Credit Agricole, France's biggest retail bank, reported a 92 percent rise in first-quarter net profit but its shares slid on Wednesday as the earnings came in below the average market forecast.
Net profit rose to 2.66 billion euros ($3.60 billion), including a capital gain of 448 million euros from the sale of a stake in Italian bank Intesa Sanpaolo. Seventeen analysts polled by Reuters had on average expected 2.75 billion.
Profits at its Credit Lyonnais French retail bank were also below forecasts, and costs rose more than expected to 2.96 billion euros, due partly to acquisitions carried out over the last year.
Credit Agricole shares closed down 4.1 percent at 31.61 euros, the biggest losers in France's blue chip CAC-40 index and the pan-European FTSEurofirst 300 index. The stock had its worst one-day slide in two months. Analysts said the earnings presented a mixed picture, with margin pressure at the French retail bank offset by higher investment banking profits.
"The net profit figure was slightly disappointing. There was also some disappointment over its French retail banking arm, although its investment bank performed well," said Gregory Moore, fund manager at Montsegur Finance, which owns Credit Agricole shares.
Citigroup cut its forecast for 2008 earnings per share (EPS) by 3 percent to 3.2 euros and its 2009 EPS forecast by 4 percent to 3.4 euros. It lowered its price target on Credit Agricole shares to 31 euros from 32 euros but kept a "hold" rating.
Gross operating profit rose 36.9 percent to 2.06 billion euros, as revenues rose 25.5 percent to 5.02 billion euros. Credit Agricole's results round off a mixed set of first-quarter profit figures from France's leading banks, which face tougher market conditions in 2007 than in 2006, as higher interest rates dent their margins. Earlier this month, rival French bank BNP Paribas posted a 24.5 percent rise in first-quarter net profit, while Societe Generale reported a 1.9 percent fall.
In January, Credit Agricole sold 3.6 percent of Intesa Sanpaolo for 2.5 billion euros after Italy's antitrust authority asked it to reduce its holding. Credit Agricole's earnings were also boosted by its takeover last year of Greek bank Emporiki and by higher profits at its Calyon investment bank division, which had a record net profit of 539 million euros.
Emporiki posted a 65 percent lower first-quarter net profit earlier this month, but Agricole said the Greek bank contributed 240 million euros to first-quarter revenues.
Credit Agricole has embarked on several overseas acquisitions in recent years to offset sluggish growth in French retail banking, and announced on Wednesday the takeover of Bank Sarasin's Luxembourg-based unit for an undisclosed sum. Based on latest prices, Credit Agricole shares have risen around 1 percent since the start of 2007, underperforming a 5 percent gain in the DJ Stoxx European bank sector.
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