the period of the employee profit-sharing and
incentive plans, with other external services remaining down. Thus,
underlying gross operating income was down in
fourth quarter 2020 (-6.6%). Underlying cost of
risk stood at -€415 million, sharply up compared to
fourth quarter 2019 (x2.7). Provisions were primarily for
performing loans and the non-performing loan ratio was down to 1.7%
(versus 1.8% at end December 2019). Loan loss reserves were
slightly up to €10.0 billion. This translated into a high
coverage ratio, at 100.9%. The Regional Banks’ contribution to
underlying net income Group share thus stood at
€470 million, down -30.8%.
In full year 2020,
underlying revenues were down -1.4% compared to
full year 2019. Operating expenses were down -1.1% despite the
increase in SRF in the first half of the year (+42.6%). GOI was
down -2.1% (-1.3% excl. SRF). The underlying cost/income
ratio excluding SRF remained unchanged at 65.8%. Lastly,
with underlying cost of risk up (x2.1) to
€1.0 billion over the full year, the Regional Banks’
contribution to the Group’s underlying net income Group
share was down ‑14.1% to €2,230 million.
The performance of the other
Crédit Agricole Group business lines is described in
detail in the section of this press release on
Crédit Agricole S.A.
Crédit Agricole
S.A.
Strong momentum across all
business lines in fourth quarter 2020, reflecting the strength of
the global relationship model
- Strong net inflows in Asset gathering:
+€14.1 billion in Q4 2020 (including JVs), driven in
insurance by UL (38.7% of gross inflows)
- Sharp increase in LCL's loan outstandings:
+4.4% Dec./Dec. excl. SGL;
- Rebound in consumer finance production: +16.8%
Dec/ Nov;
- Strengthened leading positions in Corporate and
investment banking in a normalizing market in the fourth
quarter: syndicated loans (No. 1 France, No. 3 EMEA); bonds (No. 1
France corporate bonds, No. 1 world financial bonds, No. 2 global
green, social and sustainability bonds).
Continued partnership strategy in Europe and
Asia:
- Insurance: stake in GNB Seguros increased to
100% in Portugal and distribution agreement signed with Novo
Banco
- Amundi: acquisition of Sabadell AM and
strategic partnership launched with Banca Sabadell
- CA Italia: announcement of a cash tender offer
for Credito Valtellinese
- CACF: strengthening of CA Consumer Finance's
partnership with Banco BPM
- Amundi: creation with Bank of China of the
first Wealth Management company in China with an international
shareholder holding a majority stake
Exit from non-strategic entities
(Banque Saudi Fransi, CA Bank Romania, CA Consumer Finance NL,
private banking activities in Miami and Brazil)
Excellent resilience of 2020 results,
the operating income momentum making it possible to absorb a
significant proportion of the 2.1-fold increase in the cost of
risk
- Dynamic revenues in 2020 (+2.1% 12M/12M) and stable
expenses (-0.3% 12M/12M)
- Operational agility: 2022 cost/income ratio excluding
SRF target (<60%) achieved two years ahead of schedule:
59.6% in 2020;
- Underlying gross operating income up: +4.8%
12M/12M;
- Underlying net income Group share of Crédit Agricole
S.A.: -16.0% 12M/12M (-€734 million 2020/2019,
including +€1 bn in performing loan provisioning);
- Underlying ROTE over 12 months 2020 of
9.3%18
Dividend policy adjusted for the current special
circumstances
- Very comfortable capital position: CET1 CASA
13.1%, 5.2 pp above SREP requirements, CAG 17.2%, 8.3 pp
above SREP requirements
- Dividend: 80 cents, a 8% yield, with a scrip
dividend payment option. The set up strictly respects the ECB’s
latest recommendation
- Switch: 100% unwinding by 2022, with 50%
unwound as early as Q1-21, completion of the simplification of the
Group’s structure
Crédit Agricole S.A.'s Board of Directors,
chaired by Dominique Lefebvre, met on 10 February 2021 to examine
the financial statements for the fourth quarter and full year
2020.
Activity
Crédit Agricole S.A.’s
business lines recorded a robust business level in fourth
quarter 2020, despite the impacts of the second lockdown in France
on the economy. The commercial momentum remained buoyant,
especially for Amundi which reported positive net
inflows of +€14.4 billion (including JVs) in the quarter and
+3.7% growth in assets under management year-on-year;
life-insurance also posted strong net inflows in
the quarter, up +€0.8 billion, driven by UL products, while
casualty insurance confirmed its momentum with
+7.7% increase in premium income in fourth quarter 2020 compared to
fourth quarter 2019 and 5.8% year-on-year. The share of UL
products in gross inflows increased (+9.8 percentage
points from fourth quarter 2019 to 38.7%), as did the share in
outstandings (+1.4 percentage point year-on-year), which rose to
24.2% to a record high. Premium income from personal
protection insurance increased sharply (+8.9% compared to
fourth quarter 2019). Loans outstanding in Retail
Banking were up year-on-year, excluding SGL (+4.4% at LCL,
+0.5% at CA Italia). Inflows at
LCL continued on the sharp up trend already
observed in previous quarters (on-balance sheet deposits up +11.5%
year-on-year, driven by sight deposits (+15.5%) and off-balance
sheet deposits dipped slightly by -1.1%). CA
Italia also reported significant growth in savings
outstandings (+8.8% increase in inflows). Consumer finance managed
loans dipped slightly year-on-year (-1.3%), despite the reported
rebound in production levels after each lockdown (production in
fourth quarter 2020 shrank by -3.3% compared to fourth quarter 2019
and was down -14% for the full year). Lastly, the Large
customers division remained dynamic in the fourth quarter
and the leading syndicated loan and bond issue positions were
confirmed in a market undergoing normalisation. Capital markets’
revenues continue to normalise, after starting off the year at a
high level (revenues were down -5.0% compared to very high fourth
quarter 2019), financing activities remained dynamic (+3.9%
compared to fourth quarter 2019 and +8.6% excluding forex effect).
Risk profile was prudent, with moderate VaR at €9 million at
31 December 2020.
Results
Credit Agricole S.A. – Stated and underlying results,
Q4-20 and Q4-19
€m |
Q4-20
stated |
Specific items |
Q4-20 underlying |
Q4-19
stated |
Specific items |
Q4-19 underlying |
Q4/Q4 stated |
Q4/Q4 underlying |
Revenues |
5,251 |
(47) |
5,299 |
5,119 |
(66) |
5,184 |
+2.6% |
+2.2% |
Operating expenses excl.SRF |
(3,226) |
(18) |
(3,208) |
(3,260) |
(15) |
(3,244) |
(1.0%) |
(1.1%) |
SRF |
- |
- |
- |
(0) |
- |
(0) |
(100.0%) |
(100.0%) |
Gross operating income |
2,025 |
(65) |
2,090 |
1,859 |
(81) |
1,940 |
+8.9% |
+7.8% |
Cost of risk |
(538) |
(38) |
(500) |
(340) |
- |
(340) |
+58.5% |
+47.4% |
Equity-accounted entities |
137 |
89 |
47 |
76 |
- |
76 |
+78.9% |
(38.3%) |
Net income on other assets |
(9) |
- |
(9) |
14 |
(6) |
20 |
n.m. |
n.m. |
Change in value of goodwill |
(903) |
(903) |
- |
(589) |
(589) |
- |
+53.2% |
n.m. |
Income before tax |
712 |
(916) |
1,628 |
1,021 |
(677) |
1,697 |
(30.3%) |
(4.1%) |
Tax |
(436) |
33 |
(469) |
847 |
1,065 |
(219) |
n.m. |
x
2.1 |
Net income from discont'd or held-for-sale ope. |
(96) |
(97) |
1 |
(46) |
(46) |
(0) |
n.m. |
n.m. |
Net income |
179 |
(981) |
1,160 |
1,821 |
343 |
1,479 |
(90.2%) |
(21.6%) |
Non controlling interests |
(56) |
129 |
(185) |
(160) |
1 |
(161) |
(65.3%) |
+15.0% |
Net income Group Share |
124 |
(851) |
975 |
1,661 |
343 |
1,318 |
(92.6%) |
(26.0%) |
Earnings per share (€) |
0.02 |
(0.30) |
0.31 |
0.54 |
0.12 |
0.42 |
(97.1%) |
(26.1%) |
Cost/Income ratio excl. SRF
(%) |
61.4% |
|
60.5% |
63.7% |
|
62.6% |
-2.2 pp |
-2.0 pp |
Net income Group Share excl. SRF |
124 |
(851) |
975 |
1,661 |
343 |
1,318 |
(92.6%) |
(26.0%) |
In the
fourth quarter 2020,
Crédit Agricole S.A.’s stated
net income Group share amounted to
€124 million versus €1,661 million in
fourth quarter 2019. 2020 and 2019 were characterised
respectively by CA Italia's goodwill impairment for
-€778 million in net income Group share impact on the one
hand, and LCL’s goodwill impairment for -€611 million and the
outcome of the Emporiki litigation for +€1,038 million.
Adjusted for these items, Crédit Agricole S.A.’s stated net income
Group share for fourth quarter 2020 was €902 million, down
-27.0% compared to fourth quarter 2019. In total, specific
items in fourth quarter 2020 generated a net
negative impact of -€851 million on net income Group
share.
Excluding these specific items,
underlying net income Group share19 was
€975 million, down -26.0% compared to fourth
quarter 2019, in connection with the rise in the cost of risk
related to the prudent provisioning of performing loans.
This quarter's specific items
included CA Italia's goodwill impairment for ‑€903 million in
goodwill impairment and ‑€778 million in net income Group
share impact, net of non-controlling interests, better fortune
adjustment of of the Switch 2 guarantee call (Insurance) for
-€38 million in cost of risk and -€26 million in net
income Group share. Specific items also included exceptional
contributions related to the COVID-19 crisis: an exceptional
contribution by CAA for supplementary healthcare contributions with
an impact of -€22 million in revenues and -€15 million in
net income Group share as well as an exceptional contribution by CA
Italia to the Italian banks safeguard plan for -€11 million in
expenses and -€6 million net income Group share. The other
non-recurring specific items stood at -€10 million including
for CA Consumer Finance a reversal of a provision for the AGCM
(Italian Competition Authority) fine of FCA Bank with an impact of
+€89 million in net income Group share offset by the
reclassification of CA Consumer Finance NL as asset held-for-sale
for -€66 million to net income Group share; the planned
disposal in progress of the private banking activities in Miami and
Brazil for -€23 million to net income Group share, the
reclassification of CA Bank Romania’s asset held for sale for
-€8 million to net income Group share and the consolidation
costs for the acquisitions made by CACEIS (Kas and S3) with an
impact of -€7 million to expenses and -€3 million to net
income Group share. The recurring specific items this quarter had
an impact on net income Group share of ‑€16 million, including
the DVA (Debt Valuation Adjustment, i.e. gains and losses on
financial instruments related to changes in the Group’s issuer
spread) for +€13 million, the hedge on the
Large customers loan book amounting to ‑€21 million, and
the change in the provision for home purchase savings
plans amounting to -€9 million. In fourth quarter
2019, specific items had a negative net
impact of +€343 million on net income Group share and
included LCL's goodwill impairment for -€611 million offset by
Kas Bank's negative goodwill for +€22 million, the outcome of
the Emporiki litigation for +€1,038 million, and the
consolidation and acquisition costs of Kas Bank and S3 for a total
of -€16 million, only the recurring volatile accounting items,
namely the DVA (Debt Valuation Adjustment, i.e. gains and losses on
financial instruments related to changes in the Group’s issuer
spread) in the amount of -€4 million and hedging of the
Large customers loan book for -€11 million and changes in
provisions for home savings schemes for ‑€29 million.
The results of the business lines demonstrated
excellent resilience in fourth quarter 2020 given the public health
and economic context. Underlying gross operating
income was up +7.8% compared to fourth quarter 2019,
reaching €2,090 million, thanks to increased revenues (+2.2% to
€5,299 million) and tight cost control by the business lines
(-1.1% to -€3,208 million). Crédit Agricole S.A.’s excellent
operational agility has once again been demonstrated this quarter,
with an underlying cost/income ratio of 60.5%, up +2.0 percentage
points from fourth quarter 2019 and with a positive jaws effect of
3.3 points in fourth quarter 2020. Underlying net income
Group share was, however, down by -26.0%. This decline was
due to the increased cost of risk, which stood at
-€500 million in fourth quarter 2020 (x1.5 compared to fourth
quarter 2019). Of that rise, 77% was due to increased provisioning
for performing loans, primarily related to prudent provisioning in
sensitive sectors (such as aerospace, hotels, tourism, restaurants
and certain professionals). Thus, the Asset gathering business line
was helped by market recovery and the good management of the funds
thus generating performance fees and posted gross operating income
of +6.2%, the business line’s result posted a drop of -12.0% from
fourth quarter 2019 due notably to a change in the recognition
methods used for subordinated debt (RT1) coupons, without impact on
net earnings per share. The Retail banking business line generated
a +3.4% increase in its gross operating income, driven by strong
growth in revenues, particularly at LCL (+4.5% from fourth quarter
2019) and by proven operational efficiency
(underlying cost/income ratio excluding SRF of retail banks in
fourth quarter 2020 of 66.0% (an improvement by +0.7 percentage
point compared to fourth quarter 2019). Consequently, with a
1.5-fold increase in cost of risk compared to fourth quarter 2019,
the Retail banking net income Group share posted a decline of
-13.9% compared to fourth quarter 2019. Specialised financial
services recorded a drop of -1.8% in gross operating income and of
-5.5% on a like-for like basis20 with a good general resistance of
sales revenues (-2.8% and -1.1% on a like-for-like basis14) and of
costs related to the development in France and in Europe (-3.8% and
+4.0% on a like-for-like basis14). Lastly, the Large customers
business line, despite stable underlying gross operating income
(-0.4%) this quarter, was impacted by the 2.0-fold increase in the
cost of risk, resulting in a -17.0% decline in net income Group
share.
In fourth quarter 2020, underlying
revenues stood at €5,299 million, up +2.2% compared
to fourth quarter 2019. The revenues of the Asset gathering
business line were helped by market recovery and by Amundi’s
excellent management performance and posted a +2.7% increase
compared to fourth quarter 2019. Retail banking revenues (+1.2%)
were driven by LCL’s net interest margin increase due to the good
refinancing conditions, even though international retail banking
was still hit by the drop in different markets. Sales revenues of
Specialised financial services showed good resistance (-1.1%14
compared to fourth quarter 2019), and the post-lockdown rebound
helped to limit the Q4/Q4 drop in production to -3%. Lastly, within
the Large customer business line, financing activities recorded
good performance (+3.9% in revenues compared to fourth quarter
2019), while market activities suffered a base effect, in the
context of activities returning to normal (-5.0% in revenues
compared to fourth quarter 2019). Lastly, Asset servicing revenues
were up +8.1% thanks to a scope effect related to the latest
acquisition of Santander Securities Services in 2020.
Underlying operating expenses
were down -1.1% between fourth quarter 2019 and fourth quarter
2020, resulting in indicators that showed very good levels of
operational efficiency: the underlying cost/income ratio was 60.5%
in fourth quarter 2020, an improvement of +2.0
percentage points compared to fourth quarter 2019, while the
jaws effect was positive at 3.3 percentage points. Within the
Asset gathering business line, Insurance saw a sharp decline in
expenses (-7.5% compared to fourth quarter 2019), offsetting the
increase in asset management expenses (+3.0%), primarily related to
a scope effect – the expenses of the Asset gathering business line,
on a like-for-like basis21 were down -0.9% compared to fourth
quarter 2019. Retail banking confirmed its operational efficiency
with a 66.0% underlying cost/income ratio excluding SRF, up +0.7
percentage points compared to fourth quarter 2019, thanks to stable
expenses at LCL (+0.2% compared to fourth quarter 2019) and stable
expenses for International retail banking (-0.1%) due to additional
productivity efforts made within the entities following their
decrease in revenues. Within the Large customers business line,
Corporate and investment banking posted very good cost control
(+0.3% compared to fourth quarter 2019), while Asset servicing
posted an increase of +7.9% in expenses notably due to a scope
effect. Specialised financial services posted a -3.8% decrease
in expenses in underlying terms, but a +4.0% increase on a
like-for-like basis14 over the quarter.
Thus, underlying gross operating
income rose high to €2,090 million, an increase of
+7.8% from fourth quarter 2019. This was due to a strong and
increased contribution from Asset gathering (+6.2% compared to
fourth quarter 2019), Retail banking (+3.4%) and the resilience of
the other business lines: Large customers -0.4%, Specialised
financial services -1.8% in underlying terms and -5.5% on a
like-for-like basis.
As at 31 December 2020, risk indicators
confirmed the high quality of
Crédit Agricole S.A.'s assets and risk coverage
level. The diversified loan book is mainly geared towards
home loans (28% of gross outstandings) and corporates (44% of
Crédit Agricole S.A. gross outstandings). The non-performing loan
ratio was still low at 3.2% (-0.2 percentage point compared to 30
September 2020), while the coverage ratio22 was high, at 71.5% and
up +1.7 percentage points for the quarter. Loan loss reserves
totalled €9.6 billion for Crédit Agricole S.A., down
compared to 30 September 2020, following loan disposals at CA
Italia for €450 million. Of these loan loss reserves, 28% were
for performing loan provisioning. Provisioning levels this quarter
were based on several weighted economic scenarios
– revised in fourth quarter 2020 – with notably for GDP in
France: a more favourable scenario (+7.1% in 2021 and +2,7% in
2022) and a less favourable scenario (+3.0% in 2021 and +4.8% in
2022)23, and included flat-rate adjustments for retail banking
portfolios and for corporates and specific additions for some
target sectors such as aerospace, hotels, tourism, restaurants.
The increase in cost of risk
was kept under control (x1.5/-€161 million compared to fourth
quarter 2019, at ‑€500 million, versus ‑€340 million in
fourth quarter 2019 and ‑€577 million in third quarter 2020).
77% of the increased cost of risk compared to fourth quarter 2019
was due to additional performing loan provisioning (Stages 1 &
2), related notably to prudent provisioning in sensitive sectors
(such as aerospace, cruise ships, hotels, tourism, restaurants and
certain small businesses). The ‑€500 million expense in third
quarter 2020 consisted of performing loan provisioning (Stages 1
& 2) totalling -€193 million (versus a reversal of
€184 million in fourth quarter 2019 and an allocation of
-€165 million in third quarter 2020) and
provisioning for proven risks (Stage 3) amounting to
-€291 million (versus -€531 million in fourth
quarter 2019 and ‑€425 million in
third quarter 2020). In full year 2020, the cost of risk
on outstandings stood at 62 basis points (47 basis points in
annualised quarters for fourth quarter 2020). Accordingly, LCL
posted cost of risk at ‑€89 million (x1.4 compared to fourth
quarter 2019 and a modest increase (+7.7%) since the third quarter
2020), with a ratio cost of risk relative to outstandings stable at
29 basis points for full year 2020 (25 basis points on an
annualised quarterly basis); CA Italia recorded a cost of risk of
-€113 million in fourth quarter 2020, i.e. 1.8 times the level
of fourth quarter 2019, and an increase by +30% as compared to the
third quarter 2020, with cost of risk relative to outstandings
increasing to 93 basis points for full year 2020
(95 basis points on an annualised quarterly basis); CA
Consumer Finance’s cost of risk was stable at -€128 million
compared to third quarter 2020 and up +11.0% in underlying terms
and stable since the third quarter 2020 +1,3%, with cost of risk on
outstandings at 179 basis points for full year 2020 (and
150 basis points on a quarterly annualised basis).
Lastly, in financing activities, the cost of risk for the quarter
stood at -€121 million, versus an allocation of just
-€58 million in fourth quarter 2019, but was up +51% as
compared to the third quarter 2020. Its cost of risk on
outstandings was 67 basis points for full year 2020 (versus
41 basis points on a quarterly annualised basis).
The contribution in underlying terms of the
equity-accounted entities was down
-38.3%, to €47 million, notably due to
Specialised financial services with deteriorated performance
of international entities, partially compensated by the resilience
of automobile joint-ventures.
Net income on other assets this
quarter showed a negative impact of -€9 million, related to
declassified IT projects versus a positive impact of
+€20 million in fourth quarter 2019 which was due to a real
estate capital gain in Wealth Management.
Underlying income24 before tax, discontinued
operations and non-controlling interests was therefore down ‑4.1%,
to €1,628 million. Underlying effective tax rate was 29.7%, up
+16.2 percentage points compared to fourth
quarter 2019, whose level had been very low at 13.5%, a
consequence of favourable legal cases at Crédit Agricole CIB. The
underlying tax charge therefore increased two-fold to
-€469 million. At end 2020, it amounted to 22.6% (versus 24.4%
in 2019). The underlying net income before
non-controlling interests was therefore down -21.6%.
Non-controlling interests stood
at -€185 million in fourth quarter 2020, i.e. a +15.0%
increase, notably due to a change in Insurance in the recognition
methods used for subordinated debt (RT1) coupons, without impact on
net earnings per share, and following CACEIS’s acquisitions of
2020.
Underlying
net income Group share was down
-26.0% from fourth quarter 2019 to
€1,318 million.
