CREDIT AGRICOLE SA: Second quarter and first half 2023 RESULTS - EXCELLENT PERFORMANCE OF THE UNIVERSAL BANKING MODEL
*EXCELLENT PERFORMANCE OF THE UNIVERSAL BANKING MODEL*
*CAG AND CASA STATED AND UNDERLYING DATA Q2-2023* *CRÉDIT AGRICOLE S.A.* *CRÉDIT AGRICOLE GROUP * *Stated* *Underlying* *Stated* *Underlying*
Revenues *€6,676m*
+18.8% Q2/Q2 *€6,329m*
+15.6% Q2/Q2 *€9,546m*
+7.9% Q2/Q2 *€9,159m*
+9.5% Q2/Q2
Costs excl. SRF *-€3,218m*
+3.0% Q2/Q2 *-€3,200m*
+4.5% Q2/Q2 *-€5,233m*
+4.8% Q2/Q2 *-€5,215m*
+5.7% Q2/Q2
Gross Operating Income *€3,461m*
+39.3% Q2/Q2 *€3,133m*
+30.3% Q2/Q2 *€4,319m*
+12.3% Q2/Q2 *€3,950m*
+15.4% Q2/Q2
Cost of risk *-€534m*
x2.6 Q2/Q2 *-€450m* x2.2 Q2/Q2 *-€938m*
+52.5% Q2/Q2 *-€854m*
+38.8% Q2/Q2
Net income Group share *€2,040m*
+24.7% Q2/Q2 *€1,850m*
+18.0% Q2/Q2 *€2,481m*
+2.1% Q2/Q2 *€2,249m*
+6.7% Q2/Q2
C/I ratio (excl. SRF) *48.2%*
-7.4 pp Q2/Q2 *50.6%*
-5.3 pp Q2/Q2 *54.8%*
-1.6 pp Q2/Q2 *56.9%*
-2.0 pp Q2/Q2
*QUARTERLY AND HALF-YEAR RESULTS AT **AN ALL TIME **BEST**: CAS**A REPORTED NET INCOME OF €2,040m IN Q2-23 AND €3,266m** IN H1-23**. *
Underlying figures:
· Revenues at record level, €6,329m Q2-23, +15.6% Q2/Q2 pro-forma IFRS17
· Revenues driven by dynamic business, notably in Insurance across all business lines, with continued strong net inflows in unit-linked products, Asset Management, Consumer Finance driven by the auto channel (first consolidation of CA Auto Bank), Investment banking with excellent performance in structured finance and financing solutions (repo, primary credit and securitisation).
· French retail banking impacted by the increase in refinancing costs and the slowdown in loan production
· CA Italia, IRB excluding Italy, CACEIS and CA Indosuez revenues supported by net interest margin
· Costs excl. SRF +4.5% Q2/Q2 pro-forma IFRS17 (first consolidation of CA Auto Bank)
· Cost/income ratio excl. SRF 52.3% H1-23
*SOLID CAPITAL AND LIQUIDITY POSITIONS*
· Crédit Agricole S.A. phased-in CET1 11.6% (340 bps>SREP)
· CAG phased-in CET1 17.6% (840 bps>SREP)
Within the scenario of strict adverse EBA stress tests, and based upon hypotheses radically contradictory to the French retail market, GCA strength does not waver as shown by CET1 2025 ratio, amongst strongest European banks.
· LCR 157.3% and €334bn in liquidity reserves at Crédit Agricole Group level after June-23 TLTRO-3 repayment
· Stock of provisions for performing loans €20.6bn, coverage ratio 83.6% for GCA
*CONTINUED DEVELOPMENT PROJECTS*
· Strengthening on Mobility market (start-up of Leasys and CA Auto Bank)
· Integration of European activities of RBC IS by CACEIS completed 03/07/2023
· Signing of an agreement for the acquisition of a majority stake in the capital of Banque Degroof Petercam^1
*ESG: CRÉDIT AGRICOLE SA RANKED AT TOP OF “DIVERSIFIED BANKS (EUROPE)” CATEGORY*
· Crédit Agricole S.A.’s non-financial ratings raised (72/100, +5 pts) by the Moody’s Analytics agency
At the meeting of the Board of Directors of Crédit Agricole S.A. on 3 August 2023, SAS Rue La Boétie informed the company of its intention to purchase Crédit Agricole S.A. shares
on the market for a maximum amount of one billion euros in line with the operation announced in November 2022. Details of the transaction are provided in a press release issued today by SAS Rue La Boétie.
*Dominique Lefebvre,*
Chairman of SAS Rue La Boétie and Chairman of the Crédit Agricole S.A. Board of Directors
“These excellent results demonstrate the universal banking model’s ability to adjust to a less favorable context and its usefulness towards both society and clients.
I would like to thank our chairmen, mutual shareholders and employees for their unwavering and daily commitment towards our clients.”
*Philippe Brassac,*
Chief Executive Officer of Crédit Agricole S.A.
“Being available everywhere, to everyone, at any given time, to cover all possible needs, is what makes the model universal and safe for both clients and banks.”
This press release comments on the results of Crédit Agricole S.A. and those of Crédit Agricole Group, which comprises the Crédit Agricole S.A. entities and the Crédit Agricole Regional Banks, which own 60.2% of Crédit Agricole S.A. Please refer to the appendices of this press release for details of specific items, which are adjusted for the various indicators to calculate underlying income. All 2022 figures are presented on a pro forma basis under IFRS17.
*Crédit Agricole Group*
*Group activity*
The Group’s commercial activity over the quarter was good across all business lines thanks to the customer focused banking model. In the second quarter of 2023, gross customer capture remained high, with 471,000 new retail banking customers, while the customer base grew by 114,000 customers^2. More specifically, over the quarter, the Group recorded +371,000 new Retail banking customers in France and +100,000 new International retai banking customers (Italy and Poland), and the customer base grew respectively by +69,000 and +45,000 customers.
