Research Update: Outlooks On Credit Agricole Banking Entities Revised To Negative On Economic Impact Of COVID-19; Ratings Affirmed

Despite French government measures to contain the COVID-19 pandemic, the economy and its domestic banks face an unprecedented challenge, with an expected 8% GDP contraction for France in 2020. In the wake of this, we expect that French banks' business development, earnings, asset quality, and balance-sheet management will be meaningfully affected through year-end 2020 and into 2021, and we see a possibility that economic and industry risks could increase for the sector. Credit Agricole S.A. has entered the COVID-19 pandemic in a position of strength, notably when considering its very diverse business model; leading franchises in retail banking, insurance, and asset management; and solid capital position and liquidity reserves, but we see increased downside risks to its earnings and asset

...- Despite French government measures to contain the COVID-19 pandemic, the economy and its domestic banks face an unprecedented challenge, with an expected 8% GDP contraction for France in 2020. - In the wake of this, we expect that French banks' business development, earnings, asset quality, and balance-sheet management will be meaningfully affected through year-end 2020 and into 2021, and we see a possibility that economic and industry risks could increase for the sector. - Credit Agricole S.A. has entered the COVID-19 pandemic in a position of strength, notably when considering its very diverse business model; leading franchises in retail banking, insurance, and asset management; and solid capital position and liquidity reserves, but we see increased downside risks to its earnings and asset quality if an economic recovery is significantly delayed. - As a result, we are revising the outlook on Credit Agricole's core banking entities to negative from stable and affirming the 'A+/A-1' ratings....

Research Update