Credit Agricole S.A. – Stated and underlying results,
2020 and 2019
€m |
2020 stated |
Specific items |
2020 underlying |
2019 stated |
Specific items |
2019 underlying |
∆ 2020/ 2019 stated |
∆ 2020/2019 underlying |
|
|
|
|
|
|
|
|
|
Revenues |
20,500 |
(264) |
20,764 |
20,153 |
(186) |
20,339 |
+1.7% |
+2.1% |
Operating expenses excl.SRF |
(12,452) |
(86) |
(12,366) |
(12,421) |
(15) |
(12,405) |
+0.3% |
(0.3%) |
SRF |
(439) |
- |
(439) |
(340) |
- |
(340) |
+29.1% |
+29.1% |
Gross operating income |
7,609 |
(351) |
7,959 |
7,392 |
(201) |
7,594 |
+2.9% |
+4.8% |
Cost of risk |
(2,606) |
0 |
(2,606) |
(1,256) |
- |
(1,256) |
x
2.1 |
x
2.1 |
Equity-accounted entities |
413 |
89 |
324 |
352 |
- |
352 |
+17.5% |
(7.9%) |
Net income on other assets |
75 |
- |
75 |
54 |
(6) |
60 |
+39.7% |
+25.2% |
Change in value of goodwill |
(903) |
(903) |
- |
(589) |
(589) |
- |
+53.2% |
n.m. |
Income before tax |
4,588 |
(1,164) |
5,752 |
5,952 |
(797) |
6,749 |
(22.9%) |
(14.8%) |
Tax |
(1,129) |
96 |
(1,225) |
(456) |
1,103 |
(1,559) |
x
2.5 |
(21.4%) |
Net income from discont'd or
held-for-sale ope. |
(221) |
(221) |
(0) |
(38) |
(46) |
8 |
n.m. |
n.m. |
Net income |
3,238 |
(1,289) |
4,527 |
5,458 |
260 |
5,198 |
(40.7%) |
(12.9%) |
Non controlling interests |
(546) |
133 |
(679) |
(614) |
2 |
(616) |
(11.1%) |
+10.2% |
Net income Group Share |
2,692 |
(1,157) |
3,849 |
4,844 |
262 |
4,582 |
(44.4%) |
(16.0%) |
Earnings per share (€) |
0.80 |
(0.40) |
1.20 |
1.48 |
0.09 |
1.39 |
(45.8%) |
(13.4%) |
Cost/Income ratio excl.SRF (%) |
60.7% |
|
59.6% |
61.6% |
|
61.0% |
-0.9 pp |
-1.4 pp |
Net income Group Share excl.
SRF |
3,085 |
(1,157) |
4,241 |
5,159 |
262 |
4,897 |
(40.2%) |
(13.4%) |
Over the full year 2020,
stated net income Group share amounted to €2,692 million,
versus €4,844 million for full year 2019, a decrease of
-44.4%.
Specific items in full
year 2020 had a negative impact of
-€1,157 million on stated net income
Group share. Added to the fourth-quarter items already mentioned
above were first-nine-month 2020 items that had a negative impact
of -€305 million and also corresponded to recurring volatile
accounting items. These were the DVA for -€5 million, hedges
of the Large customers' loan book for +€27 million, and
changes in the provision for home purchase savings plans for
-€10 million at LCL and -€34 million in the
Corporate Centre business line. The non-recurring items comprised
integration costs of Kas Bank and Santander Securities Services at
CACEIS totalling -€6 million, support for SME and small
business policyholders totalling -€97 million in Asset
gathering and -€1 million at LCL, Switch activation totalling
+€26 million, the Liability Management cash adjustment at CC
totalling -€28 million, and COVID-19 solidarity donations
totalling -€38 million in the Asset gathering business line,
-€4 million in the International retail banking business line
and -€10 million in Corporate Centre, the reclassification of
CA Consumer Finance NL in entity held-for-sale with an impact of
-€55 million under CC related to goodwill impairment and an
impact of -€69 million at SFS related to the IFRS 5 treatment.
Specific items from 2019 had an impact of
+€262 million on
net income Group share. Compared to
the specific fourth-quarter 2019 items mentioned above, these
items had an impact of -€81 million on net income Group share
in the first nine months of 2019 and corresponded to recurring
volatile accounting items, specifically the DVA for
-€11 million, hedges of the Large customers loan book for
-€20 million, and changes in the provision for home purchase
savings plans for -€12 million at LCL and
-€38 million in the Corporate Centre business line.
Excluding these specific items,
underlying net income Group share stood at
€3,849 million, down -16.0% compared
to full year 2019.
Underlying earnings per share for year 2020 came
to €1.20 per share, a decrease of -13.4% compared to year 2019.
Underlying RoTE25 net of
coupons on Additional Tier 1 securities (return on equity
Group share excluding intangible assets) was 9.3% in 2020. RoNE
(Return on Net Equity) was down full year 2020, in connection with
the decline in results, compared to full year 2019 and the increase
in risk weighted assets compared to December 2019.
Underlying revenues rose by
+2.1% compared to full year 2020, thanks to
significant growth in revenues in the Large customers business line
(+10.7%), while revenues in the other business lines overall
demonstrated resilience: -1.4% in Retail banking, -3.0% for the
Asset gathering business line and -7.0% in
Specialised financial services, in underlying terms or
-4.3% on a like-for-like basis9. Overall, recurring revenues, i.e.
revenues attached to an inventory item (outstanding loans/customer
assets, assets under management) or an insurance policy (property
and casualty insurance, death and disability insurance), accounted
for 76% of Crédit Agricole S.A.’s underlying revenues. Interest
revenues contribute to 37% of the underlying full-year revenues,
while commissions contribute by 41%, other revenues (including
trading) 10% and insurance 12%.
Underlying operating expenses
excluding SRF were stable (-0.3%). The contribution to the SRF and
supervisory costs have increased significantly, it was up +24.7% to
€540 million in full year 2020 compared to €433 million
in full year 2019. Expenses were stable thanks to excellent
operational efficiency by the business lines: Asset gathering
reduced expenses by -2.4% compared to full year 2019, Retail
banking by -2.1% and Specialised financial services by -5.6% in
underlying terms and stable (0.0%) on a like-for-like basis. The
Large customers business line reported a +6.0% increase in expenses
over the full year, but this was mainly due to a scope effect (with
the integration of Kas and S3 within Asset Servicing). The
underlying cost/income ratio excluding SRF
was 59.6% over the full year, an improvement of
+1.4 percentage points compared to full year 2019, and
ahead of the target set out in the Medium-Term Plan in June
2019, i.e. 60%.
Lastly, the cost of risk
increased significantly during the period
(x2.1/-€1,350 million to -€2,606 million versus
‑€1,256 million for full year 2019).
Dividends
The dividend policy was adapted in 2020 to take
the exceptional circumstances into account. Since Crédit Agricole
Group and Crédit Agricole S.A. boast very comfortable levels of
capital (a CET1 ratio of 17.2% or +8.3 percentage points above the
SREP requirement for Crédit Agricole Group and 13.1% or 5.2
percentage points above the SREP requirement for Crédit Agricole
S.A.), Crédit Agricole S.A.’s Board of Directors will submit to the
12 May 2021 General Assembly a 2020 dividend of 80 centimes per
share, with a scrip dividend payment. The nominal amount exceeds
what would have been our traditional payout ratio of 50% in cash,
and allows us to compensate a portion of the unpaid 2019 dividend.
This amount is made possible by SAS La Boétie's commitment to
subscribe to the scrip dividend payment option. The proposed
mechanism is in strict compliance with the ECB’s 15 December 2020
recommendation.
The proposed dividend means that all
shareholders will receive a return of 8%, based upon a €10 share
price26. To limit the impact of this mechanism on earnings per
share which, assuming zero public participation in the scrip
dividend payment option, and assuming participation in said option
by the employee mutual funds (FCPEs), would be less than -6%,
Crédit Agricole S.A.commits to fully unwind the switch guarantee
mechanism27 by the end of 2022, with 50% of it (i.e. an additional
15%) completed by first quarter 2021. The full unwinding will have
a positive impact on Crédit Agricole S.A.’s net income Group share
of +€141 million (+€190 million in revenues) on a full year,
and on earnings per share around 4%, resulting in an impact on
Crédit Agricole S.A.'s CET1 ratio of -90 basis points (of
which -20 basis points related to the unwinding of the additional
15% in first quarter 2021). Assuming zero public participation in
the scrip dividend payment option, the overall effect on earnings
per share would be around -1%. Crédit Agricole S.A. moreover
intends to put in place a share buyback program, up to a maximum of
5% of capital, in two steps: after the payment of the dividend, in
order to offset the EPS impact of the public participation in
the scrip dividend payment, and, once regulatory constraints have
been lifted, and with the usual authorization of the ECB, in order
to correct the impact of the transaction on the net tangible assets
per share.
Analysis of the results of Crédit Agricole
S.A.’s divisions and business lines Activity
Asset gathering
In Savings/Retirement, Crédit
Agricole Assurances continued to diversify its product mix in 2020,
having made adjustments to its offering over the past year. Thus,
net inflows were positive (+€1 billion), despite the euro
outflow (-€3.9 billion), and thanks to robust UL net inflows
(+26.9% versus fourth quarter 2019). Furthermore, the UL share
accounted for 38.7% of gross inflows in 2020, an increase of
+9.8 percentage points from 2019. In fourth quarter 2020,
net inflows were negative in euro terms (-€0.5 billion) but up
in terms of the number of unit-linked contracts
(+€1.3 billion). Total net inflows stood at
+€0.8 billion, down -€0.2 billion compared to fourth
quarter 2019 but up +€0.4 billion from third quarter 2020.
Assets (savings, retirement and death and disability) stood at
€308.3 billion, up +1.4% from December 2019. Unit-linked
contracts as a percentage of outstandings reached a historic high
of 24.2%, up +1.4 percentage points from December 2019. Premium
income amounted to €6.1 billion in fourth quarter 2020 (stable
compared to fourth quarter 2019). Lastly, the Policy Participation
Reserve (PPE) stood at €11.6 billion at 31 December 2020,
which was 5.6% of total outstandings. The average yield of the
Crédit Agricole Assurances group’s assets was 2.13% in 2020, well
above even the average guaranteed minimum rate (0.27% at end 2020)
and the profit sharing rate of euro-denominated policies of 1.28%
at the end of 2020. The adjustment these policies in the context of
low interest rates, from 1.44% to 1.28%, allowed the spread between
the return on assets and the return on liabilities to be
maintained.
In property and casualty
insurance, business in fourth quarter 2020 was dynamic
compared fourth quarter 2019, with a growth of 7.7%, confirming the
rebound seen in third quarter 2020. Premium income stood at
€4.8 billion in 2020, up +5.8%28 from 2019. With a net
contribution for the year of more than 508,000 policies, the number
of property and casualty policies in the portfolio of Crédit
Agricole Assurances was close to 14.6 million at end 2020, a
year-on-year increase of +3.6%. The equipment rate for individual
customers29 continued to increase in the Regional Bank
networks (41.7% at end December 2020, i.e. a +1.0 percentage
point increase since December 2019) and LCL (25.5% at end December
2020, i.e. a +0.5 percentage point increase since December
2019), as well as at CA Italia (17.1% at end December 2020, i.e. a
+1.7 percentage point increase since December 2019). The combined
ratio remained under control at 94.9%, down slightly year-on-year
by -1.0 percentage points. This ratio was calculated excluding the
cost of the extra-contractual mutualist mechanism for small
businesses with operating loss cover, excluding the contribution to
the solidarity fund for very small businesses and independent
workers, and excluding the exceptional contribution for
supplementary healthcare contributions. Excluding these
adjustments, the combined ratio was 97.6%.
In death & disability/creditor/group
insurance, premium income stood at €4.2 billion, an
increase of +5,7%20 from 2019, with a positive contribution from
the three business lines. Premium income amounted to €1.1 billion
this quarter, up 8.9%22 compared with the fourth quarter of
2019.
Asset Management (Amundi)
recorded good business growth this quarter, with strong momentum in
net inflows excluding JVs (+€29.8 billion) thanks to a good
level of net inflows in both MLT assets and treasury products. As a
result, Amundi posted net MLT inflows of +€12.3 billion,
driven by Retail excluding JVs (+€6.4 billion) and
Institutionals & Corporates (+€5.8 billion). Inflows on
treasury products remained high at +€17.5 billion, driven by
Corporates. Net inflows on joint ventures totalled
+€6.0 billion excluding outflows of low-margin products
(-€21.6 billion) related to institutional mandates in India
and channel business in China. Assets under management were up
+4.6% from December 2019 to €1,729 billion at end December
2020. Assets under management include Sabadell AM, which has been
included in Amundi’s consolidation scope since July 1st 2020 with
AUM of €20.7 billion. The market/foreign exchange impact on
assets under management was +€52.1 billion compared to
September 2020. Note that the joint venture with BOC Wealth
Management, which was operational in Q4 2020, has targeted net
income at 100% of €50 million by 2025. Lastly, this year
Amundi established Amundi Technology, a technology services
business line, with a target of €150 million in revenues by
2025. In January 2021, BNY Mellon and Amundi announced their
technology partnership in order to provide asset management
customers an integrated offering.
In wealth management, assets
under management were down slightly in fourth quarter 2020. In
January 2021, Azqore, a subsidiary of CAIWM, signed an agreement
with Société Générale to perform the back-office operations and a
large percentage of the IT services for the international part of
Société Générale private bank.
The Asset Gathering (AG) business line posted
underlying net income Group share of €513 million in
fourth quarter 2020, down -12.0% compared to fourth quarter 2019
notably due to a change in the recognition methods used for
subordinated debt coupons (without impact on net earnings per
share). Net income Group share remained unchanged excluding this
effect. The business line contributed by 41% to the underlying net
income Group share of the Crédit Agricole S.A. core
businesses (excluding the Corporate Centre division) in fourth
quarter 2020 and 28% to underlying revenues excluding the
Corporate Centre.
The Asset Gathering (AG) business line posted
underlying net income Group share of €1,879 million
in 2020, down -7.6% from 2019.
As at 31 December 2020, own funds allocated to
the business line amounted to €10.6 billion, including
€9.1 billion for Insurance, €1.0 billion for Asset
Management, and €0.5 billion for Wealth Management. The
business line’s risk-weighted assets accounted for
€43.0 billion, including €27.3 billion for Insurance,
€10.7 billion for Asset Management and €5.0 billion for
Wealth Management.
Underlying RONE (Return on Normalised Equity)
stood at 22.5% for the full year of 2020, versus 27.5% for
2019.
Insurance
Underlying revenues totalled €734 million
in fourth quarter 2020, a year-on-year increase of +3.4%, largely
due to a positive market effect of +€60 million compared to
fourth quarter 2019. Underlying expenses fell sharply by -7.5% in
fourth quarter 2020 versus fourth quarter 2019, to
€179 million. This was mainly due to tax cuts, which resulted
in an increase in underlying GOI of +7.4% to €555 million in
fourth quarter 2020. The underlying cost/income ratio in fourth
quarter 2020 stood at 24.4%, an improvement of
-2.9 percentage points compared to fourth quarter 2019.
The tax charge was up +57% to €206 million due to
non-deductible additions to provisions in fourth quarter 2020.
Underlying net income thus totalled €351 million, down -8.9%
compared to fourth quarter 2019. In the end, the business
line's contribution to underlying net income Group share was down
-17.6%, to €317 million, mostly due to non-controlling
interests (€34 million in fourth quarter 2020) following a
change in the recognition methods used for subordinated RT1 debt
coupons (without impact on net earnings per share).
Underlying revenues totalled €2,557 million
in 2020, down -2.3% from 2019. Underlying expenses remained under
control, rising just +0.9% over the period to €761 million. As
a result, underlying GOI decreased by -3.6% to €1,796 million,
and the cost/income ratio deteriorated slightly by +1.0 percentage
points to 29.8% for full-year 2020. Compared to 2019, underlying
net income decreased by -3.4% to €1,287 million and underlying
net income Group share by -9.2% to €1,207 million, mostly due
to a change in the recognition methods used for subordinated RT1
debt coupons (without impact on net earnings per share). Without
this impact, the decline in net income Group share would have been
more limited (-3.4% versus 2019).
Crédit Agricole Assurances also demonstrated its solidity and
resilience with a Solvency 2 regulatory prudential ratio still high
at 227% at 31 December 2020.
Asset management
Underlying revenues totalled €712 million in
fourth quarter 2020, up +1.4% on fourth quarter 2019. Net
management revenues were up +2.0% on fourth quarter 2019, driven by
the +0.9% increase in net management fee and commission income and
the sharp +9.8% increase in performance fee and commission
income. Underlying expenses excluding SRF remained under
control (+3.0%), at €379 million. This increase can be explained by
the Sabadell scope effect, and the creation of Amundi Bank of China
WM. Without these different effects, expenses would have
dropped -0.9%. Underlying GOI was stable (-0.3%) at €334 million
and the cost/income ratio excluding SRF remained at a good level at
53.2%, slightly down year-on-year (+0.8 percentage points). The
contribution of equity-accounted entities, comprising in particular
income from Amundi’s joint ventures in Asia, was up +49.9% on
fourth quarter 2020 and reached €20 million. The underlying tax
charge stayed unchanged (-0.9%) at €84 million this quarter. In the
end, underlying net income Group share was solid and rose by +2.2%
compared to fourth quarter 2019, to €180 million.
In full-year 2020, revenues fell -4.3% compared
to 2019 to €2,522 million. Underlying expenses excluding SRF
fell -2.5% to €1,367 million. Accordingly, underlying GOI was down
-6.4% to €1,152 million and the underlying cost/income ratio
excluding SRF remained at a good level (54.2%), slightly down 1.0
percentage point compared to 2019. Underlying income of
equity-accounted entities rose sharply (+43.5%) to €66 million. In
the end, underlying net income Group share decreased by -5.9%
compared to 2019, to €600 million.
Wealth management
Underlying revenues rose +4.6% compared to
fourth quarter 2019 to €219 million in fourth quarter 2020, thanks
in particular to the resilience of performance fees. Underlying
costs excluding SRF dropped (-4.2%) to €177 million mainly due to
the savings plan. Accordingly, underlying GOI increased
significantly year-on-year by +69.2%, to €42 million and the
underlying cost/income ratio excluding SRF significantly improved
by -7.4 percentage points to 80.7% in fourth quarter 2020. Cost of
risk totalled €21 million and the tax charge dropped by -48.4% to
€4 million. In the end, underlying net income Group share fell
-27.9% to €15 million in fourth quarter 2020. The recognition, this
quarter, of €23 million in specific items with an impact on net
income Group share should be noted. These losses are related to an
ongoing disposal plan for the Miami and Brazilian entities.
Revenues totalled €820 million in 2020,
stable (-0.6%) compared with 2019. Underlying expenses excluding
SRF decreased significantly (-5.7%) to €698 million. Accordingly,
underlying GOI increased sharply (+48.5% to €119 million) and the
underlying cost/income ratio excluding SRF improved (-4.7
percentage points) to 85.2%. Underlying net income Group share was
up +8.4% to €72 million in 2020.
Retail Banking
The Group’s Retail banking
continued to support the economy and activity remains strong in the
fourth quarter. The impact of the second lockdown ended up being
limited, as reflected in the resumption of loan production:
€7.8 billion for LCL (+13% since third quarter 2020
respectively), of which €1.9 billion in the corporate market
(+59% since third quarter 2020 respectively) and €3.9 billion
in the home loans market (stable since third quarter 2020
respectively); and €2.3 billion for CA Italia with record home
loan production of €1.0 billion (+2.7% and +42.9% versus third
quarter 2020 respectively). The level of outstanding loans remained
high at €143.4 billion for LCL (+10.5% year-on-year) and
€45.5 billion in Italy (+5.0% year-on-year), despite the
disposal of non-performing loans amounting to €450 million in
fourth quarter 2020. As at 31 December 2020, state-guaranteed loan
outstandings stood at €8 billion for LCL and €2.4 billion
for CA Italia. Excluding state-guaranteed loans, outstanding loans
were also up year-on-year for LCL (+4.4%), driven by small business
loans (+11.8%) and home loans (+4.5%). For CA Italia numbers were
stable (+0.5%30). In France, renegotiations on LCL home loans
continued to trend downwards in fourth quarter to €0.2 billion
in outstandings, compared with €0.3 billion in the third
quarter of 2020 and €1 billion in the fourth quarter of 2019.
This was still well below the high point of €5.2 billion in
fourth quarter 2016. Lastly, for all International retail banking
excluding Italy, loan growth was +4.7%25 at end December 2020
versus end December 2019, driven primarily by Ukraine (+18.4%25),
Egypt (+10.0%31) and Poland (+2.5%25), with Morocco remaining
stable (-0.7%25). On-balance sheet deposits at LCL were up +11.5%
year-on-year in line with the increase in precautionary household
savings and deposits of a portion of the state-guaranteed loans
that were granted to promote corporate liquidity. Against this
backdrop, demand deposits showed a rise for both individual
customers (+15.5% Dec/Dec) and small business and corporate
customers (+51.9% Dec/Dec). At CA Italia, on-balance sheet deposits
were also up year-on-year (+8.9%), for the most part demand
deposits of individual and corporate customers (+11.1%).