*Inflows* remained at a good level in the Asset gathering and Large customers division at +€1.1 billion over the quarter*, *driven by positive net inflows in *Asset Management* of +€3.7 billion despite customers’ risk aversion in uncertain markets, both in MLT assets and in Treasury, with retail and institutional customers and in the JVs in India and Korea. In *insurance*, net inflows remained positive in France, driven by the success of unit-linked bond insurance, which also boosted the rate of gross inflows into unit-linked products, which remained high at 45.3%. Business also remained buoyant in property and casualty insurance and personal protection, with premium income up by 10.4%^3 and 5.2%^2 respectively compared with the second quarter of 2022. Insurance product *equipment rates* continued to rise year-on-year and at end June 2023 stood at 42.8% for the Regional Banks, 27.4% for LCL and 17.9% for CA Italia^4
*Corporate and Investment Banking* posted good performance this quarter, especially in structured financing activities (up 20.4% compared with the second quarter of 2022) and good commercial activity in capital markets, particularly in financing solutions (repo, primary credit and securitization).
In *consumer finance*, CACF’s production was up 9% compared with the second quarter of 2022, driven by the dynamism of the automotive channel (+30%, due in particular to a good start of the CA Autobank’s white label business).
In *retail banking*, *loan production* was down compared with the second quarter of 2022 in a declining market, but the level of outstanding loans continued to rise across all business lines. Housing production was down in France, as monetary policy was tightened (-45.6% for LCL and -23.7% for the Regional Banks), as well as in Italy (-23.5%). At the same time, the rate at which new home loans were granted continued to rise compared with March 2023, both for retail banking in France and in Italy. Retail banking *customer assets* were slightly up from the first quarter of 2023. On-balance sheet deposits (+0.5% compared with March 2023 and +3.5% compared with June 2022) were driven mainly by CA Italia (+2.9%) and the Regional Banks (+0.5%) thanks to corporate maturity transactions. Quarterly off-balance sheet customer assets, up 0.7%, were positive across all business lines.
*Group results*
*In the second quarter of 2023*, Crédit Agricole Group’s *stated net income Group share* came to *€2,481 million*, up +2.1% compared to the second quarter of 2022.
*Specific items* for the quarter had a cumulative impact of +€232 million on net income Group share, and comprised non-recurring accounting items totalling +€244 million, mainly the reorganisation of the SFS division’s Mobility business^5 (+€140 million) and the reversal of the provision for the Cheque Image Exchange fine provision (+€104 million). Recurring items amounted to -€11 million on net income Group share, and included accounting volatility items under revenues, i.e. the DVA (Debt Valuation Adjustment), the issuer spread portion of the FVA, and secured lending for -€11 million in net income Group share on capital markets and investment banking, and hedging of the Large Customers’ loan book for -€1 million in net income Group share.
Excluding these specific items, *Crédit Agricole Group’s underlying net income Group share*^6 amounted to *€2,249 million*, up +6.7% compared to second quarter 2022.
Credit Agricole Group – Stated and underlying results, Q2-23 and Q2-22
€m Q2-23
stated Specific items Q2-23
underlying Q2-22
stated Specific items Q2-22
underlying ∆ Q2/Q2
stated ∆ Q2/Q2
underlying
*Revenues* *9,546* *388* *9,159* *8,849* *485* *8,364* +7.9% +9.5%
Operating expenses excl.SRF (5,233) (18) (5,215) (4,996) (63) (4,933) +4.8% +5.7%
SRF 6 - 6 (8) - (8) n.m. n.m.
*Gross operating income* *4,319* *369* *3,950* *3,845* *422* *3,423* *+12.3%* *+15.4%*
Cost of risk (938) (84) (854) (615) - (615) +52.5% +38.8%
Equity-accounted entities 46 (12) 58 103 - 103 (55.7%) (44.0%)
Net income on other assets 33 28 5 22 - 22 +54.7% (74.6%)
Change in value of goodwill - - - - - - n.m. n.m.
*Income before tax* *3,460* *301* *3,160* *3,355* *422* *2,933* *+3.1%* *+7.7%*
Tax (772) (69) (704) (771) (108) (664) +0.1% +6.0%
Net income from discont'd or held-for-sale ope. 4 - 4 23 (3) 26 (83.2%) (85.2%)
*Net income* *2,692* *232* *2,460* *2,607* *311* *2,295* *+3.3%* *+7.2%*
Non controlling interests (211) (0) (211) (176) 11 (187) +20.1% +12.9%
*Net income Group Share* *2,481* *232* *2,249* *2,431* *322* *2,108* *+2.1%* *+6.7%*
*Cost/Income ratio excl.SRF (%)* *54.8%* * * *56.9%* *56.5%* * * *59.0%* *-1.6 pp* *-2.0 pp*
In the second quarter of 2023, *underlying revenues* totalled €9,159 million, up +9.5% from the second quarter of 2022, driven by the Asset Management and Insurance Services division (+46.4%), which benefited from a rise in insurance revenues (x3.1 and +42% on an IFRS17 basis^7), the Specialised Financial Services division (+26.1%), which includes the first line-by-line integration of CA Auto Bank, International Retail Banking (+21.0%), with a healthy net interest margin, and Corporate and Investment Banking (+1.6%), which also benefited from a higher net interest margin in institutional financial services, with Investment Banking (BFI) revenues slightly lower but close to the historical best 2022 Q2;^; underlying revenues in the French Retail Banking division (-2.9%) fell as a result of higher refinancing costs and resources.
*Underlying operating expenses excluding the Single Resolution Fund (SRF) *rose by +5.7% in the second quarter of 2023, to €5,215 million, mainly due to higher compensation in an inflationary context, support for business development and IT expenses. Overall, the Group’s *underlying cost/income ratio excluding SRF* recorded a decrease of -2.0 percentage points to 56.9% in the second quarter of 2023. The *underlying gross operating income* was up +15.4% compared to the second quarter of 2022, reaching €3,950 million.
The *underlying cost of credit risk *declined to -€854 million, an increase of +39% compared with the second quarter of 2022, when it stood at -€615 million. The expense of -€854 million in the second quarter of 2023 breaks down into a provision for performing loans (stages 1 and 2) of -€154 million (vs. €220 million in the second quarter of 2022), a provision of -€697 million for proven risk (stage 3 - vs. €401 million in the second quarter of 2022), this decline is linked to the default of major French banking operations and the increase in proven risk in retail banking and consumer finance, and lastly a provision of -€3 million for other risks. The provisioning levels were determined by taking into account several weighted economic scenarios, as in previous quarters, and by applying adjustments on sensitive portfolios. The weighted economic scenarios for the second quarter were updated, with a favourable scenario (French GDP at +1% in 2023, +2.4% in 2024) and an unfavourable scenario (French GDP at +0.1% in 2023 and -0.1% in 2024). The* cost of credit risk on outstandings*^*8** over a rolling four-quarter period stood at 25 basis points, which is in line with the 25 basis point assumption of the Medium-Term Plan. *It stands at 29 basis points on a quarterly annualised basis^9.
