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TEHRAN, Jun 6 -French bank Credit Agricole unveiled a new set of higher profit targets for 2022 after it had met its 2019 targets a year ahead of schedule, and said it now expected annual net profits above 5 billion euros ($5.6 billion) in 2022.
TEHRAN, Young Journalists Club (YJC) -The profit target of 5 billion euros for 2022 compares to its net profit figure of 4.4 billion in 2018, with Credit Agricole hoping to win over clients for its retail banks in Italy and France and expects to attract mid-sized companies with corporate banking services such as cash management.
Nevertheless, while Credit Agricole sees its bottom line rising more than 3% per year, its profitability - as measured by return on tangible equity - will slow down in the period.
The bank’s return on tangible equity will fall to 11% in 2022 down from 12.7% in 2018.
“The economic scenario is based on persistent low interest rates,” Credit Agricole said in a statement.
Major European banks such as Credit Agricole have struggled to drive profitability because low interest rates have constrained returns from retail banking, while corporate and investment banking is vulnerable to financial market volatility.
While its French rivals BNP Paribas and Societe Generale have experienced wild swings from their corporate and investment banking units over the past few quarters, Credit Agricole has had more stable levels of profits.
As part of its efforts to boost profits and deliver steady profit increases, Credit Agricole expects to lower its common equity tier one ratio, a measure of the bank’s solvency, to 11% down from 11.5% at the end of 2018.
Credit Agricole’s parent bank, Groupe Credit Agricole, will instead raise its ratio in 2022 to 16% up from 15% in 2018.
The company will also invest 15 billion euros in new technology to keep pace with new banking habits such as mobile banking and real-time payment services.
Source: reuters
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