Off-balance sheet savings were down slightly at LCL (-1.1%),
particularly in life insurance (-1.6%), reflecting the market
effects related to the public health crisis which were still
negative for the year. At CA Italia, off-balance sheet deposits
were up year-on-year (+8.8%), driven by life insurance deposits
(+13.8%). Customer assets increased by +12.2% year-on-year for all
International Retail Banking excluding Italy, driven by Ukraine
(+50.1%32) and Poland (+12.5%28), with more modest growth in
Morocco (+5.1%28) and Egypt (+4.1%28). The equipment rate in
automotive, multi-risk household, healthcare, legal or accident
insurance rose to 25.5% at LCL (+0.5 percentage point compared to
end December 2019) and 17.1% at CA Italia (+1.7 percentage points
compared to end December 2019).
French retail banking
Underlying revenues were up +4.5% compared to
fourth quarter 2019, to €902 million in fourth quarter 2020. This
increase was driven by the net interest margin (+16.2%), supported
by good refinancing conditions. Fee and commission income dropped
(-4.4%) with an electronic payments activity impacted by the
sanitary crisis. Underlying costs excluding SRF remained under
control at €599 million in fourth quarter 2020 (+0.2%), which leads
to an improvement in the underlying cost/income ratio excluding SRF
of 2.9 percentage points year-on-year, to 66.4%. This made it
possible to achieve underlying gross operating income of €304
million, a sharp improvement (+14.2%) on fourth quarter 2019. Cost
of risk stayed high (+39.1% compared to fourth quarter 2019) and
totalled -€89 million in fourth quarter 2020. This increase can be
explained by prudent provisioning of performing loans, which
entails, first, prudent provisioning in sensitive sectors (such as
hospitality, tourism, restaurants) and secondly, the update of
economic scenarios. The doubtful loans ratio stands at 1.5% (-0.1
percentage point compared to third quarter 2020) and the coverage
ratio stands at 86.2% (+1.6 percentage points compared to third
quarter 2020). All in all, underlying net income Group share was up
+0.6% compared to fourth quarter 2019, to €140 million in fourth
quarter 2020.
Revenues were up +1.4% in full-year 2020
compared to 2019, to €3,537 million. Underlying expenses
excluding SRF decreased by -2.7%, due in particular to a continued
improvement in external expenses, which resulted in a -2.7
percentage point improvement in the underlying cost/income ratio
excluding SRF to 64.4%. Gross operating income thus fell sharply
(+9.1% at €1,218 million). Cost of risk was up in full-year 2020
(+79.9% to €390 million), but this increase was mostly (+€191
million) due to performing loans provisioning. The business line’s
contribution to net income Group share fell -7.1% to €548
million.
The underlying RoNE (return on normalized
equity) of LCL stood at 9.7% for 2020, compared to 10.8% for
2019.
International retail
banking
International retail banking revenues fell by
-2.8% to €692 million in fourth quarter 2020. Underlying costs
remained virtually unchanged (-0.1%), at €453 million. As a
result, underlying gross operating income decreased by -7.7% to
€239 million. Cost of risk increased +67.5% this quarter to -€131
million. All in all, net income Group share of International retail
banking was €70 million, down -33.3% compared to the fourth quarter
2019.
For the full-year 2020, underlying revenues
decreased -4.9% to €2,659 million. Underlying operating expenses
excluding SRF were down -1.3% to €1,708 million, resulting in a 2.3
percentage point deterioration in the underlying cost/income ratio
to 64.3%. SRF increased by 14.2% to -€25 million. Gross
underlying operating income totalled €925 million, down -11.2%.
Excluding SRF, the drop in gross operating income is lowered to
‑10.7%. Provisioning increased by 70.2% to €569 million
for full-year 2020. This translated into underlying net income
Group share of €225 million for full-year 2020 (down -40.6%).
Italy
Crédit Agricole Italia’s revenues were slightly
up in fourth quarter 2020 compared to 2019 at €490 million (+0.9%
compared to fourth quarter 2019). Net interest margin fell in
spite of the favourable refinancing terms, and fee and commission
income returned to the fourth quarter 2019 level thanks to credit
insurance and UCITS. Underlying costs fell slightly year-on-year
(+1.1%) following the investments made in new distribution models
that were not offset by savings on recurring costs. Underlying
cost/income ratio excluding SRF remained unchanged at 65.5%
(+0.1 percentage points compared to fourth quarter 2019).
Cost of risk increased +81.9% to €113 million, a well-controlled
level reflecting both an additional provisions on a €450 million
doubtful loans disposal and an increase in provisions for proven
risks (46% of the increase in cost of risk related to the
provisioning of performing loans). The cost of risk on outstandings
for the year therefore stood at 93 basis points. The
ratio of non performing loans loans improved this quarter to 6.5%
(-0.8 percentage points Dec/Sept) thanks to the loan disposal, and
the coverage ratio stood at 60.8% on portfolio loans. Excluding
loan disposals, the coverage ratio improved by 120 basis
points.
For full-year 2020, revenues dropped -3.0% to
€1,827 million. Operating expenses excluding SRF were down by only
-0.9%, resulting in a deterioration in the underlying cost/income
ratio excluding SRF, which stood at 64.0%, an increase of 1.4
percentage points Dec./Dec. Gross operating income was down -7.2%,
to €632 million (-6.5% excluding SRF). Lastly, the business line’s
contribution to underlying net income Group share was down by
-33.3% to €144 million.
The underlying RoNE (return on normalized equity) of CA Italia
stood at 5.7% for the full-year 2020, compared to 9.3% for
2019.
Crédit Agricole Group in
Italy
The Group’s results in Italy were €579 million
for full-year 2020, i.e. a -11% decrease compared to full-year 2019
due to the increase in cost of risk.
International Retail Banking – excluding
Italy
Underlying revenues declined in fourth quarter
2020 compared to fourth quarter 2019 (-11.0%), mainly due to a net
interest margin still impacted by the fall in reference interest
rates in Egypt, Poland, Ukraine and Morocco, and fee and commission
income affected by the slowdown in commercial activity.
However, there was a +3.8% uptick in revenues compared to third
quarter 2020. Underlying costs also fell by -2.8%. As expenses
declined less than revenues, the underlying cost/income ratio of
IRB excluding Italy deteriorated this quarter to 65.4%, up +5.5
points. Underlying gross operating income thus decreased by -23.1%.
Cost of risk increased (+12.9%) to ‑€18 million in fourth
quarter 2020. The coverage ratio was up 5 percentage points
compared to third quarter 2020 at 109%. All in all, underlying net
income Group share stood at €37 million, i.e. a decrease of
-27.8%.
By country:
- CA Egypt (33): underlying revenues were down -8% in fourth
quarter 2020 compared to fourth quarter 2019, penalised by lower
rates. The risk profile remained good with a low NPL ratio of 3.1%
and a high coverage ratio of 166%.
- CA Poland(33): revenues decreased this quarter (-20%),
penalised by the decrease in reference rates and despite a
sustained level of new business in the quarter (+16,000 clients).
Costs also fell (-3%) leading to a -56% decline in gross operating
income. The non performing loans coverage ratio rose to 116% .
- CA Ukraine(33): underlying revenues were slightly up this
quarter (+1%) as a result of a sharp upturn in commercial activity.
The 17% increase in costs reflects investments made in digital
technology and network transformation. NPL ratio improved to 1.4%
(-2.7 percentage points compared to December 2019) and the coverage
ratio stayed very high at 351%.
- Crédit du Maroc(33): revenues remained unchanged, and costs
fell sharply (-19%). Provisioning remained prudent, with the
coverage ratio reaching 94% (+3 percentage points compared to
September 2020).
For full-year 2020, revenues were down by -8.8%
to €833 million. Operating expenses decreased by -2.3% only, which
resulted in a deterioration of the underlying cost/income ratio to
64.7%, up by 4.3 percentage points Dec./Dec. Underlying gross
operating income stood at €294 million, down -18.7%. Cost of risk
totalled €142 million, up 69.6%. All in all, the
business-line’s contribution to net income Group share totalled €81
million, down -50.3%.
The underlying RoNE (return on normalized
equity) of other IRB stood at 12.3% for the year 2020, compared to
19.3% for 2019.
The International retail banking business line
contributed for 5% to the underlying net income Group share of
Crédit Agricole S.A.'s core businesses (excluding the
Corporate Centre division) in 2020 and 13% to underlying revenues
excluding the Corporate Centre.
The entire Retail banking business line
contributed for 17% to the underlying net income Group share of
Crédit Agricole S.A.'s core businesses (excluding the
Corporate Centre division) in 2020 and 30% to underlying revenues
excluding the Corporate Centre.
As of 31 December 2020, the capital allocated to
the division was €8.7 billion including €4.9 billion for French
retail banking and €3.8 billion for International retail
banking. Risk weighted assets totalled €91.6 billion including
€52.0 billion for French retail banking and
€49.5 billion for International retail banking.
Specialised Financial
Services
Specialised financial services
activity rebounded in December after a limited second lockdown
impact. CA Consumer Finance’s loan production in fourth quarter
2020 was up compared to third quarter 2020 (+1.8%), reaching
€11.1 billion (-3% compared to fourth quarter 2019) returning
to the average level of 2019. The reason for this was the strong
performance of the automobile JVs (+11% in fourth quarter 2020
compared to fourth quarter 2019). In France, loan production
withstood the impact of the second wave of covid-19, slipping by
just -3% in fourth quarter 2020 compared to fourth quarter 2019.
The production margin on depreciable loans remained stable, except
for automobile JV this quarter. Gross managed loans were
more or less stable year-on-year (-1.3% compared to
December 2019), resulting in the postponement to 2023 of
the gross managed loans target initially announced for 2022,
cost/income ratio and RoNE targets being achievable by
2022. Nevertheless, the rebound in gross managed loans
that began in September 2020 continued (+1.9% at end December 2020
compared with September, after +0.9% between June and September
2020). At CAL&F, leasing production showed good
momentum, reaching €1.8 billion in fourth quarter
2020, higher than the already very good level of fourth quarter
2019 (+0.8%). This sharp upturn compared to third quarter 2020
(+28.7%) was driven by France’s and Poland’s performances. The
gross consolidated loans were up year-on-year
(+3.2% at December 2020 compared to 2019), driven by France.
Factoring activity had a very good fourth quarter 2020 with
factored revenues up by +4.4% from fourth quarter
2019. However, this level of activity was not directly reflected in
the change in overall revenues because there was a decline in the
share of turnover subject to factoring, in the context of lower
liquidity requirements for corporates considering exceptional
governmental liquidity support measures such as SGLs.
Fourth quarter 2020 results of
Specialised financial services were resilient.
Gross operating income was slightly down (-1.8%
compared to fourth quarter 2019) and cost/income
ratio improved to 48.8% (i.e. -0.5 percentage point
decrease). In addition, the cost of risk increase
was brought below 50% over the full year 2020. The results of the
year have been marked by the reclassification under IFRS 5 on third
quarter of the Dutch subsidiary CACF Nederland BV, an entity held
for sale. In fourth quarter 2020, this translated into the posting
of CA Consumer Finance NL’s fourth quarter income to net income
from held-for-sale operations of -€66 million (classified under
specific items of the quarter and subtracted from underlying
results). Accordingly, in fourth quarter 2020, the business line’s
underlying net income Group share
stood at €165 million, i.e. a decline of -22.3% and of -25.4% at
constant scope compared to fourth quarter 2019 (i.e. excluding CA
Consumer Finance NL).
The business line contributed 13% to the
underlying net income Group share of the
Crédit Agricole S.A. core businesses (excluding the
Corporate Centre Division) for full-year 2020
RoNE (return on normalised equity) of the
business line stood at 11.7% for full-year 2020 compared to 16% in
2019. Own funds allocated to the business line totalled €4.9
billion, compared to €5.2 billion in 2019.
Consumer finance
In the fourth quarter 2020, CA Consumer
Finance’s underlying revenues totalled
€502 million, down -4.0% compared to fourth quarter 2019,
due to an unfavourable product mix and competitive pressures.
However, on a constant scope basis, i.e., excluding CA Consumer
Finance NL34, underlying revenues contracted slightly by -1.9%.
Gross operating income remained stable compared to
fourth quarter 2019 (-0.3% and -5.2% excluding scope effect, due to
a base effect on fourth quarter 2019 expenses). As such, the
cost/income ratio excluding SRF, up 1.9 percentage
points compared to fourth quarter 2019, stood at 48.1% this quarter
(excluding scope effect, cost/income ratio increases of 1.8
percentage points, due to a base effect on fourth quarter 2019
expenses). Equity-accounted entities totalled €140
million this quarter, i.e. a multiplication by 2.2 compared to
fourth quarter 2019, on account of a partial provision reversal on
a €89 million fine issued to FCA Bank by AGCM, the Italian
competition authority, restated under specific items. Consequently,
the equity-accounted entities underlying contribution contracted by
-22.7% compared to fourth quarter 2019, notably impacted by the
results of the other international entities, especially Wafasalaf,
slightly more affected by the crisis. However, cost of
risk was kept under control during the second wave of the
pandemic, up by a mere 1.3% compared to the previous quarter, and
up by only 11.0% compared to fourth quarter 2019 (+23% excluding
scope effect). Cost of risk on outstandings stood
at 179 basis points, down 9 basis compared to annualised September
2020. NPL ratio stood at 6.8%, down 0.5 percentage
point compared to September 2020. All in all, underlying
net income Group share totalled €128 million this quarter,
down 19% on fourth quarter 2019 and -23% excluding scope
effect.
For full-year 2020, CACF recorded resilient
results during the crisis, for instance, compared to 2019, CA-CF’s
underlying revenues dropped -7.1% and -3.7%
excluding scope effect. Cost/income ratio excluding
SRF slightly improved and reached 49.3% (compared to 49%
on full year 2019). Cost of risk rose by only
41.3% this year compared to 2019. Equity-accounted
entities contribution fell (-13.9%) due
to the poor performance of other international entities
(particularly at Wafasalaf, which was slightly more impacted by the
health crisis) partly offset by the resilience of the automotive
joint ventures. CA Consumer Finance’s underlying
net income Group share for the year decreased by
-21.9% and by -22% excluding scope effect. Lastly, the
business line’s contribution to net income Group
share in full-year 2020 was 11%.
Leasing & Factoring
In fourth quarter 2020, the
underlying revenues of CAL&F totalled €152
million, slightly up by 1.5% compared to fourth quarter 2020,
thanks to robust recovery of the activity that began in June 2020
but again curbed by a factoring business, which was penalised by a
decrease in the share of factored turnover resulting from the
impact of State-guaranteed loans for corporates.
Cost/income ratio returned to a normal level at
51.1% this quarter, an improvement compared to third trimester
2020, but slightly down compared to fourth quarter 2019 (-4.3
percentage points). Cost of risk increased sharply
(x2.1 compared to fourth quarter 2019, reaching €25 million)
notably related to performing loans provisioning, which accounts
for 80% of total outstandings. Nevertheless, CAL&F’s
underlying net income Group share was €37 million
this quarter, down -32% compared to fourth quarter 2019, but up
8.9% compared to the previous quarter.
For full-year 2020, CAL&F
revenues decreased by -6.7% compared to 2019
impacted by a lower factoring performance, strongly linked to the
crisis and clients lower liquidity requirements. This lead to an
increase in cost/income ratio excluding
SRF, which rose by 4.6 percentage points to 54.6%. As the
cost of risk doubled compared to 2019, CAL&F’s
net income Group share stood at €101 million, down
-40.8% compared to 2019.
Large customers
Corporate and Investment
Banking activity was brisk in fourth quarter 2020 with
stable underlying revenues (-0.5% to €1,157 million) compared
to a very high fourth quarter 2019. Capital markets and
investment banking (-5.0% to €545 million) continued
its revenue normalisation initiated in the third quarter (FICC
activities: -7.4%, including CVA) due to a slowdown in hedging
activities caused by a massive return of liquidity and lower
volatility. Bond originations were stable, with a
good level of activity (same level in fourth quarter 2020 as in
fourth quarter 2019). In a normalising market, Crédit Agricole CIB
kept its leadership positions (No. 1 in All French
Corporate bonds,35 No. 1 in All Financial Bonds,36 and No. 2
worldwide in Global Green and Sustainability bonds37). Regulatory
VaR at 31 December 2020 remained at a low
level, in line with the prudent risk
management model (€9.2 at 31 December 2020 versus
€22.2 million at 31 March 2020, average regulatory
VaR: €10.9 million in fourth quarter 2020 versus
€18.8 million in second quarter 2020). Financing
activities reported higher underlying revenues (+3.9% and
+8.6% excluding the foreign exchange impact) in fourth quarter 2020
compared to fourth quarter 2019, totalling €612 million. They
were driven on the one hand by a good performance from commercial
banking (+6.1% to €331 million), particularly in acquisition
financing, and on the other hand by structured finance (+1.5% to
€281 million in the telecoms and energy/infrastructure
sectors). In particular, Crédit Agricole CIB maintained good
positions in syndicated loans: Crédit Agricole CIB
is the leader in France and No. 3 in the
EMEA market. The drawdown rate on revolving credit
facilities (RCFs) returned almost to pre-crisis levels. It stood at
20% in fourth quarter 2020, very close to the pre-crisis level of
18%, having reached a high point of 32% at the end of April.
Lastly, Asset Servicing
(CACEIS) recorded a good level of activity this quarter. Assets
under custody totalled €4.2 trillion at end December 2020, up +8%
year-on-year, exceeding the level in value set as a target in the
2022 Medium Term Plan. Assets under administration
also increased by +6% to €2,175 billion. These increases were
largely due to customer capture and asset
growth in existing customers.
In fourth quarter 2020,
underlying net income Group share
for the Large customers business line amounted to
€303 million, down -18.6% compared to third quarter of 2019.
Gross operating income was stable (-0.4% in fourth quarter 2020
compared to fourth quarter 2019) thanks to robust activity
across all business lines, and despite the ongoing normalisation
for capital markets and investment banking. The business line still
reported an increase, although it is slowing down, in provisioning
(cost of risk increased two-fold to €111 million), particularly in
financing activities (multiplied by 2.1 to
€121 million in fourth quarter 2020).
In 2020,
underlying net income Group share
totalled €1,325 million, down -16.1% on the same period in
2019.
The business line contributed 29% to the
underlying net income Group share of
Crédit Agricole S.A.'s core businesses (excluding the
Corporate Centre division) for full-year 2020 and 30% to
underlying revenues excluding the Corporate
Centre.
At 31 December 2020, own funds
allocated to the business line totalled €11.7 billion and
risk weighted assets amounted to €123.6
billion.
Underlying RoNE (return on
normalised equity) of the business line stood at 10.7% for 2020
compared to 12.7% for 2019.
Corporate and investment
banking
In fourth quarter 2020,
Corporate and investment banking underlying
revenues remain virtually unchanged with a slight
-0.5% decrease to €1,157 million, the normalisation started in
the third quarter for capital markets continued (-5% in fourth
quarter 2020 compared to fourth quarter 2019 which was at a
high level), subject to the effect of the slowdown in hedging
activities caused by the massive return of liquidity and lower
volatility, and in spite of maintaining a strong activity level on
the primary bond market; financing activities reported an increase
in net revenues (3.9% between the two quarters) with strong
performance from commercial banking, driven by the acquisition
financing sector and a good sales momentum on structured finance,
particularly on the telecoms and energy/infrastructure business
lines. Underlying operating expenses remained well controlled and
recorded a slight increase of +0.3% in fourth quarter 2020 making
it possible to post an underlying cost/income ratio of 59.3%, a
+0.4-point slight improvement on fourth quarter 2019. Thus,
underlying gross operating income fell slightly this quarter, down
-1.5% compared to fourth quarter 2019. Cost of risk increased
significantly compared to fourth quarter 2019. It doubled to
€108 million, mainly due to the increase in performing loans
provisioning, notably on the aircraft, shipping and hospitality
sectors, weakened by the health crisis. Compared to third
quarter 2020, cost of risk decreased -51%. In the end,
underlying net income Group share was
€303 million in fourth quarter 2020, a decline of -18.6%
compared to fourth quarter 2019.
For full-year 2020, revenues
recorded a marked increase of +8.8% on the same period in 2019.
Operating expenses excluding SRF contributions recorded a very
slight increase (+2.1%), enabling the production of a +6.7
percentage point jaws effect and the posting of cost/income ratio
excluding SRF of 51.5%, a 3.4-point improvement between 2019 and
2020, and a level below the Medium-Term Plan target (less than
55%). Gross operating income was sharply up by +14.7%, between 2019
and 2020. However, cost of risk multiplied by 5.3 over the year,
86% of the increase in financing activities linked to performing
loans. All in all, the contribution to net income Group share was
€1,195 million, down -16.8% compared to 2019.
Risk-weighted assets as of December
2020 decrease by -€1.1 bn compared to end of September
2020. This decrease is due to a reduction of -€5.4 bn in
business line activity, including the continued normalisation of
VaR (lower market risk and CVA of -€2.3 bn) and a favourable
exchange rate impact of -€1.6 bn. Those two downward elements
are partially offset by the increase related to ratings downgrade
for +€2.1 bn and model effects linked to TRIM for
+€4.5 bn.