*Underlying pre-tax income stood at €3,160 million*, a year-on-year increase of +7.7%. The underlying pre-tax income included the contribution from equity-accounted entities for €58 million (down -44.0%, mainly due to the line-by-line consolidation of CA Auto Bank, formerly FCA Bank) and net income on other assets, which came to €5 million this quarter. The underlying *tax charge* *was up +6.0%* over the period. Underlying net income before non-controlling interests was up +7.2% to €2,460 million. Non-controlling interests rose +12.9%. Lastly, *underlying net income Group share was €2,249 million, +6.7% higher* than in the second quarter of 2022.
Credit Agricole Group – Stated and underlying results, H1-23 and H1-22
€m H1-23
stated Specific items H1-23
underlying H1-22
stated Specific items H1-22
underlying ∆ H1/H1
stated ∆ H1/H1
underlying
*Revenues* *18,473* *356* *18,117* *17,730* *564* *17,166* +4.2% +5.5%
Operating expenses excl.SRF (10,517) (18) (10,498) (10,078) (81) (9,997) +4.4% +5.0%
SRF (620) - (620) (803) - (803) (22.8%) (22.8%)
*Gross operating income* *7,337* *338* *6,999* *6,850* *483* *6,367* *+7.1%* *+9.9%*
Cost of risk (1,486) (84) (1,402) (1,503) (195) (1,308) (1.1%) +7.1%
Equity-accounted entities 153 (12) 165 211 - 211 (27.4%) (21.7%)
Net income on other assets 37 28 10 35 - 35 +8.0% (72.4%)
Change in value of goodwill - - - - - - n.m. n.m.
*Income before tax* *6,042* *269* *5,773* *5,592* *288* *5,304* *+8.0%* *+8.8%*
Tax (1,483) (60) (1,422) (1,474) (123) (1,351) +0.6% +5.3%
Net income from discont'd or held-for-sale ope. 6 - 6 25 (7) 31 (76.9%) (81.8%)
*Net income* *4,565* *209* *4,356* *4,143* *158* *3,984* *+10.2%* *+9.3%*
Non controlling interests (415) (0) (415) (362) 11 (373) +14.7% +11.4%
*Net income Group Share* *4,150* *209* *3,941* *3,781* *169* *3,612* *+9.8%* *+9.1%*
*Cost/Income ratio excl.SRF (%)* *56.9%* * * *57.9%* *56.8%* * * *58.2%* *+0.1 pp* *-0.3 pp*
Stated net income Group share *in the first half of 2023* amounted to €4,150 million, compared with €3,781 million in the first half of 2022, an increase of +9.8%.
Specific items for the first six months of 2023 include the specific items of the Regional Banks for first half 2023 detailed in the Regional Banks section, and the specific items of Crédit Agricole S.A. detailed in the Crédit Agricole S.A. section.
Excluding these specific items, *underlying net income Group share amounted to* *€3,941 million*, up +9.1% compared to first half 2022.
*Underlying revenues totalled €18,117 million*, up *+5.5%* in first half 2023 compared with first half 2022. This increase was due to very high revenues across all the business lines in the *Asset Gathering* division, the first line-by-line integration of CA Auto Bank in the *Specialised Financial Services* division, the highest level of revenues in the *Large Customers *division and a higher net interest margin in the *International Retail Banking *division; revenues in the *French Retail Banking *division were down due to the lower interest margin.
Underlying *operating expenses* excluding SRF amounted to -€10,498 million, up +5.0% compared with first half 2022, mainly due to higher compensation in an inflationary environment, support for business development and IT expenditure. The underlying cost/income ratio excluding SRF for first half 2023 was 57.9%, down -0.3 percentage points compared to first half 2022. The SRF totalled -€620 million in 2023, down -22.8% compared to 2022.
Underlying *gross operating income* totalled €6,999 million, up +9.9% compared to first half 2022.
The underlying* cost of risk* for the half-year rose to -€1,402 million (of which -€221 million in cost of risk on performing loans (stage 1 and 2), -€1,162 million in cost of proven risk, and +€19 million in other risks corresponding mainly to reversals of legal provisions), i.e. an increase of +7.1% compared to first half 2022.
As at 30 June 2023, risk indicators confirm *the high quality of Crédit Agricole Group’s assets and risk coverage level*. The diversified loan book is mainly geared towards home loans (46% of gross outstandings) and corporates (32% of gross outstandings). Loan loss reserves amounts to €20.6 billion at the end of June 2023 (€10.9 billion for Regional Banks), 42% of which represented provisioning of performing loans (48% for Regional Banks). The loan loss reserves for performing loans have increased at Group level by +€3.3 billion since the fourth quarter of 2019. The prudent management of these loan loss reserves has enabled the Crédit Agricole Group to have one of the best^10 overall coverage ratios for doubtful loans (83.6% at the end of June 2023) among the largest European banks.
*Net income on other assets* stood at €10 million in first half 2023, vs. €35 million in first half 2022. *Underlying pre-tax income before discontinued operations and non-controlling interests* rose by +8.8% to €5,773 million. The tax charge was -€1,422 million, up +5.3%, with an underlying effective tax rate of 25.4%, down -1.2 percentage points compared to first half 2022. Underlying net income before non-controlling interests was therefore up by +11.4%. Non-controlling interests amounted to -€415 million in first half 2023, up +11.4%.
*The underlying net income Group share for first half 2023* thus stood at €3,941 million, up +9.1% compared to first half 2022.
