By Pietro Lombardi
Credit Agricole SA's profit fell in the first quarter as the bank set aside more provisions to cover potential loan losses, a step taken by many large banks in Europe and the U.S.
France's second-largest listed bank by assets posted a 16% drop in quarterly net profit to 638 million euros ($693.3 million), it said Wednesday.
Revenue grew 7.1% to EUR5.20 billion.
Analysts had expected a net profit of EUR479 million on revenue of EUR4.97 billion, according to a consensus forecast provided by FactSet.
The bank set aside EUR621 million to cover potential soured loans, up from EUR225 million a year earlier.
Credit Agricole's core Tier 1 ratio, a key measure of capital strength, was 11.4% at the end of March, from 12.1% in December. While the cancellation of the dividend for last year boosted the bank's capital position, capital in the quarter was hit by the partial unwinding of the Switch guarantee mechanism, under which Credit Agricole transfers part of the regulatory requirements related to its insurance operations to the regional banks of the group, paying in return a fixed fee.
"Our results are good, and allowed us, this quarter, to absorb a multiplication of cost of risk by three," Chief Executive Philippe Brassac said.
"We are solid, we are prudent in our assumptions, and we are very committed vis-a-vis the economy to successfully deliver with success a scenario that we believe to be quite manageable."
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