Credit Agricole suffers more than $500 million profit slump

Company with Montreal base suffers and predicts that margins will remain under pressure

Credit Agricole, the French network of mutual banks with a Canadian base in Montreal, has been hit by a significant slump in profits during the first quarter of the year.

More than 500 million euros were slashed off its profits compared to the same period last year with net income falling to 227 million euros – down from 784 million euros. In particular, the bank has been affected by a fall in its LCL domestic consumer business, while it also took a 399 million euros charge related to an overhaul. It was announced in February that the company would sell its stakes in around three dozen regional banks in an effort to simplify its structure.

In a Bloomberg report, MainFirst Bank AG analyst Federico Salerno described the results as “weaker than expected”.

On the back of the announcement, Credit Agricole suffered a 5.9 per cent slump – overall its shares have dropped by around 20 per cent this year. However, the French firm is far from alone.

During this year, European banks have seen their profits take a hit by interest rates being set at record low levels. Credit Agricole has already started to charge institutional clients for deposits and is yet to decide whether or not to pass on some impact to corporate customers.