*Regional **b**anks*
*Regional **b**anks’ activity* grew in the second quarter of 2023. *Gross customer capture was up*, with +291,000 new customers over the quarter, while *the customer base grew by *+62,000 new customers over the quarter. The number of *customers using digital tools* increased, with “Ma Banque” application reaching now 8.6 million^11 users and the number of online signatures^12 grew up by +40% between the second quarter of 2022 and the second quarter of 2023. *The strong performance of **the offer **"Ma Banque Au Quotidien"* for individual customers has led to *an increase and improvement **of* *the **card stock* (+2.2% year-on-year, with +13% for Premium cards). In the professional market, the offer “Propulse” has quickly found its place in the range, complementing the offer of a 100% digital solution with management services (in eight months: 8,000 accounts opened strictly online and 15,000 online prospects, with a high satisfaction rate^13).
*Loan production **has declined* this quarter by -19.3% compared to the second quarter of 2022, (-6.8% Q2-23 vs. average 2018-2022). The decline is sharp in home loans (-23.7% compared to the second quarter of 2022), but it remains lower than the market^14. The home loan production rate is up compared to the first half of 2023, and the average rate for 20-25 year lending reached 3.5%^15 early July 2023. *Loan outstandings* reached €642 billion at end June 2023, up +4.6% compared to the end of June 2022 (+1.0% compared to the end of March 2023) driven by the corporate market (+7.5% compared to the second quarter of 2022).
*Total customer assets* rose by +3.3% year on year to €866 billion at end June 2023. This growth was driven by on-balance sheet deposits, which reached €579 billion at end June 2023, up +2.7% compared to end June 2022 (including +9.9% for passbook accounts and +64.5% for term deposits). Compared with the first quarter of 2023, on-balance sheet deposits rose by 0.5%. Off-balance sheet customer assets reached €287 billion at end June 2023, up +4.6% year-on-year.
*In the second quarter of 2023, Regional **b**anks’ stated revenues, including the SAS Rue La Boétie dividend*^16, amounted to €4,950 million, down -5.3% compared to the second quarter of 2022, due to a decline in the intermediation margin of -33,8% (excluding the base effect of home purchase savings plans) and an increase in refinancing costs. There was also a negative base effect on the provision for home purchase savings plans of -€342 million recorded under specific items in the second quarter of 2022. Portfolio revenues were up, benefiting from positive market effects and an increase in dividends received. Fee and commission income was up 2.3%. *Operating expenses *increased +3.6% over the period largely due to the increase in staff costs. *Gross operating income* decreased by -12.5%. *The* *cost of risk *fell slightly by -1.7% compared to the second quarter of 2022 to -€408 million. *The Regional Banks’ net income Group share*, including SAS Rue La Boétie dividend, amounted to €2,037 million in the second quarter of 2023, down -9.2% compared to the second quarter of 2022.
*The Regional **b**anks’ contribution to the results of Crédit Agricole Group amounted to €413 million (-** **46.2%) *in stated net income Group share in the second quarter of 2023, with revenues of €3,353 million (-10.3%) and a cost of risk of -€405 million (-1.6%).
*In the second quarter of 2023, specific items* had a positive impact of €41 million on revenues (identical impact on net income Group share) and were linked to a reversal of the provision for “cheque image” exchange. *In the second quarter of 2022, specific items *had an impact of €342 million on revenues (€254 million on net income Group share) and corresponded to a reversal of provisions on home purchase savings plans.
*In first half 2023*, *revenues including the **dividend from **SAS Rue La Boétie *were down (-6.9%) compared to first half 2022. Operating expenses rose by +3.1%, and *gross operating income* consequently fell by -18.8% over the first half. Finally, with a *cost of risk* up +3.4%, *the Regional **b**anks’ net income Group share, including SAS Rue La Boétie dividend*, amounted to €2,472 million, down -18.2% compared to 2022 first half.
*The Regional **b**anks’ contribution to the results of Crédit Agricole Group in first half 2023 *amounted to €833 million (-45.9%) in stated net income Group share, with revenues of €6,686 million (-9.9%) and a cost of risk of -€577 million (+3.6%).
*Crédit Agricole S.A.*
*Results*
Crédit Agricole S.A.’s Board of Directors, chaired by Dominique Lefebvre, met on 3 August 2023 to examine the financial statements for the second quarter of 2023.
Credit Agricole S.A. – Stated and underlying results, Q2-23 and Q2-22
*€m* *Q2-23*
*stated* *Specific items* *Q2-23*
*underlying* *Q2-22*
*stated* *Specific items* *Q2-22*
*underlying* *∆ Q2/Q2*
*stated* *∆ Q2/Q2*
*underlying*
*Revenues* *6,676* *346* *6,329* *5,619* *143* *5,477* *+18.8%* *+15.6%*
Operating expenses excl.SRF (3,218) (18) (3,200) (3,123) (63) (3,061) +3.0% +4.5%
SRF 4 - 4 (11) - (11) n.m. n.m.
*Gross operating income* *3,461* *328* *3,133* *2,485* *80* *2,405* *+39.3%* *+30.3%*
Cost of risk (534) (84) (450) (202) - (202) x 2.6 x 2.2
Equity-accounted entities 27 (12) 39 94 - 94 (71.1%) (58.2%)
Net income on other assets 29 28 1 11 - 11 x 2.7 (89.1%)
Change in value of goodwill - - - - - - n.m. n.m.
*Income before tax* *2,983* *259* *2,724* *2,387* *80* *2,307* *+25.0%* *+18.1%*
Tax (677) (69) (609) (549) (19) (530) +23.3% +14.9%
Net income from discont'd or held-for-sale ope. 4 - 4 23 (3) 26 n.m. n.m.
*Net income* *2,309* *190* *2,119* *1,861* *57* *1,803* *+24.1%* *+17.5%*
Non controlling interests (269) (1) (269) (225) 11 (235) +19.9% +14.2%
*Net income Group Share* *2,040* *190* *1,850* *1,636* *68* *1,568* *+24.7%* *+18.0%*
*Earnings per share (€)* *0.64* *0.06* *0.58* *0.51* *0.02* *0.49* *+25.5%* *+18.5%*
*Cost/Income ratio excl. SRF (%)* *48.2%* * * *50.6%* *55.6%* * * *55.9%* *-7.4 pp* *-5.3 pp*
*In the second quarter of 2023*, Crédit Agricole S.A.’s *stated net income Group share* amounted to *€2,040 million*, an increase of +24.7% from the second quarter of 2022.
