The Southwood Group comments on investment opportunities in Credit Agricole SA as Europe’s third largest bank earnings statements beat all estimates.
After releasing earnings statements this week that showed net income rising to 696 million Euros from a paltry 56 million Euros for the same time last year, Credit Agricole SA finds itself at the center of market attention. The bank, Europe’s third largest has undergone expansive restructuring of both assets and core business in what many have described as a “valiant” climb back from the worldwide economic down turn of 2008.
“The dramatic change in fortune for the bank can be attributed to a range of diverse actions, although key among these was the decision to sell troubled Athens based lending unit Emporiki. By selling Emporiki, the bank signalled to the markets that it was willing to make hard decisions in order to improve margins and allow it to increase capital lending, a move heavily encouraged by France’s President Francois Hollande,” said Senior Vice President of Mergers and Acquisitions James Morgan at The Southwood Group.
An added benefit of Credit Agricole’s restructuring has seen the bank express confidence in its ability to cut costs by 650 million Euros by 2016, this it intends to bring about by making further core changes in its real estate, I.T and procurement divisions. As details of the banks earning and future plans were released the markets reacted positively pushing the bank’s share value higher by 2.5 percent. This rise contributes to Credit Agricole’s 29% increase in share value this year outperforming the gains of its two larger rivals BNP Paribas SA and Societe Generale SA with 16% and 21% respectively.
“By coming back into the fold of capital lending they have shown a willingness to engage in solid long term business models which investors look for, especially when the fundamental strategic model has heavy governmental support. When you find a major banking company willing to make such key changes on this scale, then you pay close attention. With results now vindicating their strategy a lot of confidence is returning to the sector with a boost in investor interest,” added Senior Vice President of Mergers and Acquisitions James Morgan at The Southwood Group.
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