Credit Agricole has exceeded market forecasts despite a $519 million writedown causing a sharp fall in the French bank's fourth quarter profit. But, as Ciara Lee reports, the bank is the latest in France to report falling retail banking revenues, as lenders grapple with mortgage loan renegotiations and declining fee income.
Last in the line of French banks reporting on a challenging year - Credit Agricole. The country's biggest retail bank beat forecasts with a smaller than expected earnings drop in the fourth quarter. It comes despite booking a $519 million writedown on the value of its French retail unit. That's been the problem area for most French banks The low interest environment causing pain as they struggle to renegotiate mortgage loans and declining fee income. (SOUNDBITE) (English) GLOBAL FINANCIAL ECONOMIST AT COMMERZBANK, PETER DIXON, SAYING: "You've got the ECB's deposit rate in negative territory. So as a consequence it costs banks to hold cash. But at the same time you have a steepening of the yield curve which raises the ability of the banks to generate profits by its lending activities." Shares rose 3 percent on the news as fourth quarter net income of 291 million euros beat estimates. Credit Agricole's retail unit LCL's underlying profit fell 1.1 percent, performing slightly better than its peers. But for 2016 as a whole, LCL's revenue fell 14 percent. (SOUNDBITE) (English) GLOBAL FINANCIAL ECONOMIST AT COMMERZBANK, PETER DIXON, SAYING: "There are indications that we are perhaps past the worst with regards to banks but there are many hurdles still to cross. Not least of which will be what perhaps will Brexit mean for banks. What will the ECB do with regards to its monetary policy later in the year." The bank says efforts to develop its customer base in a highly competitive environment will pay off in coming quarters. Particularly given the very slow but gradual rise in interest rates.