Credit Agricole SA Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tarik El Mejjad - BofA Global Research (UK) - Analyst : Hi, good morning, Jerome. Congratulations for the confirmation of your role and looking forward to work again with Clotilde. So, first of all, on the cost -- sorry to come back on that. Yes, admittedly, you had 16% almost, RTE. So we have to keep that in mind, but still we are looking for more cost efficiency here. And now I guess you are in preparation or -- starting preparation of the new plan. What are the areas where you think there's more effort to do or if it's a cost issue -- it could be maybe a revenues that will actually come faster. But in terms of cost, what are the areas you think there is more to deliver and more to work on? And then the second question is on capital. The 44 bps battle for positive impact in Q1, I understand the mechanics of this, but is there a risk that you see some reversal of this in the next quarter or is this definite final impact from Basel IV? And lastly, you met -- I think the Bloomberg interview this morning, you mentioned that you will wait until the end of BPM offer period before deciding. I just want to understand really what you meant by that, and what can you tell us on the Chinese situation as of today? Thanks.

Question: Delphine Lee - J.P. Morgan Securities plc - Analyst : Good morning, Jerome. Thank you for taking my question. My first question is on French retail. I'm just wondering, when do you see the inflection on net income? Just -- I think that you previously mentioned that you were expecting a small increase in 2025. So just wondering your confidence level on achieving this and when we can see that. My second question is on capital. Sorry if I missed this, but with that 44 basis points, where's the surprise coming from on the impact of Basel IV? And then also, it looks like you're running much closer to 12% rather than 11%. And would you consider changing your dividend policy to reflect that? Thank you.

Question: Jacques-Henri Gaulard - Kepler Cheuvreux (UK) - Analyst : Yes. Good morning, everyone, and obviously, congratulations to everyone. I had missed that completely, but then I went to bed very early yesterday night. The two questions, I guess. The first one, yes. On the SFS division, the consumer finance, in particular, was a little bit disappointing, difficult to predict again. Obviously, one of your competitors went to a huge restructuring on that business. Are you comfortable that we're operating to some cyclical issues that you've mentioned in your slides, particularly cost of risk on international subsidiaries and also on the equity accounting? So, if you could reassure about the trajectory of that business, that would be great. And that coming back on the plan, interestingly, obviously, back in 2022, your ROTE was higher than 12% clearly, which you've beaten consistently. So I'm not going to ask you to tell me you're going to reach 15% or 16%. But more accurately, the one thing you've done very well is to increase the EPS and the ROTE on the back of your inorganic growth. Could you actually, even in generic terms, put inorganic growth uplift in profitability into your targets for 2028? Thank you.

Question: Stefan Stalmann - Autonomous Research - Analyst : Good morning, Jerome. Good morning. I wanted to ask, please, are you actually planning to keep your stake in BPM at fair value through the P&L or are you considering moving it, let's say, into equity, assuming that you keep it? The second question, slide 14, mentions that the regional banks apparently bought about EUR500 million worth of Credit Agricole's shares during the quarter, but I don't see this on slide 40, where the number of shares that the Rue La Boetie owns is still the same. Could you maybe add a bit of color on what has happened there? And the final one I wanted to ask, please, in the regional banks results, the insurance distribution fees were coming down 4% year on year. Is that because something changed about how you share revenue with the regional banks or is there a real reduction of Insurance contracts that have been sold through the regional banks?

Question: Giulia Aurora Miotto - Morgan Stanley - Analyst : Yes. Hi. Good morning, Jerome. Question for me around the tariff and the macro uncertainty. You haven't taken any provisions. Is there a plan to do so? Any overlays? And then more broadly, how do you expect this macro uncertainty to impact your business? I think SFS is particularly impacted this quarter, I guess, on the auto consumer finance side. But I don't know, for example, if you expect impact also in CIB or anywhere else? Thank you.