Asset servicing
In fourth quarter 2020, underlying revenues
increased by +8.1% to €281 million. Apart from the scope effect
linked to the consolidation of the results of
Santander Securities Services (S3) since first quarter
2020 (outstandings were consolidated in fourth quarter 2019),
underlying net revenues have been buoyed by a strong activity
level. Assets under custody totalled €4.2 trillion at 31 December
2020, exceeding the target (4 trillion) of the 2022 Medium-Term
Plan. They have increased +8% in one year at end December 2020
thanks to the arrival of new customers (mainly Groupama and
Candriam) and assets growth for existing customers. Underlying
operating expenses increased by 7.9% to €218 million. Excluding
scope effect related to the consolidation of S3, underlying
operating expenses increased 2.0% mainly as a result of IT
developments and investments, including some related to the arrival
of new large customers). Underlying gross operating income rose
+9.1% to €63 million and cost/income ratio was 77.6% in fourth
quarter 2020. Net underlying income totalled €53 million, up by
+46.1%. After sharing €17 million with Santander’s non-controlling
interest, the business line’s contribution to underlying net income
Group share posted a drop of -1.1% year-on-year to €36 million.
Underlying revenues increased by +20.5% in 2020
compared to 2019, while underlying operating expenses excluding SRF
increased by +20.2%. Underlying gross operating income increased by
+17.1% and the underlying cost/income ratio excluding SRF was
75.7%, a slight -0.2 percentage point improvement compared to the
same period in 2019. As a result, underlying net
income increased by +34.5%. In the end, the business
line’s contribution to net income Group share was
down -9.1% to €130 million due to the appearance of non-controlling
interests in favour of Santander.
Corporate Centre
An analysis of the negative contribution of the
Corporate Centre looks at both the “structural” contribution and
other items. The “structural” contribution includes three types of
activities:
- the activities and the role of the corporate centre of Crédit
Agricole S.A. holding. This negative contribution reached
-€195 million in fourth quarter 2020, down compared to the fourth
quarter 2019 (-€52 million) due to an unfavourable tax effect
partly offset by lower refinancing costs and temporary gains
related to TLTRO III;
- the sub-divisions that are not part of the core businesses,
such as CACIF (private equity) and CA Immobilier: their
contribution of +€6 million in fourth quarter 2020 shows a
decline compared to fourth quarter 2019 (-€19 million), due to
low fee and commission income at CACIF and the impact of negative
valuations in private equity entities;
- the Group’s support functions: the fourth quarter 2020 recorded
an increase in operating costs due to end-of-year project catch-up
which amounted to -€26 million, down -€19 million.
“Other items” recorded a negative contribution
of -€36 million this quarter, compared to a contribution of +€5
million in fourth quarter 2019. This negative variance is due to
seasonal inflation and the impact of the intra-group eliminations
subscribed by Predica and Amundi.
For 2020, the Corporate Centre division made a
negative contribution of -€733, an improvement of +€80 million
compared 2019. The structural component improved significantly
over the period (+€113 million), in particular with regard to the
activities and functions of the corporate entity Crédit
Agricole S.A.’s corporate centre (+€187 million). The
other items of the business line contributed +€31 million over the
year, down -€33 million.As at 31 December 2020, risk weighted
assets amounted to €26.2 billion.
* *
*
Financial
strength
Crédit Agricole Group
Over the quarter, the phased-in Common Equity
Tier 1 (CET1) ratio up by +0.2 percentage points compared
to end-June 2020 to reach 17.2%. Therefore, Crédit Agricole Group
posted a substantial buffer of 8.3 percentage points between the
level of its CET1 ratio and the 8.9% SREP requirement for Crédit
Agricole Group, compared with 8.1 percentage points at 30 September
2020.
The fully loaded ratio, in other words excluding
the impact of the phasing-in of IFRS 9 incorporated in second
quarter 2020 as part of the “Quick fix”, was 16.9%. The increase
was mainly due to the effect of the stated result (+27 basis
points) and by risk weighted assets (+17 basis points) which
decrease in Large Customers (-€4.3 billion excluding foreign
exchange impact). Risk weighted assets increase in retail banking
(+€0.7 billion excluding foreign exchange impact) of which +1.4
billion for the Regional banks, +€0.3 for LCL and -€1.2 billion for
CA Italia). Dividend and AT1 distribution had a downward impact on
the CET1 amounting to -8 basis points, corresponding to the sum of
the impacts related to the payment of a dividend of €0.80 per
share38 (-18 basis points), to provisions set aside on the
basis of the usual pay-out policy (+12 basis points), and to
AT1 coupons (-2 basis points). The “Methodology &
regulatory effects” contributed to the decrease of the CET1 (-7
basis points), with an impact of the review of internal models
(TRIM: -16 basis point) partially offset by the positive
impact of new software processing (+9 basis points). Finally,
the “M&A, OCI & Others” had a downward impact on
CET1amounting to -2 basis points.
The phased-in leverage ratio stood at 6.1%, an
increase of +0.3 point compared to end-September 2020
(increase at 5.6% compared to end-September 2020 before the
neutralisation of ECB exposures). The phased-in Tier 1 ratio stood
at 18.3%, the phased-in overall ratio was 21.1% and the phased-in
average intra-quarter leverage ratio was 5.3% this quarter, before
exclusion of the Central Bank exposures.
TLAC
The Financial Stability Board (FSB) has defined
the calculation of a ratio aimed at estimating the adequacy of the
bail-in and recapitalisation capacity of Global Systemically
Important Banks (G-SIBs). This
Total Loss Absorbing Capacity (TLAC) ratio provides
resolution authorities with the means to assess whether G-SIBs have
sufficient bail-in and recapitalisation capacity before and during
resolution. It applies to Global Systemically Important Banks, and
therefore to Crédit Agricole Group.
The elements that could absorb losses consist of
equity, subordinated notes and debts to which the Resolution
Authority can apply the bail-in.
The TLAC ratio requirement has been transposed
into European Union law via CRR2 and has been applicable since 27
June 2019. As from that date, Crédit Agricole Group must
comply with the following requirements at all times:
- a TLAC ratio above 16% of risk weighted assets (RWA), plus – in
accordance with CRD5 – a combined capital buffer requirement
(including, for the Crédit Agricole Group, a 2.5% capital
conservation buffer, a 1% G-SIB buffer and the counter-cyclical
buffer). Considering the combined capital buffer requirement,
Crédit Agricole Group must adhere to a TLAC ratio of above 19.5%
(plus the counter-cyclical buffer)
- a TLAC ratio of above 6% of the Leverage Ratio Exposure
(LRE).
As from 1 January 2022, the minimum TLAC
requirements will increase to 18% of risk weighted assets – plus
the combined buffer requirement at that date – and 6.75% of the
leverage ratio exposure.
At 31 December 2020,
Crédit Agricole Group’s TLAC ratio stood
at 25.5% of RWAs and 8.5% of leverage ratio exposure,
excluding eligible senior preferred debt39. The TLAC ratio
rose 60bp compared to 30 September 2020, hand-in-hand with the
first social bond issuance, realised in senior non-preferred
format, for €1 billion in December, the increase in own funds
during the quarter and the low increase in RWAs. Expressed as a
percentage of the leverage ratio exposure (LRE), the TLAC ratio
rose 40bp, taking into account the neutralisation of Central Bank
exposures (it would stand at 7.7% before such neutralisation of
these exposures). It exceeded the required 19.5% of RWAs (according
to CRR2/CRD5, plus, at 31 December 2020, the counter-cyclical
buffer of 0.01%) and 6% of the leverage ratio exposure,
respectively, despite the fact that it was possible at that date to
include up to 2.5% of RWAs in eligible senior preferred debt.
Achievement of the TLAC ratio is supported by a
TLAC debt issuance program of around €6 billion to €8
billion in the wholesale market in 2020. At 31 December
2020, €8.4 billion equivalent had been issued in the market; the
amount of the Crédit Agricole Group senior non-preferred debt
taken into account in the computation of the TLAC ratio was €23.9
billion.
MREL
The MREL (Minimum Requirement for Own Funds and
Eligible Liabilities) ratio is defined in the European “Bank
Recovery and Resolution Directive” (BRRD). This Directive
establishes a framework for the resolution of banks throughout the
European Union, with the aim to provide resolution authorities with
shared instruments and powers to pre-emptively tackle banking
crises, preserve financial stability and reduce taxpayers’ exposure
to losses. Directive (EU) 2019/879 of 20 May 2019 known as “BRRD2”
amended the BRRD and was transposed into French law by Order
2020-1636 of 21 December 2020.
The MREL ratio corresponds to an own funds and
eligible liabilities buffer required to absorb losses in the event
of resolution. The required minimum levels are decisions taken by
resolution authorities and then communicated to each institution,
then revised periodically.
In 2020, Crédit Agricole Group was notified of
the revision of its total consolidated MREL requirement and of a
new subordinated MREL requirement (from which senior debt are
generally excluded in line with the TLAC standards). These two
requirements were already met by the Group at the time of their
notification. The two requirements were calibrated under BRRD and
are applicable until the next notification, which will include the
changes to the European regulatory framework (i.e. BRRD2).
Under BRRD, the MREL ratio is calculated as the
amount of own funds and eligible liabilities expressed as a
percentage of the institution’s total liabilities and own funds,
after certain prudential adjustments (TLOF40), or expressed as risk
weighted assets (RWA). Regulatory capital, as well as subordinated
notes, senior non-preferred debt instruments and certain senior
preferred debt instruments with residual maturities of more than
one year are eligible for the numerator of the MREL ratio.
Crédit Agricole Group’s target is to
reach a subordinated MREL ratio (excluding eligible senior
preferred debt) of 24-25% of the RWAs by the end of 2022 and to
maintain the subordinated MREL ratio above 8% of TLOF.
This level would enable recourse to the Single Resolution Fund
(subject to the decision of the resolution authority) before
applying the bail-in to senior preferred debt, creating an
additional layer of protection for investors in senior preferred
debt.
At 31 December 2020, Crédit Agricole
Group posted an estimated MREL ratio 41 of around
11% of the TLOF and 8.5% excluding eligible senior preferred
debt. Expressed as a percentage of risk weighted assets,
the Crédit Agricole Group’s estimated MREL ratio was approximately
33% at end-December 2020. It was 25.5%
excluding eligible senior preferred debt. The MTP
target regarding subordinated MREL has been met since September
2020.
Maximum Distributable Amount (MDA)
trigger
The transposition of Basel regulations into
European law (CRD) introduced a restriction mechanism for
distribution that applies to dividends, AT1 instruments and
variable compensation. The Maximum Distributable Amount (MDA, the
maximum sum a bank is allowed to allocate to distributions)
principle aims to place limitations on distributions in the event
the latter were to result in non-compliance with combined buffer
requirements.
The distance to the MDA trigger is the lowest of
the respective distances to the SREP requirements in CET1 capital,
Tier 1 capital and total capital. As from 12 March 2020 and
considering the impact of the COVID-19 crisis, the European Central
Bank brought forward the effective date of application of Article
104a of CRD5 and allowed institutions under its supervision to use
Tier 1 and Tier 2 capital to meet the additional Pillar 2
requirement (P2R). Overall, the P2R can now be met with 75% Tier 1
capital including as a minimum 75% CET1 capital. The CET1
requirement of Crédit Agricole S.A. and Crédit Agricole Group has
thus decreased by -66 basis points since first quarter 2020.
At 31 December 2020, Crédit Agricole
Group posted a buffer of 764 basis points above
the MDA trigger, i.e. €43 billion in CET1 capital.
At 31 December 2020, Crédit Agricole
S.A. posted a buffer of 525 basis points above the
MDA trigger, i.e. €18 billion in CET1 capital.
Crédit Agricole S.A.
At end-December 2020, Crédit Agricole S.A.’s
solvency remained at a high level, with a phased-in Common
Equity Tier 1 (CET1) ratio of 13.1% (i.e. including the
impact of the IFRS 9 phasing-in incorporated in second quarter
2020 as part of the as part of the “quick fix”), up
+0.5 percentage points compared to end-September 2020,
5.2 percent points above the SREP. The fully loaded ratio is
12.9%. The CET1 ratio benefited this quarter from the
effect of the stated result, generating a positive impact of +30
basis points, the dividend and AT1 distribution : +5 basis
points corresponding to the sum of the impacts related to the
payment of a dividend of €0.80 per share for financial year 202042
(-27 basis points), to provisions set aside on the basis of
the usual pay-out policy (+34 basis points), and to AT1
coupons (-2 basis points). Risk weighted assets had an upward
impact on CET1 amounting to +33 basis points while impact of the
methodology and regulatory effects had a negative impact amounting
-6 basis point, with an impact of the review of internal models
(TRIM: -20 basis points), partially offset by the favourable
impact of new software processing (+14 basis points). Finally,
the ratio include a negative impact of -7 basis points in the
“M&A, OCI & Others” item, notably due to M&A, capital
increase reserved for employees (+5 basis points), unrealised
gains and/or losses on securities portfolios and foreign exchange
impact. In the end, Crédit Agricole S.A. had a substantial buffer
of 5.2 percentage points between the level of its CET1 ratio
and the 7.9% SREP requirement, compared with 4.7 percentage points
at 30 September 2020. The phased-in leverage ratio was 4.0% at
end-December 2020, up +0.4 percentage point from end-September 2020
(up at 4.2% compared to end-September 2020, before neutralisation
of ECB exposures). The phased-in average intra-quarter leverage
ratio was 4.0% before the neutralisation of ECB exposures, the
phased-in Tier 1 ratio was 14.9% and the phased-in overall ratio
was 19.2% this quarter.
Risk weighted assets amounted to €336 billion at
end-December 2020, stable compared to the end-September (-0,5%).
The business lines’ contribution was negative in the amount of
-€5.6 billion, (of which -€1.9 billion in foreign exchange impact)
due to a decrease in risk weighted assets in the Large customers
business line (-€4,5 billion excluding foreign exchange impact).
Risk weighted assets in Retail banking decrease (-€1.2 billion
excluding foreign exchange impact of which -€1.3 billion in CA
Italia related to the disposal of NPL). The increase in the
equity-accounted value of insurance had an upward impact on risk
weighted assets in the amount of +€0.5 billion. The “Methodology
& regulatory effects & M&A” item had a upward impact on
risk weighted assets amounting to +€5.6 billion, the increase is
mainly related to the review of internal models (TRIM:
+€5.2 billion).
Liquidity and Funding
Liquidity is measured at
Crédit Agricole Group level.
In order to provide simple, relevant and
auditable information on the Group’s liquidity position, the
banking cash balance sheet’s stable resources surplus is calculated
quarterly.
The banking cash balance sheet is derived from
Crédit Agricole Group’s IFRS financial statements. It is based on
the definition of a mapping table between the Group’s IFRS
financial statements and the sections of the cash balance sheet as
they appear in the next table and whose definition is commonly
accepted in the marketplace. It relates to the banking scope, with
insurance activities being managed in accordance with their own
specific prudential constraints.
Further to the breakdown of the IFRS financial
statements in the sections of the cash balance sheet, netting
calculations are carried out. They relate to certain assets and
liabilities that have a symmetrical impact in terms of liquidity
risk. Deferred taxes, fair value impacts, collective impairments,
short-selling transactions and other assets and liabilities were
netted for a total of €71 billion at end-December 2020. Similarly,
€96 billion in repos/reverse repos were eliminated insofar as these
outstandings reflect the activity of the securities desk carrying
out securities borrowing and lending operations that offset each
other. Other nettings calculated in order to build the cash balance
sheet—for an amount totalling €169 billion at end-December
2020—relate to derivatives, margin calls,
adjustment/settlement/liaison accounts and to non-liquid securities
held by the Corporate and Investment banking division and are
included in the “Customer-related trading assets” section.
Note that deposits centralised with Caisse des
Dépôts et Consignations are not netted in order to build the cash
balance sheet; the amount of centralised deposits
(€65 billion at end-December 2020) is booked to assets
under “Customer-related trading assets” and to liabilities under
“Customer-related funds”.
In a final stage, other restatements reassign
outstandings that accounting standards allocate to one section,
when they are economically related to another. As such, senior
issues placed through the banking networks as well as financing by
the European Investment Bank, the
Caisse des Dépôts et Consignations and other
refinancing transactions of the same type backed by customer loans,
which accounting standards would classify as “Medium long-term
market funds”, are reclassified as “Customer-related funds”.
Note that for central bank refinancing
transactions, outstandings related to the T-LTRO (Targeted
Longer-Term Refinancing Operation) are included in “Long-term
market funds”. Indeed, the T-LTRO 2 and T-LTRO 3 operations do not
allow for early redemption at the ECB’s discretion; given
respectively their four-year and three-year contractual maturity,
they are deemed equivalent to long-term secured refinancing,
identical in liquidity risk terms to a secured issue.
Medium/long-term repos are also included in
“Long term market funds”.
Finally, the CIB’s counterparties that are banks
with which we have a commercial relationship are considered as
customers in the construction of the cash balance sheet.
Standing at €1,500 billion at 31 December 2020,
the Group's banking cash balance sheet shows a surplus of
stable funding resources over stable application of funds of €265
billion, up €16 billion compared to September 2020 and up
€139 billion compared to December 2019.
In line with initiatives already undertaken
during the past quarters in connection with the Covid-19 crisis,
the Group took part in December 2020 once again in the T-LTRO 3
medium-to-long-term refinancing transactions of the European
Central Bank for €10.8 billion, increasing its level of stable
resources. Total T-LTLRO 3 outstandings for the Group amounts to
€133 billion43 at 31 December 2020. Note that the bonification
applicable to the refinancing rate for these operations is accrued
over the drawdown period and the additional bonification is accrued
over one year, as the Group already meets the lending trigger
Moreover, the Group has once again benefited
from an increase of deposit during the quarter, however more
modest. Over the quarter, deposits were up +€10 billion, while
loans were up +€7 billion, also contributing to the improvement of
stable resources.
The surplus of 265 billion euros,
known as “stable resources position”, allows the Group to cover the
LCR deficit generated by long term assets and stable liabilities
(customer, tangible and intangible assets, long-term funds, own
funds). Internal management excludes the temporary surplus of
stable resources provided by the increase in T-LTRO 3 oustandings
in order to secure the Medium-Term Plan’s objective of more than
€100 billion, regardless of the future repayment strategy. The
ratio of stable resources over long term applications of funds was
123.5%, up 1.3pp compared to the previous quarter.
Furthermore, given the excess liquidity, the
Group remained in a short-term lending position at 31 December 2020
(central bank deposits exceeding the amount of short-term
debt).
Medium-to-long-term market resources
were €321 billion at 31 December 2020, up +€8 billion
compared to end-September 2020.
They include senior secured debt of
€199 billion, senior preferred debt of €79 billion,
senior non-preferred debt of €24 billion and Tier 2
securities amounting to €19 billion.
The increase in senior secured debt is explained
by the Group taking part in the T-LTRO 3 transactions of the
European Central Bank.
At 31 December 2020, the Group’s
liquidity reserves, at market value and after haircuts, amounted to
€438 billion, up +€34 billion from end-September 2020
and up +€140 billion from 31 December 2019. They covered short-term
debt more than four times over (excluding the replacements with
Central Banks).
The high level of central bank deposits was the
result of the replacement of significant excess liquidity: they
amount to €186 billion at December 31, 2020, up +€8 billion
compared to end-September 2020 and up +€80 billion compared to
end-December 2019. Crédit Agricole Group has furthermore pursue its
efforts to increase immediate available reserves (after recourse to
ECB financing). Eligible central bank assets after haircut amount
to €102 billion, up +€18 billion compared to end-September 2020 and
+€32 billion compared to end-December 2019.
At end-December 2020, the numerator of the
LCR ratio (including the HQLA securities portfolio, cash and
central bank deposits, excluding mandatory reserves), calculated as
an average over 12 months, stood respectively at
€314.3 billion for Crédit Agricole Group and at
€283.1 billion for Crédit Agricole S.A. The
denominator of the ratio (representing net cash outflows),
calculated as an average over 12 months, stood respectively at
€211.0 billion for Crédit Agricole Group and at
€191.0 billion for Crédit Agricole S.A.
The average LCR ratios over 12 months of
Crédit Agricole Group and of Crédit Agricole S.A. stood at
respectively 149.0% and 148.2% at end-December 2020. They
exceeded the Medium-Term Plan target of around 110%. Credit
Institutions are subject to a threshold for this ratio, set at 100%
from 1 January 2018. The end of period LCR ratios at 31
December 2020 are respectively 178.5% for Crédit Agricole Group and
169.4% for Crédit Agricole S.A.
In the context of the COVID-19 health crisis,
the increase in the level of LCR ratios of Crédit Agricole Group
and Crédit Agricole S.A. was in line with the recourse of the Group
to T-LTRO 3 drawings from the central bank.
The Group continues to follow a prudent policy
as regards medium-to-long-term refinancing, with a very diversified
access to markets in terms of investor base and
products.
