Credit Agricole SA: Sustaining Strong Earnings Momentum in 2024

As an investor, keeping track of the financial performance of companies is crucial for making informed decisions. One company that has caught my attention recently is Credit Agricole SA, a leading European bank with a strong presence in France and Italy. In this article, we will explore how Credit Agricole SA maintained its strong earnings momentum in 2024 and the key factors that contributed to its success.

Record Revenues and High Profitability

One of the most significant contributors to Credit Agricole SA's strong earnings momentum in 2024 was its record revenues. The company reported a +17.4% increase in Q4 revenues compared to the same period in 2023, reaching €7,092 million. This impressive growth was driven by the excellent performance of its Asset Gathering and Large Customers segments. Additionally, the full-year revenues reached a new high, with a +13.4% increase in Q4 compared to the same period in 2023.

Credit Agricole SA's high profitability was another key factor in its strong earnings momentum. The company maintained a low cost/income ratio, which decreased by -6.2 pp in Q4 2024 compared to Q4 2023. This, combined with a 14.0% return on tangible equity in 2024, contributed to the group's high profitability.

Strong Activity in All Business Lines

Credit Agricole SA experienced robust growth in retail banking and consumer finance, driven by multiple factors such as the continued upturn in the home loan business in France (up +18%), higher corporate loan production, thriving international lending business, consumer finance stability at a high level, and the confirmed stabilisation of the deposit mix in France. Additionally, the group reported record CIB, asset management, and insurance business, reflected in the record level of insurance revenues with contributions from all activities, high net inflows, and a record level of assets under management, as well as a new quarterly and full-year record reached by CIB.

Strategic Acquisitions and Capital Position

Credit Agricole SA's strategic acquisitions, such as Banco BPM and CACEIS, contributed to its earnings growth in 2024 by expanding its customer base and increasing its revenue streams. The acquisition of Banco BPM, a leading Italian bank, allowed Credit Agricole SA to gain a significant foothold in the Italian market, while the acquisition of CACEIS, a leading European asset servicing provider, strengthened its position in the asset management and servicing sector. These acquisitions enabled Credit Agricole SA to diversify its revenue streams, tap into new markets, and leverage synergies to drive earnings growth.

The Group's capital and liquidity positions played a crucial role in maintaining its strong earnings momentum in 2024. As of the end of the year, Crédit Agricole S.A.'s phased-in CET1 ratio stood at 11.7%, and the Group's phased-in CET1 ratio was 17.2%. These solid capital and liquidity positions allowed the Group to continue its strong earnings momentum, as indicated by the record quarterly and full-year revenues, high profitability, and proposed 2024 dividend increase to €1.10 per share (+5% vs. 2023). The Group's strong capital and liquidity positions also enabled it to successfully conclude financial instruments relating to 5.2% of Banco BPM's share capital and sign an agreement for the acquisition of 30.5% of Santander's stake in CACEIS.

In conclusion, Credit Agricole SA's strong earnings momentum in 2024 was driven by its record revenues, high profitability, strong activity in all business lines, strategic acquisitions, and solid capital and liquidity positions. The company's ability to maintain this momentum will depend on its continued focus on these key areas and its ability to adapt to the ever-changing financial landscape. As an investor, keeping a close eye on Credit Agricole SA's performance will be essential for making informed decisions about the company's future prospects.