*Specific items* for the quarter had a cumulative impact of +€190 million on net income Group share, and comprised non-recurring accounting items totalling +€201 million, mainly the reorganisation of the SFS division's Mobility business^17 (+€140 million) and the reversal of the provision for the Cheque Image Exchange fine (+€62 million). Recurring items amounted to -€11 million on net income Group share, and included accounting volatility items under revenues, i.e. the DVA (Debt Valuation Adjustment), the issuer spread portion of the FVA, and secured lending for -€11 million in net income Group share on capital markets and investment banking, and hedging of the Large Customers’ loan book for -€1 million in net income Group share.
Excluding specific items, *underlying net income Group share*^18 stood at *€1,850 million* in the second quarter of 2023, a +18.0% rise over the second quarter of 2022.
In the second quarter of 2023, *underlying revenues* came to €6,329 million, up +15.6% compared to the second quarter of 2022. This growth was driven by the Asset Gathering division (+47.5%), which benefited from a rise in insurance premium revenues (x3.1 and +42% on an IFRS 17 basis^19); Specialised Financial Services (+26.1%), which includes the first line-by-line integration of CA Auto Bank; International Retail Banking (+20.9%), with a healthy net interest margin in Italy, Poland and Egypt; and Corporate and Investment Banking (+1.5%), boosted mainly by a higher net interest margin in asset servicing, with CIB revenues slightly lower but close to the historical best Q2 achieved in 2022. The underlying revenues of French Retail Banking (-4.4%) fell due to the higher costs of refinancing and funding resources.
*Underlying operating expenses *totalled -€3,196 million in the second quarter of 2023, an increase of +4.1% compared to the second quarter of 2022. *Excluding SRF*, this item comes to -€3,200 million for the second quarter of 2023, an increase of -€139 million, or +4.5%, of which -€62 million is due to the effect of the first-time consolidation of CA Auto Bank. The remainder is mainly attributable to the payroll increase of -€75 million (primarily Large Customers and IRB), and provisions for variable compensation and bonuses of -€26 million (mainly Corporate and Investment Banking), IT investments increased by -€35 million (mainly for Large Customers).
*The* *underlying cost/income ratio excluding SRF* in the second quarter of 2023 thus stood at 50.6%, a - 5.3 percentage points improvement compared to the second quarter of 2022.
*Gross underlying operating income* in the second quarter of 2023 totalled €3,133 million, a rise of +30.3%.
As at 30 June 2023, risk indicators confirm *the high quality of Crédit Agricole S.A.’s assets and risk coverage level*. The diversified loan book is mainly geared towards home loans (26% of gross outstandings) and corporates (43% of Crédit Agricole S.A. gross outstandings). The Non Performing Loans ratio remained stable and low at 2.6%. The coverage ratio^20 was high at 71.4%, up +0.6 percentage points over the quarter. *Loan loss reserves* amounted to €9.7 billion for Crédit Agricole S.A., an increase of +3.7% compared to end March 2023. Of those loan loss reserves, 36% were for performing loan provisioning. Loan loss reserves for performing loans are higher by €1.5 billion compared with the fourth quarter of 2019.
*The underlying cost of credit risk* deteriorated to -€450 million, a 2.2x increase compared with the second quarter of 2022 figure of -€202 million. The expense of -€450 million in the second quarter of 2023 consists of a write-back on performing loans (Stages 1 and 2) for -€14 million (versus a write-back of -€76 million in the second quarter of 2022), provisioning of proven risks for -€468 million (Stage 3, compared to -€309 million in the second quarter of 2022), the degradation due to a market significant case and the increase in proven risk on retail banking and consumer credit, and lastly a write-back of €4 million for other risks.
The provisioning levels were determined by taking into account several weighted economic scenarios, as in previous quarters, and by applying adjustments on sensitive portfolios. The weighted economic scenarios for the second quarter were updated, with a favourable scenario (French GDP at +1% in 2023, +2.4% in 2024) and an unfavourable scenario (French GDP at +0.1% in 2023 and -0.1% in 2024). The cost of risk relative to outstandings on a four quarter rolling basis^21 stood at 33 basis points, *i.e. in line with the assumption of the Medium-Term Plan of 40 basis points* and 35 basis points on an annualised quarterly basis^22.
*The underlying contribution of* *equity-accounted entities *came to €39 million in the second quarter of 2023, down -58.2% from the second quarter of 2022, impacted by a scope effect linked to the line-by-line consolidation of CA Auto Bank within SFS.
*Net income on other assets* stood at €1 million in the second quarter of 2023, down €10 million compared to the second quarter of 2022.
*Underlying income*^*23** before tax, *discontinued operations and non-controlling interests was up +18.1% to €2,724 million. The *underlying effective tax rate* stood at 22.7%, while the underlying tax charge increased by +14.9% to -€609 million. Net income on discontinued operations came in at +€4 million, versus +€26 million in the second quarter of 2022. *Underlying net income before non-controlling interests* was therefore up +17.5% to €2,119 million. *Non-controlling interests* amounted to -€269 million in the second quarter of 2023, an increase of +14.2%.
*Underlying net income Group share* was up by +18.0% compared to the second quarter of 2022 at €1,850 million.
*Underlying earnings per share *in the second quarter of 2023 reached *€0.**58*, increasing by +18.5% compared to the second quarter of 2022.
*Underlying RoTE*^24, which is calculated on the basis of an annualised underlying net income Group share^25 and IFRIC charges linearised over the year, net of annualised Additional Tier 1 coupons (return on equity Group share excluding intangibles) and adjusted for certain volatile items recognised in equity (including unrealised gains and/or losses), reached 14.7*% at 30 June 2023*, +.3 percentage point compared to 31^st March 2023.
