PARIS: Credit Agricole aims to lift net profit by 60 percent to over 4 billion euros ($5.56 billion) in 2016, the French bank said on Thursday, helped by cost cuts and more product cross-selling at a time of slow growth at home.
The number-three listed French bank by market value, which is hosting an investor day in London, is eyeing growth after slashing its balance sheet and exiting markets such as Greece in order to offset tougher post-crisis regulation and macroeconomic headwinds.
The bank is also following in the footsteps of rivals like Societe Generale by promising a higher capital return to investors: It pledged to increase its dividend payout ratio to 50 percent in 2015 from 35 percent in 2013, with a cash component of about 50 percent.
Like many European banks forced to cut costs in an environment of tougher regulation and weaker profits, Credit Agricole said it was eyeing 520 million euros in cost cuts over the next three years in order to lift its return on tangible equity (ROTE) to 12 percent in 2016 versus 9.3 percent in 2013.
This profitability metric strips out intangible assets such as goodwill.
The 120-year-old semi-cooperative lender is targeting a revenue increase of 3 percent on an annual basis between 2014 and 2016, with most of the growth coming from retail banking, asset management and insurance.
"For the whole group we have identified a further 850 million euros of revenue synergies," said Jean-Paul Chifflet, Credit Agricole's chief executive officer, referring to the bank's parent group of regional lenders. "Savings and insurance business are the main contributors."
Acquisitions might also be on cards. Credit Agricole said its asset manager Amundi was targeting 1 trillion euros in assets under management by 2016, up 30 percent from end-2013, thanks to acquisitions and partnerships.
INTERNATIONAL PROMISE
Credit Agricole also expects recovery in its retail operations abroad and investment banking - business lines that were most hit during the financial crisis.
"Italy is our second-biggest market. We are confident in the capacity of (Italian unit) Cariparma to rebound and control the risks," Chifflet said. Credit Agricole, which is known in France as the "green bank" due to its historic roots as an agricultural bank, said its revenue at home would be nearly flat over the next three years.
France faces a lacklustre recovery from recession with unemployment hovering near all-time highs.
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