Insurance

Crédit Agricole SA: AlphaValue downgrades – 04/05/2022 at 11:03 am

(AOF) – AlphaValue has lowered its recommendation to Accumulate to Sell and displays a price target of 9.51 euros on Crédit Agricole SA. The research firm cut its earnings per share estimates by 81.3% for 2022 and 35.6% for 2023. Its scenario includes a full write-down of CASA’s exposure to Russia: 4.5 billion euros. euros. The analyst also now factors in a more pessimistic economic scenario, in which growth is reduced and inflation accelerates to a higher level.

“Such an environment is expected to put additional pressure on CASA’s earnings, resulting in lower revenues for sensitive segments such as CIB and AM (although this is mitigated by the integration of Lyxor into Amundi),” it adds. he.

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Key points

– Listed vehicle of the mutualist group of the same name, 1

time

French bank and 8

th

worldwide;

– Net banking income of €22.7 billion, generated by retail banking at 65%, by specialized financial services at 12%, by wholesale banking at 14% and by savings management and insurance ;

– Business model in 3 points – relational excellence by becoming the preferred bank of individuals, entrepreneurs and institutions, local responsibility to support digitalisation and societal commitment by amplifying mutualist commitment;

– Capital held at 55.3% by the regional mutuals, hence the strong presence of their representatives on the Board of Directors (10 out of 21 members) chaired by Dominique Lefebvre, Philippe Brassac being Chief Executive Officer;

– Solid financial position with a CET 1 ratio of 11.9% and liquidity reserves of €344 billion.

Challenges

– Presentation on June 22 of a new medium-term plan, the objectives of that of 2019-2022 having been achieved a year in advance;

– Innovation strategy, one of the 3 levers of the business model:

– internally: 90% of Group entities having a “data-centric” architecture in 2022, and €300 million in IT efficiency gains, 100% of IT employees trained in new technologies in the University of the ‘Information and 100% of emerging technologies tested on new business services,

– towards customers: expansion of the range of leading applications (Ma banque Pro, Pro&Entreprises LCL, etc.), offer of digital and mobile checkout solutions for small/medium-sized merchants, European electronic banking offer for large brands and complete range -trade ;

– Reinforced environmental strategy:

– carbon neutrality by 2050 for the own footprint and on the investment and financing portfolios;

– in 2022: total cessation of financing for unconventional hydrocarbon extraction projects, no financing for oil or gas extraction in the Arctic zone,

– in 2025:

– 20% reduction in oil extraction,

– for all of Amundi’s open funds under active management, an energy rating higher than that of the competition and €20 billion committed to impact funds, – renewable energies: doubling of the production capacity of renewable energy facilities financed by Crédit Agricole Assurances at 10.5 GW

– 60% growth in the exposure of the investment bank to non-carbon energies and development of the platform dedicated to consulting and financing of hydrogen projects,

– 50% increase in the financing of renewable energies in France by Unifergie

– Benefits from the penetration of Chinese markets (1

time

foreign asset management company) and Indian (cash management offer);

– Reinforcement in the financing of mobility via the partnership with Stellantis, operational in 2023 and the launch of an internal entity specializing in car financing, rental and mobility.

Challenges

– Net assets of €13.2 per share, compared to the stock market price;

– Monitoring of the cost/income ratio, up slightly to 57.8%;

– Integration of Italian CreVal and Lyxor and result of the offer to retain BBVA shares;

– 2022 expectations: slowdown in growth, slow moderation in inflation and weak impact of monetary normalizations on the bond market;

– 2021 dividend of €1.05 (including €0.2 for the 2019 catch-up).

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