In 2020, the Group’s main issuers raised
the equivalent of €31.0 billion44 45 in
medium-to-long-term debt on the markets, 41% of which was
issued by Crédit Agricole S.A. To be noted that:
- Crédit Agricole Next Bank (Switzerland) completed an inaugural
issue in September of CHF 200 million 9-year in Covered bond format
;
- Crédit Agricole Assurances (CAA) issued a €1 billion 10-year
Tier 2 bond in July to refinance intra-group subordinated
debt.
In addition, €4.4bn was also borrowed from
national and supranational organisations or placed in the Group’s
retail banking networks (Regional Banks, LCL, CA Italia) and other
external retail networks at end 2020.
In 2020, Crédit Agricole S.A.
completed 105% of its €12 billion medium-to-long-term market
funding program for the year. The bank raised the
equivalent of €12.6 billion44,45, of which €6.2 billion in senior
non-preferred debt and €2.2 billion in Tier 2 debt, as well as €4.0
billion in senior secured debt and €0.2 billion in senior preferred
debt. The funding is diversified with various formats and
currencies (EUR, USD, AUD, JPY, CNY, CHF):
·The inaugural Social bond
issuance in senior non-preferred format of €1bn 7 years in December
should be noted.
As a reminder, Crédit Agricole S.A. announced in
its second quarter 2020 results that the target for senior
non-preferred emissions or Tier 2 issues in 2020 had been revised
to €6 to 8 billion, up from the initial target of €5 to 6
billion.
Crédit Agricole S.A. also repurchased €3.4
billion of preferred senior notes denominated in EUR, USD and GBP
via a public offer launched at the end of May 2020, in order to
optimise its balance sheet structure and debt management and to
provide liquidity to holders of these bonds.
Furthermore, in October 2020 Crédit Agricole
S.A. completed a €750 million PNC7.5 AT1 issuance at the initial
rate of 4% to allow the Crédit Agricole Group to maintain its high
flexibility in the management of its Tier 1 capital. The 2021
program is set at €9 billion, including €7 billion of TLAC-eligible
debt (non-preferred senior debt or Tier 2). At the end January
2021, 29% of the funding plan was realised.
Economic and financial
environment
Overview of 2020
The year 2020, initially marked by an orderly
slowdown in the global economy, financial markets made to feel
optimistic by the reduction in uncertainties (including a China-US
trade agreement) and lasting accommodative monetary policies, will
obviously be marked by the effects of the COVID-19 epidemic.
COVID-19 is a shock unprecedented in nature firstly due to its
disruption of the real economy: an external event that has impacted
the economy globally and affects both supply and demand by forcing
entire business sectors into inactivity, while at the same time
causing consumption to contract with the resulting unintentional
accumulation of extensive savings. The magnitude of the shock is
another point of difference, being much greater than the 2008-2009
crisis. As early as April, the IMF thus delivered a forecast of a
contraction of world GDP of -3% in 2020 (compared to a -0.1%
decline in 2009). In June, the IMF stated that it expected a
recession of -4.9% in 2020 followed by a recovery of 5.4% in 2021.
In October, the forecasts of a recession followed by global
recovery were both slightly revised (-4.4% followed 5.2%) to
finally be revised favourably in January 2021 (-3.5% and 5.5%).
To cushion the anticipated recession and
prevent the public health and economic crisis from being coupled
with a financial crisis, we have thus witnessed the rapid and
generalised implementation of monetary and budgetary support
policies unprecedented in terms of size and capacity to overcome
constraints. In monetary matters, central banks have had
recourse to diverse combinations of various tools, while pursuing
similar targets: easing of financing conditions, efficient
transmission of monetary policy, better functioning of the
financial and credit markets and, in the case of the ECB, easing of
tensions on the most vulnerable sovereign bond spreads in the
Eurozone. Thanks to massive support plans (partial unemployment,
aid to the most vulnerable populations, temporary reduction in
social contributions, deferral of tax charges and social security
costs, public guarantees on loans to companies, government equity
investments), the budgetary policies have sought to soften the
shock by limiting the destruction of jobs and production capacities
in order to ensure the best possible restart, once the pandemic has
passed. While monetary and budgetary policies have made it possible
to avoid a financial crisis and attenuate the recessionary effect
of the pandemic, its effect has nonetheless been considerable but
of varying magnitude by country depending, notably, on the
countries’ structural features (structure of GDP, employment,
weight of different sectors), how robust they were pre-crisis,
their public health strategies and how much leeway they had.
In the United States, in mid-March, the
Federal Reserve took a series of radical easing
measures,46 some of which were then extended and
supplemented in order to ensure a supply of liquidity to banks and
markets (unlimited asset buying, expansion of the universe of
purchasable securities). This accommodative stance was also
reinforced by the adoption of average inflation targeting which
explicitly allows the inflation target to be exceeded after periods
in which inflation has been consistently below 2%. After its
December meeting, the Federal Reserve made it clear that it would
maintain an accommodative stance and its key rates at zero for an
extended period as evidenced by the ‘dot plot’, in which the median
projection of members of the FOMC shows unchanged rates until at
least 2023. While feeling comfortable with the current set up, the
Fed has said it was ready to do more (more bond purchases and/or
maturity extensions) if necessary.
The US budgetary response was also rapid
(March) and massive, in the form of a support plan known as the
Coronavirus Aid, Relief, and Economic Security (CARES) Act
(totalling nearly $2,200 billion (i.e.10% of GDP) aimed at
providing financial assistance or relief to households and
businesses, but also to hospitals and states. The flagship measures
included the direct stimulus payment to low and moderate income
households, an unemployment insurance assistance plan (authorising
the extension of unemployment benefits which normally fall under
the competence of the states), financial support to SMEs
($350 billion), loans to large corporates, to states and local
governments ($500 billion), the release of loans to hospitals
($150 billion). An additional budget plan ($484 billion
i.e. just over 2% of GDP), aimed at strengthening the CARES Act of
March and "lengthening" the loan program for SMEs, was adopted in
April.
In 202047, the US budget deficit therefore
widened by nearly 10 points to 14.9% of GDP, while the debt grew by
+20 percentage points to reach 100% of GDP. Activity nonetheless
fluctuated throughout the year. After a decline of -1.3% in the
first quarter (non-annualised quarterly change), the decline in GDP
in the second quarter was violent (-9%) but followed by a more
sustained rebound than expected (+7.5 % in the third quarter).
Owing to the resurgence of the pandemic, the improvement in the
labour market came to a halt in December (after peaking at 14.8% in
May, the unemployment rate reached 6.7% against 3.5% before the
crisis). In the fourth quarter, economic activity grew only +1%.
Despite massive monetary and budgetary support, the
recession in the end stood at -3.5% (-2.5% in 2009); GDP was 2.5%
below its pre-crisis level (end of 2019) and inflation reached 1.4%
at end December.
In the Eurozone, from March onwards, the
ECB deployed aggressive accommodative measures which it then
adapted to prevent any undesirable tightening of financial
conditions: increase in Quantitative Easing (additional
envelope of €120 billion), launch of a new temporary
purchasing program (Pandemic Emergency Purchase Program or PEPP of
€750 billion, initially until the end of 2020, purchases not
constrained by the limit of holding no more than 33% of any one
bond or issuer, which makes for easier compliance with the capital
distribution key), introduction of transitional Long Term
Refinancing Operations (LTRO) until June 2020 (with more favourable
conditions as well as less stringent rules for collateral), easing
of the TLTRO III conditions, new long-term refinancing operations
Pandemic Emergency Longer-Term Operations (PELTRO) and, lastly,
measures to alleviate the solvency and liquidity constraints on the
banking sector. At the end of December, faced with the more severe
impact of the second wave of the pandemic on the short-term
scenario and the high uncertainties about growth (for which it
revised the 2021 forecast downwards from 5% to 3.9%), the ECB sent
a very clear signal of substantial and, above all, lasting
presence; it renewed its incentive to lend to banks and its
commitment to limit pressure on the risk premiums of vulnerable
sovereigns: recalibration of the third series of targeted
longer-term refinancing operations (TLTRO III, extension until June
2022 of the period during which very favourable conditions adopted
in terms of interest rates48 and easing of collateral apply), three
additional operations planned for 2021 (June, September, December),
increase in the total amount that the counterparties will be
authorised to borrow during TLTRO III, four additional refinancing
operations (PELTRO, from March to December 2021 for a period of one
year), additional budget of €500 billion dedicated to the PEPP
(a total of €1,850 billion), extension of the horizon for net
purchases to the end of March 2022, reinvestment of principal
repayment of maturing securities extended at least until the end of
2023.
The Eurozone’s fiscal policy also
quickly took an expansionary turn with national measures
(support for the healthcare system, businesses and employment,
public guarantees on new business loans). By easing constraints on
national policies through the suspension of budgetary rules, the
European Commission enabled the countries to respond immediately to
the crisis. Faced with such diverse national latitudes that posed
the risk of a detrimental fragmentation to the market and to the
single currency, the pooling of resources was essential. The
existing funds were first mobilised49. As the scale of the
crisis became clear, new pooled resources financed by debt
emerged: the SURE fund (support to mitigate unemployment
risks, €100 billion), investment guarantees by the EIB
(€200 billion), a proposal from the European
Commission in favour of a recovery and reconstruction support fund,
redistributing in favour of the poorest countries and those most
affected by the crisis: the Recovery Fund (i.e.
€750 billion raised by bond issue guaranteed by the EU
budget).
In 2020, the boost to the economy provided by
fiscal policy was slightly less than 4 percentage points of GDP on
average in the Eurozone. Coupled with the cyclical deterioration of
the budget balance (4 percentage points of GDP), the public deficit
widened by almost 9.3% on average in the Eurozone and led to a
sharp increase in public debt (almost 18 points on average to reach
just over 104% of GDP). Despite monetary and fiscal arrangements,
the economy nonetheless evolved with the pandemic and the mobility
restriction measures it imposed. After an already substantial
decline in the first quarter (-3.7% quarter-on-quarter), GDP fell
by -11.7% in the second quarter before recording a spectacular
rebound that was more robust than expected (+12.5%). In the last
quarter, the decline was less severe than expected (-0.7%).
While inflation fell back (-0.3%, year-on-year in December;
0.3% on average), the recession thus reached 6.8% in 2020 (compared
to -4.5% in 2009), leaving GDP down -5.1% on its level at end 2019
and showing significant differences between the large Eurozone
countries. For example, in Germany, after almost zero
growth in the fourth quarter, GDP recorded an average contraction
of 5.3% over 2020, which remains "limited" notably in view of the
financial crisis of 2009 (a -5.7% decline).
In France, after a sharp rebound, the lockdown
in November led to a smaller-than-expected contraction in GDP
(-1.3% in the fourth quarter), less than estimated. Over full year
2020, GDP fell by -8.3%, a shock much greater than that of the 2009
crisis (-2.9%), but ultimately lower than what had been anticipated
in the scenario of December or by the economists ‘scenario which
planned a contraction by around 9%. With a less maturity and
extent, the second lockdown has been less negative for the economy
than the spring’s one. Thus, the level of activity in the fourth
quarter is lower by 5% compared to the fourth quarter 2019, last
quarter with a “normal” level of activity, whereas the
second quarter 2020 was lower by 18.8%. In the fourth
quarter, the contraction of activity is mainly due to the decline
in consumption, caused by administrative closures and curfew
measures. On the other hand, the investment continues its recovery
thanks to the continuation of the activity in sectors such as
building, and capital goods production.
By posting even moderate growth (around
2.3%), China was ultimately the only G20 economy not to have
suffered a recession in 2020. After a historically low
first quarter, Chinese activity was revived thanks to a policy
focused on supply (support for companies through public orders and
lines of credit). A two-speed recovery has thus started with, on
the one hand, a V-shaped recovery for industrial production,
exports and public investment and, on the other hand, a more
gradual rebound in consumption, private investment and imports.
Despite the recovery, almost a year after the public health crisis,
some stigmas are still visible: retail sales, just like certain
service activities (requiring a physical presence) have not caught
up to their 2019 level and job creation is still insufficient to
offset the destruction that took place in early 2020 and absorb new
entrants.
In 2020, monetary activism made it
possible to prevent the economic crisis from being coupled with a
financial crisis: a clear success in view, on the one hand, of the
shock to the real economy and, on the other hand, of the threats
that hovered at the beginning of the year, particularly within the
Eurozone. In the wake of a powerful wave of risk aversion,
in March, the German ten-year interest rate plunged to -0.86%, a
low quickly followed by a violent widening of risk premiums paid by
the other countries. Risk premiums offered by France, Spain and
Italy peaked at 66 basis points (bp), 147 bp and 280 bp,
respectively, in mid-March. Completed by the European Recovery
Fund, the monetary policy measures rolled out by the ECB made it
possible, if not to significantly raise German rates, then to avoid
a fragmentation of the Eurozone and to encourage the appreciation
of the euro against the dollar (9% over the full year). At end
December, while the Bund stood at -0.57%, French, Italian and
Spanish spreads were only 23 bp, 62 bp and 111 bp
respectively. US rates (10-year US Treasuries), which started from
1.90% at the beginning of the year, fell back to 0.50% in March and
then moved within a relatively narrow range (0.60%-0.90%). At its
15-16 December meeting, the Fed opted for the status quo but
confirmed that it was still possible, if necessary, to increase its
bond purchases and extend their maturity. Rates therefore rose
slightly before quickly easing off. Having followed a slow upward
trend since the summer, rates ended the year at 0.91%. Finally, the
abundance of liquidity and the commitment to maintain accommodative
monetary conditions provided by central banks supported riskier
markets. Thus, for example, while American and European equities
posted declines of respectively -30% and -37% in mid-March compared
to their level at the beginning of January, they ended the year
with a respectable rise (+14%) and a limited decline (-6.5%).
2021 Outlook
The economic outlook is still clouded by major
uncertainties related to problems in exiting the public health
crisis (persistent virulence of the pandemic, more contagious virus
mutations, a new rise in infections, and ongoing uncertainty about
whether vaccination will lead to immunity). The profile and pace of
growth will therefore continue to be impacted by the pandemic and
the delicate trade-off between growth and public health safety.
After a lacklustre first half, recovery should be very modest and
very disparate, despite monetary and budgetary infusions. The major
economies will continue to be helped out by massive budgetary
support, highly accommodating monetary policies and favourable
financial conditions. While some key markers may still fall (as in
the scenario of negative interest rates in the UK, which cannot be
ruled out), it seems that easing exercises have come to an end (in
the sense that there will be no new tools) and reliance will now
have to be on improving/extending existing mechanisms. Budgetary
policy will be decisive in delivering short-term support and then
stimulating the economy once the situation is “normalised”. As is
being demonstrated in Japan, where monetary innovation seems highly
advanced, budgetary policy is playing a more direct role in
reducing the output gap. This has the support of Bank of Japan,
which is acting as an “integrated stabiliser” of long rates by
controlling the yield curve.
In the United States, at a time
when the resurgence of the virus poses a risk of sharp deceleration
in first half 2021, the election of Joe Biden as President and the
control of both houses of Congress by the Democrats is expected to
result in additional stimulus measures on top of the $900-billion
deal negotiated at the end of 2020. In fact, Joe Biden has already
proposed a new stimulus bill worth $1.9 trillion. However,
political constraints make it unlikely that a bill of that size
will pass (a stimulus of around $1 trillion is more likely).
In January, the Federal Reserve, with its wait-and-see attitude,
extended its status quo,50 while noting that the economy was
slowing, that its scenario for boosting economic recovery in the
second half was contingent on the progress of immunisation and that
rumours of tapering were premature. Consequently, while budgetary
support could contribute 1 percentage point to US growth, growth
will not start to accelerate until the second half, once the
vaccine rollout is more widespread and restrictions are eased, at
which point it should be close to 4% (as an annual
average).
In the Eurozone, uncertainty as
to when the pandemic will be under control and the lack of a clear
view of the economic situation will continue to weigh on spending
decisions, both by consumers (risk of precautionary savings) and
investors, throughout 2021. The risk of a massive and early
withdrawal of budgetary support measures seems to be ruled out for
2021: the risk (including of business failures and increased
unemployment) is expected to materialise later, once business
activity begins to return to normal. Our scenario assumes
growth in 2021 close to 3.8% (with a now-downward bias). Depending
on structural characteristics (sectoral composition of supply and
employment, services weighting, export capacity, adequacy of
exported products, etc.) and national strategies (health/economy
trade-offs, abundance and effectiveness of support measures), there
will be enormous diversity in both the impact of the crisis and the
speed and strength of the recovery. Our scenario assumes average
growth rates close to 2.5% in Germany, 5.9% in France and 4% in
Italy. At end 2021, the Eurozone’s GDP is expected to be 2.4% below
its pre-crisis level (i.e. at end 2019). While this gap should be
limited to 2% in Germany, it is expected to be close to 7.4% in
Spain and around 2.2% and 3.9% in France and Italy
respectively.
The announcements made by the ECB in December
removed any prospect of normalised monetary policy. The ECB has
offered reassurance that there will be no early rise in interest
rates while additional budgetary efforts are being rolled out and
guaranteed its presence in the sovereign market until 2023. It is
working to maintain the credit supply provided in recent months,
ensuring banks have favourable conditions. In the medium term, the
key issues are therefore less about the sustainability of public
debt than about governance and the ability to mobilise public funds
to organise a response to the crisis.
The United Kingdom left the
single market and customs union on 1 January 2021, with a
last-minute free-trade agreement. This avoids customs duties and
quotas (subject to compliance with fair competition rules and rules
of origin) but involves significant non-tariff barriers.
Frictionless trade in goods and services has therefore come to an
end, as has the free movement of people. In addition to the
disruptions associated with setting up a new post-Brexit
relationship, there are also the consequences of the pandemic:
following a major contraction in 2020 estimated at -11.1%, growth
is expected to be close to 4.5% in 2021, leaving GDP at the end of
2021 3.8% below its 2019 pre-crisis level.
In emerging markets, after a
contraction of just under 3% in 2020, recovery looks to be close to
5.5%. However, this figure masks substantial diversity: an optical
illusion that conceals both the immediate effects of the crisis,
mostly the result of monetary and budgetary constraints that are
more severe in emerging markets than in the developed world, and
its lasting consequences in the form of a widening of the
structural gap between the emerging markets in Asia and the others.
Asia (particularly North Asia) has suffered less and is getting
ready to rebound, led by China. At the fifth plenum, the Chinese
authorities made public the initial objectives of the country’s
14th Five-Year Plan. The plan aims for “sound and sustainable
development” promoting “quality growth” with no formal economic
growth target, perhaps to allow for more flexibility in economic
policymaking. China is expected to rebound strongly in 2021 (+8%)
before returning to its projected trajectory in 2022 (+5.1%).
However, it seems unrealistic to count on China’s momentum to
invigorate Asia and promote the recovery of the rest of the world
given the experience of 2009. With most of the catching-up now
done, growth in China has slowed, and the country no longer has the
means to tow the rest of the world in its wake. And nor does it
want to. Its latest so-called “dual circulation” strategy, aimed at
limiting its dependence on overseas markets, is proof of this.
A slow, uncertain and probably chaotic
recovery, multiple uncertainties and monetary easing are all
conditions conducive to maintaining extremely low interest
rates. It will be necessary to wait until favourable news
finally emerges, in terms of public health as well as the economy,
before recovery can start to take shape – a start limited by the
absence of inflation and excess capacity. In the meantime, progress
made by the Eurozone can be judged by past interest rate changes:
clear solidarity has avoided fragmentation, risk premiums paid by
the so-called “peripheral” countries have been tightened, and the
euro has put in a solid performance. Our scenario therefore assumes
US and German 10-year sovereign rates of close to 1.50% and -0.40%
respectively at end 2021, coupled with spreads of 20 basis
points (bp), 50 bp and 100 bp above the Bund for France,
Spain and Italy where it is assumed that political tensions will
ease.
In keeping with a scenario where
recovery might even be slow, timid and unsynchronised, the dollar
could depreciate very slightly against the euro and currencies that
are more procyclical or driven by risk appetite. The
dollar's depreciation would, however, be tempered by the resurgence
of Sino-American tensions that weigh on Asian currencies in
particular: the current crisis has only temporarily overshadowed
the dissent between the United States and China. While the
timetable is uncertain (the US still has to install the new
administration, manage its domestic problems and rebuild its global
alliances), and despite the fact that Joe Biden’s presidency augurs
a change in tone, the roots of the conflict remain. The rise of
protectionism and political risk hampered hyper-globalisation: the
crisis should favour greater regionalisation of growth centres, as
evidenced by the signing of the Regional Comprehensive Economic
Partnership uniting China, ASEAN member countries and key US allies
(Australia, South Korea, Japan and New Zealand).
Risk factors of Crédit Agricole
S.A.
The main risks to which Crédit Agricole S.A. and
the Crédit Agricole Group are exposed are set out respectively on
pages 123 to 134 and 135 to 147 of Amendment A03 to the 2019
Universal Registration Document.
In Amendment A04 to the Universal Registration
Document 2019 pertaining to risk factors to which Crédit Agricole
S.A. is exposed, risk factor A 4. a) “The ongoing coronavirus
(COVID-19) pandemic may negatively affect the business, operations
and financial performance of Crédit Agricole S.A.” is presented
page 125 :
a) “The ongoing
coronavirus (COVID-19) pandemic may negatively affect the business,
operations and financial performance of Crédit Agricole S.A.
