* Q3 group net income up 33%

* Q3 FICC sales trading growth of 25.6%

* Net interest margin stabilises in French retail

PARIS, Nov 8 (Reuters) - Credit Agricole, France's second-largest listed bank, posted better-than-expected quarterly results on Wednesday, driven by a strong performance of its investment bank and retail activities.

Third-quarter net income jumped 33% from a year earlier to 1.75 billion euros ($1.87 billion), above the 1.37 billion-euro average of analyst estimates compiled by the company.

Group revenues for the period came in at 6.34 billion euros, up 19% from a year earlier and also above expectations of 5.99 billion euros. The amount set aside by the bank for failing loans was also below expectations, at 439 million euros, boosting its bottom line.

The listed entity of Credit Agricole Group, controlled by 39 French mutual banks, said revenues from its corporate and investment bank division rose by more than 9% over the period, propelled notably by a 25.6% jump in trading in fixed-income, currencies and commodities (FICC).

Credit Agricole performance on that front was better than that of its two French rivals, Societe Generale and BNP Paribas, as well as of Deutsche Bank and Barclays, as less volatile financial markets dented investment banks' earnings.

Sales from the French retail banking division remained almost stable, edging up 0.4% in the third quarter, as it gained more customers, stabilised net interest margin and benefited from hedging contracts.

The net interest margin generated in Italy jumped by 48%, as higher interest rates are more quickly passed on to customers than in France, where almost all mortgages are signed on a fixed rate basis and where the government determines the remuneration of the country's most popular savings account, thus squeezing margins for banks.

Credit Agricole controls Europe's largest fund manager Amundi and recently announced its plan to acquire Belgium's wealth management firm Degroof Petercam. ($1 = 0.9361 euros) (Reporting by Mathieu Rosemain; Additional reporting by Augustin Turpin; Editing by Silvia Aloisi)