Credit Agricole S.A. – Stated and underlying results, H1-23 and H1-22
*€m* *H1-23*
*stated* *Specific items* *H1-23*
*underlying* *H1-22*
*stated* *Specific items* *H1-22*
*underlying* *∆ H1/H1*
*stated* *∆ H1/H1*
*underlying*
*Revenues* *12,797* *315* *12,482* *11,203* *152* *11,051* *+14.2%* *+12.9%*
Operating expenses excl.SRF (6,546) (18) (6,528) (6,256) (81) (6,175) +4.6% +5.7%
SRF (509) - (509) (647) - (647) (21.3%) (21.3%)
*Gross operating income* *5,741* *296* *5,445* *4,300* *71* *4,229* *+33.5%* *+28.8%*
Cost of risk (908) (84) (824) (943) (195) (748) (3.7%) +10.1%
Equity-accounted entities 113 (12) 125 189 - 189 (40.1%) (33.8%)
Net income on other assets 33 28 5 20 - 20 +60.8% (75.9%)
Change in value of goodwill - - - - - - n.m. n.m.
*Income before tax* *4,979* *227* *4,752* *3,567* *(124)* *3,691* *+39.6%* *+28.7%*
Tax (1,199) (60) (1,138) (950) (17) (934) +26.2% +21.9%
Net income from discont'd or held-for-sale ope. 6 - 6 24 (7) 31 n.m. n.m.
*Net income* *3,786* *167* *3,619* *2,641* *(147)* *2,788* *+43.4%* *+29.8%*
Non controlling interests (520) (0) (519) (434) 11 (445) +19.8% +16.8%
*Net income Group Share* *3,266* *167* *3,100* *2,207* *(136)* *2,344* *+48.0%* *+32.3%*
*Earnings per share (€)* *1.00* *0.06* *0.95* *0.67* *(0.05)* *0.72* *+48.6%* *+31.5%*
*Cost/Income ratio excl.SRF (%)* *51.2%* * * *52.3%* *55.8%* * * *55.9%* *-4.7 pp* *-3.6 pp*
Stated net income Group share *in first half 2023* amounted to €3,266 million, compared with €2,207 million in first half 2022, an increase of +48.0%.
*Specific items in first half 2023* had a positive impact of *+€167 million *on stated net income Group share. In addition to the second quarter items already mentioned above, the first quarter 2023 items had had a negative impact of -€23 million and corresponded to the recurring accounting volatility items, i.e. the DVA for -€6 million and the hedges of the Large Customers’ loan book for -€17 million. The specific items for first half 2022 had a negative impact of -€136 million on stated net income Group share, explained by one of the recurring accounting volatility items, specifically the DVA for -€6 million, as well as hedges on the Large Customers’ loan book for +€53 million and changes in the provision for home purchase savings plans for +€63 million. To this were added the Creval integration costs for -€16 million and those of Lyxor for -€26 million in net income Group share, as well as the provision for equity risk in Ukraine for -€195 million, and the reclassification of Crédit du Maroc to assets held for disposal for -€10 million. Excluding these specific items, *underlying net income Group share amounted to* *€3,100 million*, up *+32.3%* compared to first half 2022.
*Underlying e**arnings per share stood at €0.95** per share in first half 2023,* up *31.5**%* compared to first half 2022.
*Underlying*^26* RoTE, *which is calculated on the basis of an annualised underlying net income Group share^27 and IFRIC charges linearised over the year*, *net of annualised Additional Tier 1 coupons (return on equity Group share excluding intangibles) and restated for certain volatile items recognised in equity (including unrealised gains and/or losses), reached *14.7%* *for first half 2023*, up from first half 2022 (13.9%).
*Underlying revenues* were up *+12.9%* compared to first half 2022. Underlying *operating expenses* excluding SRF increased by 5.7% compared to first half 2022. The cost/income ratio excluding SRF for the first half of the year was 52.3%, an improvement of 3.6 percentage points compared to first half 2022. SRF for the period came to -€509 million, a decrease of 21.3% compared to first half 2022. Underlying *gross operating income* totalled €5,445 million, up +28.8% compared to first half 2022. Lastly, *cost of risk* increased over the period (+10.1%/-€76 million to -€824 million versus -€748 million in first half 2022).
*Analysis of **the activity and the results of **Crédit Agricole S.A.’s divisions and business lines*
*Activity of the Asset Gathering division*
In the second quarter of 2023, assets under management in the Asset Gathering (AG) division stood at €2,482 billion, up +1.2% compared to the end of March 2023 thanks to a positive market effect. Net inflows for the quarter were positive at +€1.1 billion, driven by €3.7 billion at Amundi. Over one year, assets under management rose by +2.0%, due to a positive market effect. Net inflows year-on-year were negative at -€4.7 billion, mainly due to significant outflows in the first quarter of 2023 for Amundi on low-margin institutional assets. Excluding double counting, assets under management stood at €2,205 billion at 30 June 2023, up +2.9% compared to 30 June 2022.
*Insurance activity (Crédit Agricole Assurances)* reached a record level in the second quarter, with total premium income of €9.1 billion, up +2.7% compared to the second quarter of 2022 (+3.8% at constant scope, excluding La Médicale). Premium income in first half 2023 achieved a record of €20.8 billion, up +3.6% compared to first half 2022 (+5.6%, at constant scope, excluding La Médicale).
*In Savings/Retirement*, the business enjoyed strong commercial momentum, with premium income of €14.8 billion at end June 2023, up +4.7% compared to first half 2022. Gross inflows amounted to €6.6 billion this quarter, with the unit-linked share remaining very high at 45.3% (+4.4 percentage points compared to the second quarter of 2022 and -0.4 points compared to the first quarter of 2023). Net inflows were -€0.2 billion this quarter as net inflows in France (+€1.1 billion) offset outflows from international markets, particularly Italy and Luxembourg. Similarly, positive net inflows from unit-linked contracts (+€1.5 billion) offset outflows from euro funds (-€1.8 billion).
*Assets* (savings, retirement and death and disability) stood at €326.3 billion, up year-on-year by +€6.9 billion, i.e. +2.2%. Unit-linked contracts accounted for 27.9% of assets, up +0.8 percentage points compared to March 2023, and +2.7 percentage points over one year. This asset was buoyed by the successful marketing of unit-linked bond products and favourable financial markets.
Policy Participation Reserve (PPE^28) amounted to €11.9 billion at 30 June 2023, representing 5.6% of total euro outstandings.