In December 2019, a new coronavirus strain
(COVID-19) appeared in China. The virus has spread to many
countries around the world, leading the World Health Organisation
to describe the situation as a pandemic in March 2020. The pandemic
has had and is expected to continue to have significant negative
impacts on the world economy and financial markets.
The spread of COVID-19 and resulting government
controls and travel bans implemented around the world have caused
disruption to global supply chains and economic activity. The
outbreak has led to supply and demand shocks, resulting in a marked
slowdown in economic activity, due to the impact of containment
measures on consumption, as well as production difficulties, supply
chain disruptions and a slowdown of investment. Financial markets
have been significantly impacted, with increased volatility, stock
market indexes declining precipitously, falls in commodity prices
and credit spreads widening for many borrowers and issuers. The
extent of the adverse impact of the pandemic on the global economy
and markets over the long term will depend, in part, on its length
and severity, and on the impact of governmental measures taken to
limit the spread of the virus and its impact on the economy.
In this respect, in December 2020, the French Ministry of Economy
and Finance revised its GDP growth forecasts for 2021 downwards to
+5.0% versus +7.4% as previously announced.
The pandemic and its impact on the global
economy and financial markets have had and are likely to continue
to have a material adverse impact on the results of the divisions
and the financial position of Crédit Agricole S.A. This impact
included and is likely to include in the future (1) a deterioration
in the Crédit Agricole Group’s liquidity (which impacts its
Liquidity Coverage Ratio (LCR)) due to various factors including in
particular increased drawing by corporate customers on liquidity
lines (up to 32% at end-April 2020), (2) a decline in revenue due
in particular to (a) reduced production in activities such as home
loans and consumer finance, (b) lower asset management inflows and
banking and insurance fees and commissions and hence lower revenues
from fees and commissions and (c) lower revenues in asset
management and insurance, (3) a higher cost of risk resulting from
a deterioration in the macroeconomic outlook, the granting of
moratoria and, more generally, the deterioration in the repayment
capacity of corporates and consumers, (4) an increased risk of a
ratings downgrade following the sector reviews of certain rating
agencies and following internal reviews of
Crédit Agricole S.A. models and (5) higher Risk Weighted
Assets (RWAs) due to the deterioration of risk parameters, which in
turn could affect Crédit Agricole S.A.’s capital position
(including its solvency ratio).
The health crisis and its effect on the economy
in France, Europe and internationally have had a major impact on
the levels of activity of the various business lines of the Group.
In the course of 2020, several lockdowns have been imposed in
several countries around the world, particularly in France and
Italy, Crédit Agricole Group’s two main domestic markets, with the
following consequences: (1) Retail banking activities were strongly
impacted by the imposed lockdown. Consequently, French retail
banking housing loans in 2020 reached 96% of the business in 2019,
and at CA Italia 102% of 2019. Similarly, 2020 consumer credit
business of CA Consumer Finance was at 86% of 2019, and CAL&F's
leasing was 98% of its 2019 level; (2) Insurance activities were
also impacted by the lockdown. In relation to the risk-aversion by
savers due to the volatility of the financial markets, total net
inflows were +€1.0 billion, versus +€9.5 billion in 2019, and new
non-life insurance business in 2020 reached 91% of new businesses
recorded in 2019; (3) Clients drew heavily on credit lines with
drawdown rates of up to 32% during the second quarter of 2020,
although these drawdowns slowed down at the end of June 2020.
The cost of risk had been affected by the
deterioration in the repayment capabilities of corporates (weakened
companies, fraud revealed by the crisis) and consumers, the rating
downgrades of counterparties whose outstanding move from “Stage 1”
to “Stage 2”, and in particular the sensitivity of some industries
(i) related to restrictions on movement or gatherings of people,
for aeronautics, tourism, hotels, restaurants, cruises, or (ii)
whose demand levels were below normal, such as the automotive and
shipbuilding industries, or lastly, (iii) that remain weak due to
the weight of the global recession on demand in the distribution of
non-food goods, and Oil & Gas sectors. In addition, the
commercial real estate sector is a sector to watch, as the health
crisis has accelerated pre-existing threats in some segments, such
as shopping malls being hurt by online shopping and the office
segment facing structural change if teleworking trends continue. At
31 December 2020, Crédit Agricole S.A. exposures to sectors
considered “sensitive” were as follows: (a) aeronautics with €16.1
billion in Exposure at Default (EAD)51, of which 6.4% in default,
(b) tourism, hotels, restaurants with €7.6 billion in EAD, of which
3.7% in default, (c) the distribution of non-food goods with €13.0
billion in EAD, of which 3.7% in default, (d) automotive, with
€22.5 billion in EAD, of which 0.8% in default, (e) Shipping with
€13.0 billion in EAD of which 4.6% in default, and (f) Oil &
Gas with €22.7 billion in EAD, of which 2.3% in default. These
sectors have been subject to additional provisions to take their
increased sensitivity into account. In the fourth quarter of 2020
the economic scenarios, revised downwards compared to the third
quarter of 2020, also generated an additional burden of Stage 1 and
Stage 2 cost of risk, due in particular to deteriorated GDP growth
forecasts for 2021.
As a result, the underlying results for 2020
amounted to €3,849 million, down -16.0% compared to 2019. This is
mainly explained by the increase in cost of risk reaching €2,606
million at the end of 2020, +€1,350 million compared to 2019.
The health crisis had a greater impact during
the lockdown periods in France and Italy during the second and
fourth quarters. In the second quarter: (1) new home loans
were down in the second quarter of 2020 at LCL (-9.8% compared to
second quarter of 2019) and stable at CA Italia (-0.8%). Similarly,
new consumer finance at Crédit Agricole Consumer Finance was down
-40% in the second quarter of 2020 compared to the second quarter
of 2019. CAL&F also recorded a decline in new leasing business
of -23.9%; (2) Insurance activities were also impacted by the
lockdown. Total net inflows were negative at -€0.9 billion in
second quarter 2020 and Property & Casualty insurance revenues
were slightly down by -0.9% in second quarter 2020 compared to
second quarter 2019; (3) Corporate and Institutional activities
remained dynamic in the second quarter of 2020, but customers drew
heavily on credit lines.
In the fourth quarter of 2020, the new lockdown
imposed in France and in various European countries, while having a
less significant impact on the economy, had the following
consequences for Crédit Agricole S.A. in the fourth quarter of
2020:
(1) retail banking activities were affected
throughout the new business of new loans to individuals (notably
home loans and consumer finance). At LCL and Regional Banks, new
housing loans in the fourth quarter of 2020 were stable reaching
104% of the production recorded over the same period in 2019. But
at CACF, new consumer finance loans during the fourth quarter 2020
represented 97% of the production recorded during the fourth
quarter 2019. CAL&F also recorded a stable leasing production
during the fourth quarter 2020 reaching 101% of the production of
the fourth quarter of 2019.
(2) Inflows in the insurance sectors remained
stable, totalling +€1.0 billion in the fourth quarter of 2020
compared with +€1.0 billion in the fourth quarter of 2019.
Uncertainties continue to weigh on developments
in the health situation in Europe, with the introduction of new
restrictive measures in France and other European countries
(curfews, closing of borders, lockdowns) and the emergence of
variants of the virus. Additional measures are therefore likely to
be imposed, depending on the evolution of the pandemic. Although
vaccines were announced at the end of 2020 and several countries
have begun their phased roll-out, the timing of these roll-outs
also remains highly uncertain, leading to uncertainties about the
pace of recovery from the crisis. Lastly, there exists a
considerable uncertainty about the pace of change and the rate at
which states (particularly the French and Italian states) and
central banks (particularly the European Central Bank) will
implement measures to support the economy.
Lastly, in terms of solvency, the main impacts
of the crisis on the CET1 ratio of Crédit Agricole S.A. were, in
addition to a more modest level of retained earnings, an increase
in risk-weighted assets due to rating downgrades, mainly in
Corporate and Investment Banking (€5.4 billion in 2020). The fully
loaded CET1 ratio of Crédit Agricole S.A. at 31 March thus
deteriorated (11.4%, versus 12.1% at 31 December 2020) and 30 June
2020 (11.7%) before recovering at 30 September 2020 (12.4%) and at
31 December 2020 (12.9%). This increase does not predict the level
the CET1 ratio will reach in the coming quarters. More
specifically, there still remains a high uncertainty regarding the
unemployment rate, the use of accumulated savings, the health
scenario and the timetable for implementing and halting public
measures and, more generally, about the consequences of any changes
in economic activity on retained earnings, risk weighted assets and
regulatory decisions.
Risk factors of Crédit Agricole
Group
The main risks to which Crédit Agricole S.A. and
the Crédit Agricole Group are exposed are set out respectively on
pages 123 to 134 and 135 to 147 of Amendment A03 to the 2019
Universal Registration Document.
In Amendment A04 to the Universal Registration
Document 2019 pertaining to risk factors to which Group Crédit
Agricole is exposed, risk factor A 4. a) “The ongoing coronavirus
(COVID-19) pandemic may negatively affect the business, operations
and financial performance of Group Crédit Agricole” is presented
page 127 :
a) “The ongoing
coronavirus (COVID-19) pandemic may negatively affect the business,
operations and financial performance of Group Crédit Agricole
In December 2019, a new coronavirus strain
(COVID-19) appeared in China. The virus has spread to many
countries around the world, leading the World Health Organisation
to describe the situation as a pandemic in March 2020. The pandemic
has had and is expected to continue to have significant negative
impacts on the world economy and financial markets.
The spread of COVID-19 and resulting government
controls and travel bans implemented around the world have caused
disruption to global supply chains and economic activity. The
outbreak has led to supply and demand shocks, resulting in a marked
slowdown in economic activity, due to the impact of containment
measures on consumption, as well as production difficulties, supply
chain disruptions and a slowdown of investment. Financial markets
have been significantly impacted, with increased volatility, stock
market indexes declining precipitously, falls in commodity prices
and credit spreads widening for many borrowers and issuers. The
extent of the adverse impact of the pandemic on the global economy
and markets over the long term will depend, in part, on its length
and severity, and on the impact of governmental measures taken to
limit the spread of the virus and its impact on the economy.
In this respect, in December 2020, the French Ministry of Economy
and Finance revised its GDP growth forecasts for 2021 downwards to
+5.0% versus +7.4% as previously announced.
The pandemic and its impact on the global
economy and financial markets have had and are likely to continue
to have a material adverse impact on the results of the divisions
and the financial position of Group Crédit Agricole. This impact
included and is likely to include in the future (1) a deterioration
in the Crédit Agricole Group’s liquidity (which impacts its
Liquidity Coverage Ratio (LCR)) due to various factors including in
particular increased drawing by corporate customers on liquidity
lines (up to 32% at end-April 2020), (2) a decline in revenue due
in particular to (a) reduced production in activities such as home
loans and consumer finance, (b) lower asset management inflows and
banking and insurance fees and commissions and hence lower revenues
from fees and commissions and (c) lower revenues in asset
management and insurance, (3) a higher cost of risk resulting from
a deterioration in the macroeconomic outlook, the granting of
moratoria and, more generally, the deterioration in the repayment
capacity of corporates and consumers, (4) an increased risk of a
ratings downgrade following the sector reviews of certain rating
agencies and following internal reviews of Group
Crédit Agricole models and (5) higher Risk Weighted Assets
(RWAs) due to the deterioration of risk parameters, which in turn
could affect Group Crédit Agricole’s capital position (including
its solvency ratio).
The health crisis and its effect on the economy
in France, Europe and internationally have had a major impact on
the levels of activity of the various business lines of the Group.
In the course of 2020, several lockdowns have been imposed in
several countries around the world, particularly in France and
Italy, Crédit Agricole Group’s two main domestic markets, with the
following consequences: (1) Retail banking activities were strongly
impacted by the imposed lockdown. Consequently, French retail
banking housing loans in 2020 reached 96% of the business in 2019,
and at CA Italia 102% of 2019. Similarly, 2020 consumer credit
business of CA Consumer Finance was at 86% of 2019, and CAL&F's
leasing was 98% of its 2019 level; (2) Insurance activities were
also impacted by the lockdown. In relation to the risk-aversion by
savers due to the volatility of the financial markets, total net
inflows were +€1.0 billion, versus +€9.5 billion in 2019, and new
non-life insurance business in 2020 reached 91% of new businesses
recorded in 2019; (3) Clients drew heavily on credit lines with
drawdown rates of up to 32% during the second quarter of 2020,
although these drawdowns slowed down at the end of June 2020.
The cost of risk had been affected by the
deterioration in the repayment capabilities of corporates (weakened
companies, fraud revealed by the crisis) and consumers, the rating
downgrades of counterparties whose outstanding move from “Stage 1”
to “Stage 2”, and in particular the sensitivity of some industries
(i) related to restrictions on movement or gatherings of people,
for aeronautics, tourism, hotels, restaurants, cruises, or (ii)
whose demand levels were below normal, such as the automotive and
shipbuilding industries, or lastly, (iii) that remain weak due to
the weight of the global recession on demand in the distribution of
non-food goods, and Oil & Gas sectors. In addition, the
commercial real estate sector is a sector to watch, as the health
crisis has accelerated pre-existing threats in some segments, such
as shopping malls being hurt by online shopping and the office
segment facing structural change if teleworking trends continue. At
31 December 2020, Crédit Agricole S.A. exposures to sectors
considered “sensitive” were as follows: (a) aeronautics with €16.5
billion in Exposure at Default (EAD)52, of which 6.3% in default,
(b) tourism, hotels, restaurants with €12.0 billion in EAD, of
which 3.7% in default, (c) the distribution of non-food goods with
€19.0 billion in EAD, of which 4.2% in default, (d) automotive,
with €26.3 billion in EAD, of which 0.9% in default, (e) Shipping
with €13.4 billion in EAD of which 5.1% in default, and (f) Oil
& Gas with €23.7 billion in EAD, of which 2.2% in default.
These sectors have been subject to additional provisions to take
their increased sensitivity into account. In the fourth quarter of
2020 the economic scenarios, revised downwards compared to the
third quarter of 2020, also generated an additional burden of Stage
1 and Stage 2 cost of risk, due in particular to deteriorated GDP
growth forecasts for 2021.
As a result, the underlying results for 2020
amounted to €6,129 million, down -14.8% compared to 2019. This is
mainly explained by the increase in cost of risk reaching +€1,895
million at the end of 2020, +€3,651 million compared to 2019.
The health crisis had a greater impact during
the lockdown periods in France and Italy during the second and
fourth quarters. In the second quarter: (1) activities
related to retail banking were strongly impacted by the two months
of lockdown imposed in France and in Italy. New home loans were
down in the second quarter of 2020 within Regional Banks (-14.8% as
compared to the second quarter 2020), at LCL (-9.8% compared to
second quarter of 2019) and stable at CA Italia (-0.8%). Similarly,
new consumer finance at Crédit Agricole Consumer Finance was down
-40% in the second quarter of 2020 compared to the second quarter
of 2019. CAL&F also recorded a decline in new leasing business
of -23.9%; (2) Insurance activities were also impacted by the
lockdown. Total net inflows were negative at -€0.9 billion in
second quarter 2020 and Property & Casualty insurance revenues
were slightly down by -0.9% in second quarter 2020 compared to
second quarter 2019; (3) Corporate and Institutional activities
remained dynamic in the second quarter of 2020, but customers drew
heavily on credit lines.
In the fourth quarter of 2020, the new lockdown
imposed in France and in various European countries, while having a
less significant impact on the economy, had the following
consequences for Crédit Agricole S.A. in the fourth quarter of
2020:
(1) retail banking activities were affected
throughout the new business of new loans to individuals (notably
home loans and consumer finance). At LCL and Regional Banks, new
housing loans in the fourth quarter of 2020 were stable reaching
104% of the production recorded over the same period in 2019. But
at CACF, new consumer finance loans during the fourth quarter 2020
represented 97% of the production recorded during the fourth
quarter 2019. CAL&F also recorded a stable leasing production
during the fourth quarter 2020 reaching 101% of the production of
the fourth quarter of 2019.
(2) Inflows in the insurance sectors remained
stable, totalling +€1.0 billion in the fourth quarter of 2020
compared with +€1.0 billion in the fourth quarter of 2019.
Uncertainties continue to weigh on developments
in the health situation in Europe, with the introduction of new
restrictive measures in France and other European countries
(curfews, closing of borders, lockdowns) and the emergence of
variants of the virus. Additional measures are therefore likely to
be imposed, depending on the evolution of the pandemic. Although
vaccines were announced at the end of 2020 and several countries
have begun their phased roll-out, the timing of these roll-outs
also remains highly uncertain, leading to uncertainties about the
pace of recovery from the crisis. Lastly, there exists a
considerable uncertainty about the pace of change and the rate at
which states (particularly the French and Italian states) and
central banks (particularly the European Central Bank) will
implement measures to support the economy.
Lastly, in terms of solvency, the main impacts
of the crisis on the CET1 ratio of Group Crédit Agricole were, in
addition to a more modest level of retained earnings, an increase
in risk-weighted assets due to rating downgrades, mainly in
Corporate and Investment Banking (€5.4 billion in 2020). The fully
loaded CET1 ratio of Group Crédit Agricole at 31 March thus
deteriorated (15.5%, versus 15.9% at 31 December 2020) and 30 June
2020 (15.8%) before recovering at 30 September 2020 (16.7%) and at
31 December 2020 (16.9%). This increase does not predict the level
the CET1 ratio will reach in the coming quarters. More
specifically, there still remains a high uncertainty regarding the
unemployment rate, the use of accumulated savings, the health
scenario and the timetable for implementing and halting public
measures and, more generally, about the consequences of any changes
in economic activity on retained earnings, risk weighted assets and
regulatory decisions.
Appendix 1 – Specific items, Crédit Agricole
Group and Crédit Agricole S.A.