Question: Matthew Clark - Mediobanca SpA - Analyst : Hi. Some more questions on capital and Banco BPM, please. So, firstly, I just wanted to confirm whether the TRIM impact which you talked about previously is embedded within that CRR impact that you've given us this quarter or whether that's still to come in future quarters. I think it was like EUR4 billion or EUR5 billion risk-weighted assets, if I remember rightly, that we've been waiting for for a few quarters now. Secondly, on Banco BPM, could you just give us the P&L impact in euro million terms from the revaluation of both your synthetic and cash stakes in the first quarter? That would be helpful. And then finally, on Banco BPM, you said that your cash stake will be partially hedged going forward to limit the P&L volatility. Will your -- sorry, the amount that's through P&L will be partly hedged. Will the amount that's held through OCI also be hedged? Is there a kind of an over-hedging P&L impact going forward or will the part that's held through the OCI be unhedged? Thank you.

Question: Chris Hallam - Goldman Sachs International - Analyst : Yeah. Hi. Good afternoon and two questions for me. I'm afraid they're on BPM and capital as well. So can you help me understand just what is the latest capital ratio impact from the BPM stake? I know we have the 30 basis points headwind coming from the stake increase, but I've lost track a bit on the total amount given the deduction thresholds, et cetera. So just what is the total impact on the CASA CET1 ratio as of today? And then, as you mentioned, you have a decision to make there. There are a few different options open to you. If you determine that the best option is to release some or all of that capital -- you're already at 11.5% pro forma, 50 bps above your target -- then you'd have the tailwind from the BPM capital release. So in that context, how would you think about dealing with that excess capital position and how does that capital redeployment flexibility feed into the formulation of BNPP, i.e., where would you want to push incremental investment across the businesses? Thank you.

Question: Pierre Chedeville - CIC Market Solutions - Analyst : Yes. Good afternoon, Jerome. No more left questions, I would say. Maybe a question as we get to the end of the strategic plan and the end of Philippe Brassac governance, I remember that when he launched the plan, he was very enthusiastic regarding the creation of two divisions, Credit Agricole Transitions & Energies and Credit Agricole Health and Territories. And he was also very enthusiastic to launch an offer regarding insurance for SMEs and more generally for companies. What would you say, at the end of the plan, regarding the success or not of this division, because you never talk about them? My second question is regarding the home loans. Of course, you said that we are in an ultra-competitive level playing field, I would say. But we see that one of your peers is retrenching from this business because he considers that margins are too thin. And other one -- and I'm talking about LCL here, not Caisses Regionales, which is completely different. The other one appear is on the contrary accelerating -- seems to accelerate strongly on home loans. I wanted to know where do you stand at LCL? Thank you very much.

Question: Pierre Chedeville - CIC Market Solutions - Analyst : And regarding insurance towards -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 10:00AM, CAGR.PA - Q1 2025 Credit Agricole SA Earnings Call

Question: Flora Bocahut - Barclays Capital - Analyst : Thank you. Hello, Jerome. Three questions actually from me. The first is, we've seen comments lately from [DSSM] or even some of the ECB governors around the willingness to simplify regulation, as they call it. So have you seen already any tangible sign of that happening, and is this something that you think can make a difference? Secondly, a question on the steepening of the yield curve, because the way you describe the macro hedge at LCL makes me think like this is actually pointing to the steepening of the curve being a headwind. So if you could elaborate whether this is actually a positive or a negative to credit P&L, the steepening of the curve. And lastly, a quick question on US dollar exposure. I imagine it's not much for Credit Agricole, so the effect headwind here from the weaker dollar. I guess maybe in the financing operations of the CIB, I would assume you have quite a bit of US dollar-denominated revenues against euro costs. So is this negligible or something we should be aware of? Thank you.

Question: Sharath Kumar - Deutsche Bank - Analyst : Thank you for taking my questions. Sorry if this has been asked already. So are there any updated thoughts on the interim dividend decision? Can you confirm if you have put this proposal to the Board and should there be a positive decision, whether it could apply on current day profits already? The second one is a clarification on capital. Versus your 11.8% pro forma CET1 ratio that you mentioned in your slides, I would expect a further 30 basis points impact from the asset services acquisition. So when do you expect this transaction to conclude? Also, are there any other material items that we need to be aware of for the capital trajectory? Thank you.

Question: Sharath Kumar - Deutsche Bank - Analyst : Thank you.