*Property and casualty insurance* activity was dynamic, with premium income of €1.2 billion in the second quarter of 2023, up +3.8% compared to the second quarter of 2022 (+10.4% at constant scope, excluding La Médicale). At the end of June 2023, the portfolio of property and casualty policies totalled nearly €15.6 million^29, an increase of +1.1% over the quarter and +3.5% over one year (at constant scope, excluding La Médicale). The equipment of individual customers in the banking networks of Crédit Agricole Group increased compared to end June 2022 for all networks: 42.8%, or +0.5 percentage point for Regional Banks, 27.4%, or +0.5 percentage point for LCL, and 17.9% for CA Italia including Creval’s customer base, or +2.3 percentage points. The combined ratio stood at 97.8%, an improvement of +3.9 percentage points year-on-year, as the second quarter of 2022 had been heavily impacted by weather-related claims.
In *death & disability/creditor/group insurance*, premium income for the second quarter of 2023 stood at €1.3 billion, up +5.2% from the second quarter of 2022, at constant scope excluding La Médicale, thanks to the strong growth of death & disability (up +15% at constant scope, excluding La Médicale) and of group insurance (+19%). Premium income from creditor insurance is stable.
In the second quarter of 2023, the European asset management market was marked by persistent risk aversion, with very modest total inflows and even outflows from active management. Against this backdrop, *Asset Management (Amundi)* posted positive net inflows, both in Medium/Long-Term assets and Treasury products, in the Retail and Institutional segments alike
*Assets under management* reached €1,961 billion at the end of June 2023, up +1.4% compared to 31 March 2023. Year-on-year, AuM rose by +1.9% compared to 30 June 2022.
The *Retail* segment recorded net inflows of +€2.1 billion in the second quarter, reflecting the particularly high level of risk aversion among this client base, as evidenced in particular by a high level of inflows into Treasury products (+€1.9 billion) continued strong activity in Structured products (+€2.2 billion), which offer capital protection and returns, as well as Buy & Watch bond funds.
The* Institutionals *segment also recorded positive net inflows of €2.4 billion in the second quarter of 2023, driven by a record quarter in Employee Savings (+€3.4 billion in MLT assets). The excellent performance of this business line is due to a combination of rising corporate profits and companies’ desire to develop ways to share value with their staff, such as through employee savings schemes.
Finally, *the Asian JVs*^30 recorded outflows of -0.9 billion in the second quarter of 2023, entirely due, as in the first quarter, to outflows from major institutions at ABC-CA (China, with outflows of -€5.5 billion), whereas the Indian JV recorded very buoyant activity (+€3.6 billion) and the other JVs also recorded positive net inflows.
*Amundi Technology* saw its revenues grow by more than +30% in the second quarter and second half 2023 compared with the same periods last year. The entity gained three new customers in the second quarter and seven in first half 2023.
*In wealth management*^*31**,* total assets under management (CA Indosuez Wealth Management and LCL Private Banking) amounted to €194.6 billion at the end of June 2023 (including €132.7 billion for Indosuez Wealth Management), and were stable compared to the end of March 2023 owing to a positive market effect. Net inflows were negative in wealth management at -€2.3 billion, impacted by changes in customer behaviour in a context of rising rates.
*Results of the Asset Gathering division*
The 2023 data for the Insurance business line, and therefore the data for the Asset management and Savings business line, are compared with 2022 pro forma IFRS 17 data.
In the second quarter of 2023, AG generated *revenues* of €1,732 million, up +47.5% compared to the second quarter of 2022, with a very high level of revenues across all of the division's business lines, in Insurance, Asset Management and Wealth Management. Costs excluding SRF decreased -1.7%. Thus, the cost/income ratio excluding SRF stood at 41.3%, down -20.7 percentage points compared to the second quarter of 2022. Gross operating income stood at €1,017 million, 2.3 times greater than the second quarter of 2022. Taxes stood at €246 million, a +72.6i % increase. The *net income Group share* of AG stood at €676 million, 2.8 times greater than the second quarter of 2022. Net income Group share increased between the second quarter of 2022 and the second quarter of 2023, across all of the division's business lines: asset management (+38.4%), insurance (x6.3) and wealth management (+56.3%).
In the first quarter of 2023, AG generated *revenues* of €3,478 million, up +26.8% compared to first half 2022. The increase is explained by a very good level of revenues overall in Insurance and Wealth Management activities. Costs excluding SRF were stable (+0.3%). As a result, the cost/income ratio excluding SRF stood at 41.1%, down -10.8 percentage points compared to first half 2022. Gross operating income stood at €2,042 million, a sharp increase of +55.8% compared to first half 2022. Taxes stood at €478 million, a +46.6% increase. The *net income Group share* of AG stood at €1,374 million, up +67.6% compared to first half 2022. Net income Group share increased between first half 2022 and first half 2023 across all of the division’s business lines: asset management (+12.8%), insurance (x2.1) and wealth management (+62.3%).
In first half 2023, AG contributed 47% to the underlying net income Group share of Crédit Agricole S.A.'s core businesses (excluding Corporate Centre division) and 30% to underlying revenues excluding Corporate Centre division.
As at 30 June 2023, equity allocated to the division amounted to €12.4 billion, including €10.5 billion for Insurance, €1.3 billion for Asset management, and €0.5 billion for Wealth management. The division’s risk weighted assets amounted to €46.9 billion, including €27.6 billion for Insurance, €13.6 billion for Asset management and €5.7 billion for Wealth management.
The *underlying* *RoNE* (return on normalised equity) stood at 25.6% at end of June 2023.
*Insurance results *
In the second quarter of 2023, *revenues* from insurance totalled €668 million, 3.1 times higher than in the second quarter of 2022 pro forma under IFRS17, and +42% under IFRS17, i.e. after restatement for the base effect in 2022, which did not take into account the investment management decisions implemented at the end of 2022 (segregation of equity and desensitisation of the portfolio). This 42% increase is linked to the market downturn and a high level of claims in the second quarter of 2022.
This quarter’s revenues were made up of Savings/Retirement (€539 million)^32, personal protection (€123 million)^33 and property and casualty insurance (€59 million)^34.
*Gross operating income* came to €593 million and tax to -€142 million. As a result, *net income Group share *was €433 million, 6.3 times higher than in the second quarter of 2022, and 1.7 times higher under the IFRS17 run rate^35.