Crédit Agricole Group - Specific items, Q4-20 et Q4-19,
2020 et 2019
|
|
Q4-20 |
Q4-19 |
|
2020 |
2019 |
€m |
|
Gross impact* |
Impact on Net income |
Gross impact* |
Impact on Net income |
|
Gross impact* |
Impact on Net income |
Gross impact* |
Impact on Net income |
|
|
|
|
|
|
|
|
|
|
|
DVA (LC) |
|
18 |
13 |
(6) |
(4) |
|
11 |
8 |
(21) |
(16) |
Loan portfolio hedges (LC) |
|
(30) |
(21) |
(16) |
(12) |
|
10 |
7 |
(44) |
(32) |
Home Purchase Savings Plans (LCL) |
|
2 |
1 |
(12) |
(8) |
|
(14) |
(9) |
(31) |
(20) |
Home Purchase Savings Plans (CC) |
|
(14) |
(10) |
(32) |
(21) |
|
(64) |
(44) |
(90) |
(59) |
Home Purchase Savings Plans (RB) |
|
52 |
35 |
(137) |
(90) |
|
(81) |
(55) |
(307) |
(201) |
Liability management upfront payment
(CC) |
|
- |
- |
- |
- |
|
(41) |
(28) |
- |
- |
Support to insured clients Covid-19
(AG) |
|
- |
- |
- |
- |
|
(2) |
(1) |
- |
- |
Support to insured clients Covid-19
(AG) |
|
- |
- |
- |
- |
|
(143) |
(97) |
- |
- |
Support to insured clients Covid-19
(RB) |
|
- |
- |
- |
- |
|
(94) |
(64) |
- |
- |
Exceptional contribution on
supplementary health insurance premiums (AG) |
|
(22) |
(15) |
- |
- |
|
(22) |
(15) |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Total impact on revenues |
|
5 |
4 |
(202) |
(135) |
|
(439) |
(298) |
(493) |
(329) |
|
|
|
|
|
|
|
|
|
|
|
Covid-19 donation (AG) |
|
- |
- |
- |
- |
|
(38) |
(38) |
- |
- |
Covid-19 donation (IRB) |
|
- |
- |
- |
- |
|
(8) |
(4) |
- |
- |
Covid-19 donation (CC) |
|
- |
- |
- |
- |
|
(10) |
(10) |
- |
- |
Covid-19 donation (RB) |
|
- |
- |
- |
- |
|
(10) |
(10) |
- |
- |
S3 / Kas Bank integration costs
(LC) |
|
(7) |
(3) |
(15) |
(11) |
|
(19) |
(9) |
(15) |
(11) |
Exceptional contribution to the Italian
banks rescue plan (IRB) |
|
(11) |
(7) |
- |
- |
|
(11) |
(7) |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Total impact on operating expenses |
|
(18) |
(11) |
(15) |
(11) |
- |
(96) |
(79) |
(15) |
(11) |
Triggering of the Switch2 (AG) |
|
- |
- |
- |
- |
|
65 |
44 |
- |
- |
Triggering of the Switch2 (RB) |
|
- |
- |
- |
- |
|
(65) |
(44) |
- |
- |
Adjustement on switch 2 activation
(GEA) |
|
- |
- |
- |
- |
|
(28) |
(19) |
- |
- |
Adjustement on switch 2 activation
(RB) |
|
- |
- |
- |
- |
|
28 |
19 |
- |
- |
Better fortune adjustment on switch
2 (AG) |
|
(38) |
(26) |
- |
- |
|
(38) |
(26) |
- |
- |
Better
fortune adjustment on switch 2 (RB) |
|
38 |
26 |
- |
- |
|
38 |
26 |
- |
- |
Total impact on cost of credit risk |
|
0 |
0 |
- |
- |
- |
0 |
0 |
- |
- |
Crédit Agricole Group - Specific items, Q4-20 et Q4-19,
2020 et 2019
|
|
Q4-20 |
Q4-19 |
|
2020 |
2019 |
€m |
|
Gross impact* |
Impact on Net income |
Gross impact* |
Impact on Net income |
|
Gross impact* |
Impact on Net income |
Gross impact* |
Impact on Net income |
|
|
|
|
|
|
|
|
|
|
|
Impairment LCL goodwill (CC) |
|
- |
- |
(664) |
(664) |
|
- |
- |
(664) |
(664) |
Badwill Kas Bank (LC) |
|
- |
- |
22 |
22 |
|
- |
- |
22 |
22 |
Impairment CA Italia goodwill (CC) |
|
(965) |
(884) |
- |
- |
|
(965) |
(884) |
- |
- |
Total impact on change of value
of goodwill |
|
(965) |
(884) |
(642) |
(642) |
- |
(965) |
(884) |
(642) |
(642) |
Emporiki litigation (CC) |
|
|
- |
|
1,038 |
|
|
- |
|
1,038 |
Total impact on
tax |
|
- |
- |
- |
1,038 |
|
- |
- |
- |
1,038 |
Provision recovery on FCA bank fine (SFS) |
|
89 |
89 |
- |
- |
|
89 |
89 |
- |
- |
Total impact equity-accounted
entities |
|
89 |
89 |
- |
- |
- |
89 |
89 |
- |
- |
Santander/Kas Bank integration costs (LC) |
|
- |
|
(6) |
(5) |
|
|
|
(6) |
(5) |
Total impact on Net income on
other assets |
|
- |
- |
(6) |
(5) |
|
- |
- |
(6) |
(5) |
Impairment on goodwill (SFS) |
|
- |
- |
- |
- |
|
(55) |
(55) |
- |
- |
Reclassification of held-for-sale operations (IRB) |
|
(7) |
(7) |
(46) |
(46) |
|
(7) |
(7) |
(46) |
(46) |
Reclassification of held-for-sale operations (SFS) |
|
(66) |
(66) |
- |
- |
|
(135) |
(135) |
|
- |
Reclassification of held-for-sale operation Bankoa (IRB) |
|
(1) |
(1) |
- |
- |
|
(42) |
(42) |
- |
- |
Reclassification of held-for-sale operations (IRB) |
|
- |
- |
- |
- |
|
(5) |
(5) |
- |
- |
Ongoing sale project (WM) |
|
(24) |
(24) |
- |
- |
|
(24) |
(24) |
- |
- |
Total impact on Net
income from discounted or held-for-sale operations |
(98) |
(98) |
(46) |
(46) |
|
(268) |
(268) |
(46) |
(46) |
|
|
|
|
|
|
|
|
|
|
|
Total impact of specific
items |
|
(987) |
(899) |
(912) |
200 |
|
(1,679) |
(1,440) |
(1,202) |
6 |
Asset gathering |
|
(83) |
(64) |
- |
- |
|
(227) |
(174) |
- |
- |
French Retail banking |
|
91 |
62 |
(149) |
(98) |
|
(206) |
(145) |
(338) |
(222) |
International Retail banking |
|
(20) |
(16) |
(46) |
(46) |
|
(68) |
(60) |
(46) |
(46) |
Specialised financial services |
|
24 |
24 |
- |
- |
|
(45) |
(45) |
- |
- |
Large customers |
|
(19) |
(11) |
(22) |
(10) |
|
3 |
6 |
(65) |
(42) |
Corporate centre |
|
(979) |
(894) |
(696) |
353 |
|
(1,136) |
(1,021) |
(754) |
315 |
* Impact before tax and before minority
interests |
|
|
|
|
|
|
|
|
|
|
Crédit Agricole S.A. - Specific items,
Q4-20 et Q4-19, 2020 et 2019
|
|
Q4-20 |
Q4-19 |
|
2020 |
2019 |
€m |
|
Gross impact* |
Impact on Net income |
Gross impact* |
Impact on Net income |
|
Gross impact* |
Impact on Net income |
Gross impact* |
Impact on Net income |
|
|
|
|
|
|
|
|
|
|
|
DVA (LC) |
|
18 |
13 |
(6) |
(4) |
|
11 |
8 |
(21) |
(15) |
Loan portfolio hedges (LC) |
|
(30) |
(20) |
(16) |
(11) |
|
10 |
7 |
(44) |
(32) |
Home Purchase Savings Plans (FRB) |
|
2 |
1 |
(12) |
(8) |
|
(14) |
(9) |
(31) |
(20) |
Home Purchase Savings Plans (CC) |
|
(14) |
(10) |
(32) |
(21) |
|
(64) |
(44) |
(90) |
(59) |
Liability management upfront payment (CC) |
|
- |
- |
- |
- |
|
(41) |
(28) |
- |
- |
Support to insured clients Covid-19 (LCL) |
|
- |
- |
- |
- |
|
(2) |
(1) |
- |
- |
Support to insured clients Covid-19 (AG) |
|
- |
- |
- |
- |
|
(143) |
(97) |
- |
- |
Exceptional contribution on supplementary health insurance premiums
(AG) |
|
(22) |
(15) |
- |
- |
|
(22) |
(15) |
- |
- |
Total impact on revenues |
|
(47) |
(31) |
(66) |
(44) |
- |
(264) |
(179) |
(186) |
(126) |
|
|
|
|
|
|
|
|
|
|
|
Covid-19 donation (AG) |
|
- |
- |
- |
- |
|
(38) |
(38) |
- |
- |
Covid-19 donation (IRB) |
|
- |
- |
- |
- |
|
(8) |
(4) |
- |
- |
Covid-19 donation (CC) |
|
- |
- |
- |
- |
|
(10) |
(10) |
- |
- |
S3 / Kas Bank integration costs (LC) |
|
(7) |
(3) |
(15) |
(11) |
|
(19) |
(9) |
(15) |
(11) |
|
|
|
|
|
|
|
|
|
|
|
Exceptional contribution to the Italian banks rescue plan
(IRB) |
|
(11) |
(6) |
- |
- |
|
(11) |
(6) |
- |
- |
Total impact on operating expenses |
|
(18) |
(10) |
(15) |
(11) |
- |
(86) |
(68) |
(15) |
(11) |
|
|
|
|
|
|
|
|
|
|
|
Triggering of the Switch2 (AG) |
|
- |
- |
- |
- |
|
65 |
44 |
- |
- |
Adjustement on switch 2 activation (GEA) |
|
- |
- |
- |
- |
|
(28) |
(19) |
- |
- |
Better fortune adjustment on switch 2 (AG) |
|
(38) |
(26) |
- |
- |
|
(38) |
(26) |
- |
- |
Total impact on cost of credit risk |
|
(38) |
(26) |
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Provision recovery on FCA bank fine (SFS) |
|
89 |
89 |
- |
- |
|
89 |
89 |
- |
- |
Total impact equity-accounted entities |
|
89 |
89 |
- |
- |
- |
89 |
89 |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Santander/Kas Bank acquisition costs (LC) |
|
- |
- |
(6) |
(5) |
|
- |
- |
(6) |
(5) |
Total impact Net income on other assets |
|
- |
- |
(6) |
(5) |
- |
- |
- |
(6) |
(5) |
Crédit Agricole S.A. - Specific items, Q4-20 et Q4-19,
2020 et 2019
|
|
Q4-20 |
Q4-19 |
|
2020 |
2019 |
€m |
|
Gross impact* |
Impact on Net income |
Gross impact* |
Impact on Net income |
|
Gross impact* |
Impact on Net income |
Gross impact* |
Impact on Net income |
|
|
|
|
|
|
|
|
|
|
|
Impairment LCL goodwill (CC) |
|
- |
- |
(611) |
(611) |
|
- |
- |
(611) |
(611) |
Badwill Kas Bank (LC) |
|
- |
- |
22 |
22 |
|
- |
- |
22 |
22 |
Impairment CA Italia goodwill (CC) |
|
(903) |
(778) |
- |
- |
|
(903) |
(778) |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Total impact on change of value of goodwill |
|
(903) |
(778) |
(589) |
(589) |
- |
(903) |
(778) |
(589) |
(589) |
|
|
|
|
|
|
|
|
|
|
|
Emporiki litigation (CC) |
|
- |
- |
- |
1,038 |
|
- |
- |
- |
1,038 |
|
|
|
|
|
|
|
|
|
|
|
Total impact on tax |
|
- |
- |
- |
1,038 |
|
- |
- |
- |
1,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of held-for-sale operations (IRB) |
|
(7) |
(7) |
(46) |
(46) |
|
(7) |
(7) |
(46) |
(46) |
Reclassification of held-for-sale operations (SFS) |
|
(66) |
(66) |
- |
- |
|
(135) |
(135) |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Impairment on goodwill (CC) |
|
- |
- |
- |
- |
|
(55) |
(55) |
- |
- |
Ongoing sale project (WM) |
|
(24) |
(23) |
- |
- |
|
(24) |
(23) |
- |
- |
Total impact on Net income from discounted or held-for-sale
operations |
|
(97) |
(96) |
(46) |
(46) |
|
(221) |
(221) |
(46) |
(46) |
|
|
|
|
|
|
|
|
|
|
|
Total impact of specific items |
|
(1,013) |
(851) |
(722) |
343 |
|
(1,385) |
(1,157) |
(843) |
262 |
Asset gathering |
|
(83) |
(64) |
- |
- |
|
(227) |
(174) |
- |
- |
French Retail banking |
|
2 |
1 |
(12) |
(8) |
|
(16) |
(10) |
(31) |
(20) |
International Retail banking |
|
(19) |
(14) |
(46) |
(46) |
|
(27) |
(18) |
(46) |
(46) |
Specialised financial services |
|
24 |
24 |
- |
- |
|
(45) |
(45) |
- |
- |
Large customers |
|
(19) |
(10) |
(22) |
(9) |
|
3 |
6 |
(65) |
(40) |
Corporate centre |
|
(917) |
(788) |
(643) |
406 |
|
(1,074) |
(915) |
(701) |
368 |
* Impact before tax and before minority
interests |
|
|
|
|
|
|
|
|
|
|
Appendix 2 – Credit Agricole Group: results by
business lines
Credit Agricole Group – Contribution by divisions –
Q4-20 & Q4-19
|
Q4-20 (stated) |
€m |
RB |
LCL |
IRB |
AG |
SFS |
LC |
CC |
Total |
Revenues |
3,425 |
904 |
712 |
1,634 |
654 |
1,424 |
(88) |
8,665 |
Operating expenses excl. SRF |
(2,311) |
(599) |
(481) |
(735) |
(319) |
(911) |
(230) |
(5,585) |
SRF |
- |
- |
- |
- |
- |
- |
- |
- |
Gross operating income |
1,114 |
305 |
230 |
899 |
335 |
513 |
(317) |
3,080 |
Cost of risk |
(378) |
(89) |
(130) |
(60) |
(154) |
(111) |
2 |
(919) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
1 |
- |
- |
20 |
140 |
2 |
- |
163 |
Net income on other assets |
(7) |
1 |
(0) |
1 |
(10) |
(0) |
(9) |
(26) |
Change in value of goodwill |
- |
- |
- |
- |
- |
- |
(965) |
(965) |
Income before tax |
731 |
216 |
100 |
861 |
311 |
405 |
(1,290) |
1,334 |
Tax |
(205) |
(68) |
(16) |
(274) |
(44) |
(55) |
28 |
(634) |
Net income from discont'd or
held-for-sale ope. |
5 |
- |
(7) |
(24) |
(66) |
- |
0 |
(91) |
Net income |
531 |
148 |
77 |
564 |
201 |
350 |
(1,262) |
609 |
Non controlling interests |
0 |
(0) |
(15) |
(119) |
(12) |
(16) |
82 |
(80) |
Net income Group Share |
531 |
148 |
62 |
445 |
189 |
334 |
(1,180) |
530 |
|
Q4-19 (stated) |
|
€m |
RB |
LCL |
AG |
IRB |
SFS |
LC |
CC |
Total |
Revenues |
3,276 |
851 |
1,621 |
740 |
672 |
1,401 |
(163) |
8,399 |
Operating expenses excl. SRF |
(2,276) |
(598) |
(746) |
(478) |
(331) |
(902) |
(251) |
(5,582) |
SRF |
- |
- |
- |
- |
- |
- |
- |
- |
Gross operating income |
1,000 |
254 |
875 |
262 |
341 |
499 |
(414) |
2,818 |
Cost of risk |
(155) |
(64) |
(5) |
(77) |
(127) |
(55) |
(10) |
(494) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
2 |
- |
14 |
- |
65 |
3 |
- |
83 |
Net income on other assets |
1 |
1 |
11 |
3 |
(0) |
7 |
(8) |
15 |
Change in value of goodwill |
- |
- |
- |
- |
- |
22 |
(664) |
(642) |
Income before tax |
848 |
191 |
895 |
188 |
278 |
476 |
(1,096) |
1,780 |
Tax |
(257) |
(53) |
(225) |
(49) |
(40) |
(67) |
1,277 |
587 |
Net income from discont'd or
held-for-sale ope. |
- |
- |
- |
(46) |
- |
- |
(0) |
(46) |
Net income |
590 |
138 |
670 |
93 |
238 |
409 |
181 |
2,320 |
Non controlling interests |
(0) |
(0) |
(85) |
(25) |
(25) |
(1) |
2 |
(134) |
Net income Group Share |
590 |
138 |
585 |
69 |
213 |
408 |
184 |
2,186 |
Credit Agricole Group – Contribution by divisions –
2020 & 2019
|
2020 (stated) |
€m |
RB |
LCL |
IRB |
AG |
SFS |
LC |
CC |
Total |
Revenues |
13,056 |
3,521 |
2,724 |
5,749 |
2,526 |
6,297 |
(278) |
33,596 |
Operating expenses excl. SRF |
(8,712) |
(2,277) |
(1,785) |
(2,865) |
(1,268) |
(3,523) |
(836) |
(21,266) |
SRF |
(123) |
(42) |
(25) |
(6) |
(20) |
(260) |
(86) |
(562) |
Gross operating income |
4,221 |
1,203 |
914 |
2,879 |
1,238 |
2,514 |
(1,200) |
11,768 |
Cost of risk |
(1,042) |
(390) |
(566) |
(55) |
(732) |
(829) |
(36) |
(3,651) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
2 |
- |
- |
66 |
344 |
7 |
(0) |
419 |
Net income on other assets |
(13) |
2 |
72 |
3 |
(3) |
1 |
(10) |
52 |
Change in value of goodwill |
(3) |
- |
- |
- |
- |
- |
(965) |
(968) |
Income before tax |
3,165 |
814 |
419 |
2,893 |
847 |
1,693 |
(2,212) |
7,620 |
Tax |
(1,067) |
(252) |
(103) |
(775) |
(69) |
(277) |
378 |
(2,165) |
Net income from discontinued or
held-for-sale operations |
(0) |
- |
(48) |
(24) |
(135) |
- |
(55) |
(262) |
Net income |
2,098 |
563 |
268 |
2,095 |
643 |
1,416 |
(1,889) |
5,193 |
Non controlling interests |
(3) |
(0) |
(75) |
(362) |
(84) |
(57) |
77 |
(504) |
Net income Group Share |
2,096 |
562 |
193 |
1,733 |
559 |
1,359 |
(1,812) |
4,689 |
|
2019 (stated) |
€m |
RB |
LCL |
AG |
IRB |
SFS |
LC |
CC |
Total |
Revenues |
13,117 |
3,457 |
6,061 |
2,898 |
2,716 |
5,601 |
(553) |
33,297 |
Operating expenses excl. SRF |
(8,836) |
(2,340) |
(2,897) |
(1,813) |
(1,343) |
(3,321) |
(837) |
(21,386) |
SRF |
(86) |
(32) |
(7) |
(22) |
(18) |
(177) |
(83) |
(426) |
Gross operating
income |
4,196 |
1,085 |
3,157 |
1,063 |
1,354 |
2,103 |
(1,473) |
11,485 |
Cost of risk |
(498) |
(217) |
(19) |
(337) |
(497) |
(159) |
(29) |
(1,757) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
11 |
- |
46 |
- |
295 |
4 |
- |
356 |
Net income on other assets |
(6) |
2 |
32 |
2 |
0 |
6 |
(1) |
36 |
Change in value of goodwill |
- |
- |
- |
- |
- |
22 |
(664) |
(642) |
Income before tax |
3,703 |
870 |
3,215 |
728 |
1,152 |
1,976 |
(2,166) |
9,478 |
Tax |
(1,307) |
(274) |
(879) |
(201) |
(233) |
(407) |
1,564 |
(1,737) |
Net income from discontinued or
held-for-sale operations |
- |
- |
8 |
(46) |
- |
- |
(0) |
(38) |
Net income |
2,396 |
596 |
2,345 |
481 |
919 |
1,569 |
(602) |
7,704 |
Non controlling interests |
(0) |
(0) |
(309) |
(105) |
(104) |
(0) |
14 |
(506) |
Net income Group
Share |
2,396 |
596 |
2,035 |
375 |
815 |
1,569 |
(588) |
7,198 |
Appendix 3 – Crédit Agricole S.A.:
results by business line
Crédit Agricole S.A. – Contribution by divisions – Q4-20
& Q4-19
Q4-20
(stated) |
€m |
AG |
FRB (LCL) |
IRB |
SFS |
LC |
CC |
Total |
Revenues |
1,644 |
904 |
692 |
654 |
1,426 |
(68) |
5,251 |
Operating expenses excl. SRF |
(735) |
(599) |
(465) |
(319) |
(911) |
(198) |
(3,226) |
SRF |
- |
- |
- |
- |
- |
- |
- |
Gross operating income |
909 |
305 |
228 |
335 |
514 |
(266) |
2,025 |
Cost of risk |
(60) |
(89) |
(131) |
(154) |
(111) |
6 |
(538) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
20 |
- |
- |
140 |
2 |
(26) |
137 |
Net income on other assets |
1 |
1 |
(0) |
(10) |
(0) |
(0) |
(9) |
Change in value of goodwill |
- |
- |
- |
- |
- |
(903) |
(903) |
Income before tax |
871 |
216 |
96 |
311 |
406 |
(1,189) |
712 |
Tax |
(275) |
(68) |
(15) |
(44) |
(55) |
21 |
(436) |
Net income from discontinued or
held-for-sale operations |
(24) |
- |
(7) |
(66) |
- |
0 |
(96) |
Net income |
572 |
148 |
74 |
201 |
351 |
(1,167) |
179 |
Non controlling interests |
(123) |
(7) |
(19) |
(12) |
(23) |
128 |
(56) |
Net income Group Share |
449 |
141 |
56 |
189 |
328 |
(1,040) |
124 |
Q4-19 (stated) |
€m |
AG |
FRB (LCL) |
IRB |
SFS |
LC |
CC |
Total |
Revenues |
1,623 |
851 |
713 |
672 |
1,401 |
(141) |
5,119 |
Operating expenses excl. SRF |
(746) |
(598) |
(454) |
(331) |
(902) |
(229) |
(3,260) |
SRF |
- |
0 |
(0) |
(0) |
0 |
(0) |
(0) |
Gross operating
income |
877 |
254 |
259 |
341 |
499 |
(370) |
1,859 |
Cost of risk |
(5) |
(64) |
(78) |
(127) |
(55) |
(10) |
(340) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
14 |
- |
- |
65 |
3 |
(5) |
76 |
Net income on other assets |
11 |
1 |
3 |
(0) |
7 |
(8) |
14 |
Change in value of goodwill |
- |
- |
- |
- |
22 |
(611) |
(589) |
Income before tax |
896 |
191 |
184 |
278 |
476 |
(1,004) |
1,021 |
Tax |
(224) |
(53) |
(49) |
(40) |
(67) |
1,278 |
847 |
Net income from discontinued or
held-for-sale operations |
- |
- |
(46) |
- |
- |
(0) |
(46) |
Net income |
672 |
138 |
90 |
238 |
409 |
274 |
1,821 |
Non controlling interests |
(90) |
(6) |
(31) |
(25) |
(10) |
2 |
(160) |
Net income Group
Share |
583 |
132 |
59 |
213 |
399 |
276 |
1,661 |
Crédit Agricole S.A. – Contribution by divisions – 2020
& 2019
2020 (stated) |
€m |
GEA |
BP (LCL) |
BPI |
SFS |
GC |
AHM |
Total |
Revenues |
5,734 |
3,521 |
2,659 |
2,526 |
6,297 |
(238) |
20,500 |
Operating expenses excl. SRF |
(2,864) |
(2,277) |
(1,728) |
(1,268) |
(3,523) |
(792) |
(12,452) |
SRF |
(6) |
(42) |
(25) |
(20) |
(260) |
(86) |
(439) |
Gross operating income |
2,864 |
1,203 |
906 |
1,238 |
2,514 |
(1,116) |
7,609 |
Cost of risk |
(55) |
(390) |
(569) |
(732) |
(829) |
(29) |
(2,606) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
66 |
- |
- |
344 |
7 |
(4) |
413 |
Net income on other assets |
3 |
2 |
72 |
(3) |
1 |
0 |
75 |
Change in value of goodwill |
- |
- |
- |
- |
- |
(903) |
(903) |
Income before tax |
2,878 |
814 |
408 |
847 |
1,693 |
(2,052) |
4,588 |
Tax |
(770) |
(252) |
(101) |
(69) |
(278) |
341 |
(1,129) |
Net income from discontinued or
held-for-sale operations |
(24) |
- |
(8) |
(135) |
- |
(55) |
(221) |
Net income |
2,084 |
563 |
299 |
643 |
1,415 |
(1,766) |
3,238 |
Non controlling interests |
(379) |
(25) |
(92) |
(84) |
(85) |
119 |
(546) |
Net income Group Share |
1,706 |
537 |
207 |
559 |
1,330 |
(1,647) |
2,692 |
2019 (stated) |
€m |
AG |
FRB (LCL) |
IRB |
SFS |
LC |
CC |
Total |
Revenues |
6,078 |
3,457 |
2,796 |
2,716 |
5,603 |
(497) |
20,153 |
Operating expenses excl. SRF |
(2,896) |
(2,340) |
(1,731) |
(1,343) |
(3,321) |
(789) |
(12,421) |
SRF |
(7) |
(32) |
(22) |
(18) |
(177) |
(83) |
(340) |
Gross operating
income |
3,174 |
1,086 |
1,042 |
1,354 |
2,105 |
(1,369) |
7,392 |
Cost of risk |
(19) |
(217) |
(335) |
(497) |
(160) |
(28) |
(1,256) |
Cost of legal risk |
- |
- |
- |
- |
- |
- |
- |
Equity-accounted entities |
46 |
- |
- |
295 |
4 |
6 |
352 |
Net income on other assets |
32 |
2 |
2 |
0 |
6 |
12 |
54 |
Change in value of goodwill |
- |
- |
- |
- |
22 |
(611) |
(589) |
Income before tax |
