CREDIT AGRICOLE SA: Results for the Q4 & 2020 - A solid Group, determined to support the economy as a whole

CREDIT AGRICOLE SA
·145 min de lecture

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

CRÉDIT AGRICOLE GROUP

CRÉDIT AGRICOLE S.A.

Stated

Underlying

Stated

Underlying

Revenues

33,596 m€
+0.9% 12M/12M

34,035 m€
+0.7% 12M/12M

20,500 m€
+1.7% 12M/12M

20,764 m€
+2.1% 12M/12M

Expenses

21,266 m€
-0.6% 12M/12M

21,169 m€
-0.9% 12M/12M

12,452 m€
+0.3% 12M/12M

12,366 m€
-0.3% 12M/12M

Gross operating income

11,768 m€
+2.5% 12M/12M

12,304 m€
+2.6% 12M/12M

7,609 m€
+2.9% 12M/12M

7,959 m€
+4.8% 12M/12M

Cost of risk

3,651 m€
x2.1 12M/12M

3,651 m€
x2.1 12M/12M1

2,606 m€
X2.1 12M/12M

2,606 m€
X2.1 12M/12M 2

Net income Group share

4,689 m€
-34.9% 12M/12M

6,129 m€
-14.8% 12M/12M

2,692 m€
-44.4% 12M/12M

3,849 m€
-16.0% 12M/12M

Cost/income ratio (excl.SRF)

63.3%
-0.9 pp 12M/12M

62.2%
-1.0 pp 12M/12M

60.7%
-0.9 pp 12M/12M

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 €975m
Cost/ income ratio (excl. SRF) : 60.5% (-2.0 pp Q4/Q4)

Dividend policy adjusted for the current exceptional circumstances

CRÉDIT AGRICOLE GROUP

CRÉDIT AGRICOLE S.A.

Phased-in CET1

17.2%

+0.2 pp Q4/Q3

13.1%

+0.5 pp Q4/Q3

+8.3 pp above SREP requirements

+5.2 pp above SREP requirements

€438 bn in liquidity at end Dec. 2020

Dividend of €0.80/share with a scrip dividend option
Unwinding of 100% of Switch by 2022
Underlying ROTE : 9.3%

Post-lockdown rebound in activities; overall strong momentum over the full year, reflecting the strength of the global relationship model

CRÉDIT AGRICOLE GROUP

CRÉDIT AGRICOLE S.A.

French retail banking: loans outstanding: +5.0% excl. SGL
+1,500,000 new retail banking customers in 2020

Asset gathering: strong net inflows
CIB: strengthened leading positions

HIGHLIGHTS



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.




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.”


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

- 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

-