3,233 |
870 |
710 |
1,152 |
1,978 |
(1,991) |
5,952 |
Tax |
(881) |
(274) |
(199) |
(233) |
(407) |
1,539 |
(456) |
Net income from discontinued or
held-for-sale operations |
8 |
- |
(46) |
- |
- |
(0) |
(38) |
Net income |
2,360 |
596 |
465 |
919 |
1,570 |
(452) |
5,458 |
Non controlling interests |
(326) |
(27) |
(132) |
(104) |
(32) |
7 |
(614) |
Net income Group
Share |
2,034 |
570 |
333 |
815 |
1,538 |
(445) |
4,844 |
Appendix 4 – Methods used to calculate earnings
per share, net asset value per share
Crédit Agricole S.A. – Data per share, net book value per
share and ROTE |
(en m€) |
|
T4-20 |
T4-19 |
|
2020 |
2019 |
|
Var T4/T4 |
Var 12M/12M |
|
|
|
|
|
|
|
|
|
|
Net income Group share - stated |
|
124 |
1,661 |
|
2,692 |
4,844 |
|
(92.6%) |
(44.4%) |
- Interests on AT1, including issuance
costs, before tax |
|
(79) |
(105) |
|
(373) |
(587) |
|
(24.8%) |
(36.5%) |
NIGS attributable to ordinary shares -
stated |
[A] |
45 |
1,556 |
|
2,319 |
4,257 |
|
(97.1%) |
(45.5%) |
Average number shares in issue, excluding
treasury shares (m) |
[B] |
2,893.4 |
2,883.5 |
|
2,885.3 |
2,873.4 |
|
+0.3% |
+0.4% |
Net earnings per share - stated |
[A]/[B] |
0.02 € |
0.54 € |
|
0.80 € |
1.48 € |
|
(97.1%) |
(45.8%) |
Underlying net income Group share
(NIGS) |
|
975 |
1,318 |
|
3,849 |
4,582 |
|
(26.0%) |
(16.0%) |
Underlying NIGS attributable to ordinary
shares |
[C] |
896 |
1,213 |
|
3,476 |
3,995 |
|
(26.1%) |
(13.0%) |
Net earnings per share - underlying |
[C]/[B] |
0.31 € |
0.42 € |
|
1.20 € |
1.39 € |
|
(26.4%) |
(13.4%) |
(en
m€) |
|
31/12/2020 |
31/12/2019 restated |
31/12/2019 |
|
Shareholder's equity Group
share |
|
65,217 |
62,921 |
62,921 |
|
- AT1 issuances |
|
(5,888) |
(5,134) |
(5,134) |
|
- Unrealised gains and
losses on OCI - Group share |
|
(3,083) |
(2,993) |
(2,993) |
|
- Payout assumption on
annual results* |
|
(914)53 |
- |
(2,019) |
|
Net book value (NBV), not revaluated, attributable to
ordin. sh. |
[D] |
55,333 |
54,793 |
52,774 |
|
- Goodwill &
intangibles** - Group share |
|
(17,488) |
(18,011) |
(18,011) |
|
Tangible NBV (TNBV), not revaluated attrib. to ordinary
sh. |
[E] |
37,844 |
36,783 |
34,764 |
|
Total shares in issue,
excluding treasury shares (period end, m) |
[F] |
2,915.6 |
2,884.3 |
2,884.3 |
|
NBV per share , after
deduction of dividend to pay (€) |
[D]/[F] |
19.0
€54 |
19.0
€ |
18.3
€ |
|
+ Dividend to pay (€) |
[H] |
0.31
€55 |
|
0.70
€ |
|
NBV per share , before
deduction of dividend to pay (€) |
|
19.3
€ |
19.0
€ |
19.0
€ |
|
TNBV per share, after
deduction of dividend to pay (€) |
[G]=[E]/[F] |
13.0
€54 |
12.8
€ |
12.1
€ |
|
TNBV per sh., before
deduct. of divid. to pay (€) |
[G]+[H] |
13.3
€ |
12.8
€ |
12.8
€ |
|
|
*
dividend proposed to the Board meeting to be paid |
|
|
**
including goodwill in the equity-accounted entities
|
|
(€m) |
|
2020 |
2019 |
|
Net income Group share
attributable to ordinary shares |
[H] |
2,319 |
4,257 |
|
Tangible NBV (TNBV), not
revaluated attrib. to ord. sh. - avg*** |
[I] |
37,31456 |
33,525 |
|
Stated ROTE (%) |
[H]/[I] |
6.2% |
12.7% |
|
Net income Group share
attributable to ordinary shares excl. CA Italia goodwill
impairment |
[J] |
3,097 |
|
|
|
Stated ROTE (%) excl CA
Italia impairment |
[H]/[J] |
8.3% |
|
|
|
Underlying Net income
attrib. to ord. shares (annualised) |
[K] |
3,476 |
3,995 |
|
Underlying ROTE (%) |
[H]/[K] |
9.3% |
11.9% |
|
*** including assumption of dividend for the current exercise |
|
|
|
|
Alternative Performance
Indicators
NAVPS Net asset value per share – Net
tangible assets per share
One of the methods for calculating the value of
a share. NAV per share is net equity Group share restated from AT1
issues divided by the number of shares outstanding at the end of
the period.
Net tangible assets per share is tangible net
equity Group share, i.e. restated for intangible assets and
goodwill, divided by the number of shares outstanding at the end of
the period.
NBV Net Book Value
Net book value is net equity Group share,
restated for AT1 issues, HTCS hidden reserves and proposed
dividends on annual earnings.
EPS Earnings Per Share
Net income Group share (excluding AT1 issues
interests) divided by the average number of shares outstanding,
excluding Treasury shares. EPS indicates the portion of profits
attributable to each share (not the portion of earnings paid out to
each shareholder, which is the dividend). It may decrease, assuming
net income Group share remains unchanged, if the number of shares
increases (see Dilution).
Cost/income ratio
The cost/income ratio is calculated by dividing
expenses by revenues, indicating the proportion of revenues needed
to cover expenses.
Cost of risk/outstandings
Calculated by dividing the cost of risk (over
four quarters on a rolling basis) by outstandings (over an average
of the past four quarters, beginning of the period). The cost of
risk on outstandings can also be calculated by dividing the
annualised cost of risk of the quarter by the outstandings as of
beginning of the period.
Since the first quarter 2019, loans
outstanding considered are only loans to customers, before
impairment
Impaired loans ratio
This ratio compares the gross impaired customer
loans to total gross customer loans outstanding.
Coverage ratio
This ratio compares the total loans loss
reserves to the gross impaired customer loans outstanding.
Net income Group share attributable to
ordinary shares – stated
The net income attributable to equity
attributable to ordinary equity corresponds to the group share of
which the interest on the AT1 debt has been deducted, including the
pre-tax issue costs
Underlying net income Group
share
Underlying net income Group share is calculated
as net income Group share restated for specific items (i.e.
non-recurring or exceptional items).
ROE Return on Equity
Indicator measuring the return on equity,
calculated by dividing a company’s net income by its equity.
RoTE Return on Tangible
Equity
Measures the return on tangible equity (the
bank’s net assets restated to eliminate intangibles and
goodwill).
Disclaimer
The financial information on Crédit Agricole
S.A. and Crédit Agricole Group for the fourth quarter and the full
year 2020 comprises this presentation and the attached appendices
and press release which are available on the website:
https://www.credit-agricole.com/en/finance/finance/financial-publications.
This presentation may include prospective
information on the Group, supplied as information on trends. This
data does not represent forecasts within the meaning of EU
Delegated Act 2019/980 of 14 March 2019 (chapter 1, article 1,
d).
This information was developed from scenarios
based on a number of economic assumptions for a given competitive
and regulatory environment. Therefore, these assumptions are by
nature subject to random factors that could cause actual results to
differ from projections. Likewise, the financial statements are
based on estimates, particularly in calculating market value and
asset impairment.
Readers must take all these risk factors and
uncertainties into consideration before making their own
judgement.
Applicable standards and
comparability
The figures presented for the twelve-month
period ending 31 December 2020 have been prepared in accordance
with IFRS as adopted in the European Union and applicable at that
date, and with prudential regulations currently in force. The
Statutory Auditor’s audit work on the financial consolidated
statements is underway.
Note: the scopes of consolidation of the
Crédit Agricole S.A. and Crédit Agricole Groups have not
changed materially since the Crédit Agricole S.A. 2019
Universal Registration Document and its A.01 update (including all
regulatory information about the Crédit Agricole Group) were filed
with the AMF (the French Financial Markets Authority).
The sum of values contained in the tables and
analyses may differ slightly from the total reported due to
rounding.
Since 30 September 2019, Kas Bank has been
included in the scope of consolidation of Crédit Agricole
Group as a subsidiary of CACEIS. SoYou has also been included in
the scope of consolidation as a joint-venture between Crédit
Agricole Consumer Finance and Bankia. Historical data have not been
restated on a proforma basis.
Since 23 December 2019, Caceis and Santander
Securities Services (S3) have merged their operations. As of said
date, Crédit Agricole S.A. and Santander respectively hold 69.5%
and 30.5% of the capital of Caceis.
On 30 June 2020, once all necessary regulatory
approvals were secured, Amundi acquired the entire share capital of
Sabadell Asset Management.
Financial Agenda
11 February 2021
Publication of the 2020 fourth quarter and
full year results7 May 2021
Publication of the 2021 first quarter results12 May
2021
Annual General Meeting in
Paris5 August 2021
Publication of the 2021 second quarter and the
first half year results10 November 2021
Publication of the 2021 third quarter and first 9 months
results
Contacts
CREDIT AGRICOLE PRESS
CONTACTS
Charlotte de
Chavagnac +33 (0)1
57 72 11
17
charlotte.dechavagnac@credit-agricole-sa.frOlivier
Tassain
+ 33 1 43 23 25
41
olivier.tassain@credit-agricole-sa.frBertrand
Schaefer
+ 33 1 49 53 43
76
bertrand.schaefer@ca-fnca.fr
Crédit Agricole S.A.
investor relations contacts
Institutional shareholders
|
+ 33 1 43 23 04
31 |
investor.relations@credit-agricole-sa.fr |
Individual
shareholders |
+ 33 800
000 777 (freephone number – France only) |
relation@actionnaires.credit-agricole.com |
|
|
|
Clotilde
L’Angevin |
+ 33 1 43 23 32
45 |
clotilde.langevin@credit-agricole-sa.fr |
Equity
investors: |
|
|
Toufik
Belkhatir |
+ 33 1 57 72 12
01 |
toufik.belkhatir@credit-agricole-sa.fr |
Joséphine
Brouard |
+ 33 1 43 23 48
33 |
Joséphine.brouard@credit-agricole-sa.fr |
Oriane Cante |
+ 33 1 43 23 03
07 |
oriane.cante@credit-agricole-sa.fr |
Emilie
Gasnier |
+ 33 1 43 23 15
67 |
emilie.gasnier@credit-agricole-sa.fr |
Nicolas
IannaIbrahima Konaté |
+ 33 1 43 23 55
51+ 33 1 43 23 51 35 |
Nicolas.ianna@credit-agricole-sa.fribrahima.konate@credit-agricole-sa.fr |
Annabelle
Wiriath |
+ 33 1 43 23 55
52 |
annabelle.wiriath@credit-agricole-sa.fr |
|
|
|
Credit investors and rating agencies: |
|
Caroline
Crépin |
+ 33 1 43 23 83
65 |
caroline.crepin@credit-agricole-sa.fr |
Marie-Laure
Malo |
+ 33 1 43 23 10
21 |
marielaure.malo@credit-agricole-sa.fr |
Rhita Alami
Hassani |
+ 33 1 43 23 15
27 |
rhita.alamihassani@credit-agricole-sa.fr |
|
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See all our press releases at: www.credit-agricole.com
–www.creditagricole.info
1 93% of the increase in Crédit Agricole Group cost of risk
related to the provisioning of performing loans.
2 77% of the increase in Crédit Agricole S.A. cost of risk
related to the provisioning of performing loans.
3 Amounts of SGLs requested (RBs, LCL and CACIB) at 15/01/2021,
97.3% acceptance rate
4 Breakdown by number of customer applications. Breakdown by
amounts: 62% for the RBs, 30% for LCL and 8% for CACIB.
5 In deferred maturities.
6 Study Brand Asset Valuator, October 2020,all sectors, only one
bank in the top.
7 Net Promoter Score, internal sources 2020.
8 Total hires in 2020, including permanent contracts, fixed-term
contracts and work-study contracts.
9 Source Universum 2020.
10 FT European ranking, No. 1 position in France in financial
services.
11 €15 billion planned for the entire duration of the
MTP.
12 Car, home, health, legal, all mobile phones or personal
accident insurance.
13 Underlying, excluding specific items. See Appendixes for more
details on specific items.
14 Provisioning rate calculated with outstandings in Stage 3 as
denominator, and the sum of the provisions recorded in Stages 1, 2
and 3 as numerator
15 Cost of risk on outstandings (in annualised basis points)
16 Rate of digital customers : number of customers with an
active profile on the Ma Banque app or who had visited CAEL (CA
online) during the month / number of adult clients having an active
demand deposit account
17 Corporates, SMEs and small businesses, farmers and local
authorities
18 Stated ROTE excluding goodwill impairment for full year
2020 stood at 8.3%
19 Underlying, excluding specific items. See Appendixes for more
details on specific items.
20 Excl. CA Consumer Finance NL
21 Excluding the scope effect of Sabadell and the establishment
of Amundi Bank of China Wealth Management
22 Provisioning rate calculated with outstandings in Stage 3 as
denominator, and the sum of the provisions recorded in Stages 1, 2
and 3 as numerator
23 A decrease of 10 points in the weight of the favourable
scenario towards the less favourable scenario would lead to a
change in “forward-looking central” ECL inventory of around 5% of
total ECL inventory. However, such a change in the weight would not
necessarily have a significant impact due to “forward looking
local” adjustments, which could mitigate the effect.
24 See Appendixes for more details on specific items.
25 See Annexes for details on the calculation of the business
lines' ROTE (return on tangible equity) and RONE (return on
normalised equity). The stated ROTE for 2020 stands at 6.2%, and
the stated ROTE excluding CA Italia goodwill impairment stand at
8.3%
26 Yield calculated based of a 10€ share price. Impact on the
2020 EPS <-6% assuming zero public opting for the scrip dividend
payment, taking into account the formal commitment of SAS La Boétie
to opt for a scrip dividend payment, and assuming that the employee
mutual funds (FCPE’s) also opt for the scrip dividend payment.
27 The Insurance Switch guarantee transfers to the Regional
Banks the regulatory prudential requirements related to
Crédit Agricole S.A.’s equity interest in Crédit
Agricole Assurances.
28 Increases adjusted for a change in accounting method;
excluding adjustment, growth was +16.4% Q4/Q4 and +7.6% compared to
2019 in Property & Casualty insurance and +10.2% Q4/Q4 and
+6.1% in Death & Disability/Creditor/Group insurance.
29 Equipment rate: percentage of individual banking customers
holding at least one insurance product (Pacifica estimates). Scope:
auto, home, health, life accidents, legal protection insurance and
all mobile phones.
30 Excluding disposal of non-performing loans
31 Excluding foreign exchange impact.
32 Excluding foreign exchange impact.
33 Excluding forex effect
34 Excluding IFRS 5 impact CACF NL in Q4-20
35 Sources: Dealogic
36 Sources: Refinitiv N11
37 Sources: Bloomberg
38 With a share-based dividend payment option, with a formal
commitment by SAS Rue La Boétie to opt for payment in shares, and
on the assumption that the employee mutual funds (FPCEs) also
request the dividend to be paid in shares.
39 As part of its annual resolvability assessment, Crédit
Agricole Group has chosen to waive the possibility offered by
Article 72b(3) of the Capital Requirements Regulation to use senior
preferred debt for compliance with its TLAC requirements in
2021.
40 TLOF – Total Liabilities Own Funds, equivalent to the
prudential balance sheet after netting of derivatives
41 Computation made in accordance with the BRRD applicable to
the requirements in force. MREL eligible liabilities issued
externally by all Group entities are included.
42 With a share-based dividend payment option, with a formal
commitment by SAS Rue La Boétie to opt for payment in shares, and
on the assumption that the employee mutual funds (FPCEs) also
request the dividend to be paid in shares
43 Excluding Bankoa and FCA Bank
44 Gross amount before buy-back and amortisation
45 Excluding EUR AT1 Issuance
46 Rate cut of 100 basis points (Fed funds range
at [0; 0.25%]) of the marginal lending facility rate (discount
window of 1.5% to 0.25%), lower reserve requirement rate, asset
purchase program ($500 billion in Treasuries and
$200 billion in mortgage-backed securities, MBS), liquidity
for specific segments (Commercial Paper Funding Facility, Money
Market Mutual Fund Liquidity Facility), forward guidance (no
interest rate hike until the public health crisis is overcome and
the economy evolves in line with its inflation and employment
targets).
47 2020 fiscal year ended in September.
48 50 basis points (bp) below the refinancing
rate for all outstandings and 50 bp below the deposit rate for
any net outstandings equal to the level of outstandings granted
between October 2020 and December 2021. The precondition for
benefiting from this strong incentive to lend is therefore clear:
the existing support must not be reduced.
49 Reorientation of unused cohesion funds from
the EU budget in the amount of €37 billion, guarantees to SMEs
provided by the European Investment Bank (EIB), use of funds still
available from the European Stability Mechanism (ESM) in the amount
of €240 billion (or 2% of the area's GDP).
50 Target range of the Federal funds at 0-0.25%;
net purchases of securities at $120 billion per month, i.e.
2/3 Treasury securities and 1/3 MBS; forward guidance on key rates
consisting of tolerating a “moderate” overshoot of the inflation
target for “some time”; forward guidance on asset purchases
indicating that they will continue at least at the current pace
until “substantial progress” is made towards employment and
inflation targets.
51 Exposure at default: this is Crédit Agricole SA’s exposure
should the counterparty default. The EAD includes on- and
off-balance sheet exposures. Off-balance sheet exposures are
converted into balance sheet equivalents using internal or
regulatory conversion factors (draw-down scenarios).
52 Exposure at default: this is Crédit Agricole SA’s exposure
should the counterparty default. The EAD includes on- and
off-balance sheet exposures. Off-balance sheet exposures are
converted into balance sheet equivalents using internal or
regulatory conversion factors (draw-down scenarios).
53 € 914 million correspond to the share of the distribution of
the dividend made in cash assuming zero public opting for the scrip
dividend payment.
54 The NBV per share after deduction of dividend to pay and the
TNBV per share after deduction of dividend to pay are calculated
based on the total number of shares as of 31/12/2020
55 0,31€ correspond to the cash distribution
56 Average of the TNBV not revaluated attrib. to ordinary shares
calculated based on 31/12/2020 figures and 31/12/2019 restated
figures
- EN_CASA_2020-Q4_Results_PR_Vdef
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