The Contractual Service Margin (CSM) stood at €23.6 billion at 30 June 2023, up 8.2% compared with 31 December 2022. CSM rose again in the second quarter thanks to the impact of new business exceeding the quarter's CSM allocation, the positive effect of the market environment on inventory valuation, and a good performance by the savings business line in France.
Revenues from insurance in *first half 2023* amounted to €1,379 million, up 83.9% compared with first half 2022, and up 13.6% under the IFRS17^35 run rate, mainly due to a base effect in 2022 (investment management decisions implemented at the end of 2022, i.e. segregation of equity and desensitisation of the portfolio, were not taken into account in the IFRS17 pro-forma), a decline in the markets in first half 2022, and a high level of weather-related claims in the second quarter of 2022. Gross operating income was twice as high as in first half 2022, up 13.7% under the IFRS17 run rate^35. Finally, the tax charge for first half 2023 rose by 81.4%. All in all, net income Group share came to €907 million, 2.1 times higher than in first half 2022, and up 16% at constant scope under the IFRS17 run rate^35.
At 30 June 2023, Crédit Agricole Assurances’ solvency was high at 222%, increasing of +18 percentage points compared to 31 December 2022.
Insurance contributed 26% to the underlying net income Group share of Crédit Agricole S.A.'s core businesses. (excluding the Corporate Centre division) at the end of March 2023 and 11% to their underlying revenues.
*Asset management results*
In the second quarter of 2023, *revenues* totalled €803 million, up 9.5% compared with the second quarter of 2022, thanks to higher margins on management fees, financial revenues that became positive and a high level of performance fees. Operating *expenses *excluding SRF stood at €439 million, a slight increase of +1.9% compared with the second quarter of 2022 (excluding Lyxor integration costs recorded last year), boosted in particular by synergies from the Lyxor acquisition, which were achieved at 80% of target, ahead of the initial timetable. As a result, the *cost/income ratio excluding SRF* was 54.7%. Gross operating income increased by +38.8% compared to the second quarter of 2022. The contribution from equity-accounted entities, comprising the contribution from the Amundi joint ventures, stood at €27 million, up +29.6% from the second quarter of 2022, while the tax charge amounted to -€91 million, up +37.0%. Lastly, net income Group share increased by +38.4% to €201 million.
In *first half 2023*, revenues from asset management rose by 1.9%, driven as in the quarter by financial income (€29 million vs. -€27 million in first half 2022) and Amundi Technology revenues (+33.0% to €29 million), while net management fee and commission income and performance fee and commission income were down. However, the decline in management fee and commission income was less pronounced than the decline in average assets excluding JVs, reflecting the improvement in margins already commented on in the quarter. Operating expenses excluding SRF rose by 1.4%, excluding the impact of Lyxor integration costs recorded in first half 2022 (€51 million before tax). The cost/income ratio excluding SRF was 55.2%, a decline of -3.5 percentage points compared to first half 2022. As a result, gross operating income was up +10.8% compared to first half 2022. The net income of equity-accounted entities increased by +20.7%. All in all, net income Group share stood at €387 million, an increase of +12.8%.
Asset management contributed 11% to the underlying net income Group share of Crédit Agricole S.A.'s core businesses. (excluding the Corporate Centre) at end June 2023 and by 12% to their underlying revenues.
*Wealth management results*^*36*
*Revenues *from Wealth Management amounted to €262 million in the second quarter of 2023, up +14.9% from the second quarter of 2022, boosted by the rise in interest rates, which had a positive impact on the interest margin, which increased by +75% between the second quarter of 2022 and the second quarter of 2023. *Expenses excluding SRF* totalled €201 million, up steadily by +5.0%. As a result, the *cost/income ratio* fell by -7.2 percentage points year-on-year to 76.9% in the second quarter of 2023. Gross operating income, excluding SRF, rose +66.4% to €60 million. *Net income Group share* amounted to €43 million, up +56.3% compared to the second quarter of 2022.
In first half 2023, Wealth management’s revenues rose sharply by +17.3% compared to first half 2022, to reach €522 million. Costs excluding SRF were up +7.1%. Gross operating income was therefore up +76.3% at €115 million. Thus, net income Group share increased by +62.1% to €80 million for the half-year.
Asset management contributed 2% to the underlying net income Group share of Crédit Agricole S.A.'s core businesses (excluding the Corporate Centre) at end June 2023 and by 4% to their underlying revenues.
On the 4^th of August, signing of an agreement for the acquisition of a majority stake in the capital of Banque Degroof Petercam^37.
*Activity of the Large Customers division*
*Corporate and Investment Banking (CIB)* posted excellent commercial performance in the second quarter of 2023, close to the second quarter of 2022’s record level. *Asset servicing* recorded very good business levels during the period, benefiting from interest rate levels.
In the second quarter, *underlying revenues* in *Corporate and Investment Banking (CIB)* were close to the level of the best second quarter on record^38 at €1,550 million, down -1.8% year-on-year. *Capital markets and investment banking* maintained a high level of underlying revenues at €774 million, down -4.9% compared with the second quarter of 2022, especially in FICC (down -1.1% over the period) thanks to excellent business in financing activities (repo, primary credit and securitization. In a less active M&A market, investment banking activity declined, with underlying revenues down -23.2% over the period. Underlying revenues from *financing activities *were up +1.4% compared to the second quarter of 2022 to stand at €776 million. This can be explained in particular by the excellent performance of structured finance in all sectors (+20.4% compared with the second quarter of 2022). Commercial banking was down (-7.8% compared with the second quarter of 2022), in Corporate & Leverage Finance due in particular to greater selectivity in leverage finance, and despite the dynamic activity of International Trade & Transaction Banking driven by cash management.
Financing activities thus confirmed its *position as leader* in syndicated loans (#1 in France^39 and #2 in EMEA^39) and ranked #3 in project finance loans worldwide^39 CACIB reaffirmed its leading position in bond issues with its rankings as #2 in All bonds in EUR Worldwide^39 and #2 in Green, Social & Sustainable bonds in EUR^40. Average regulatory *VaR *stood at €17.9 million in the second quarter of 2023, an insignificant increase from the €15.9 million recorded in the first quarter of 2023, reflecting changes in positions and financial markets. However, it remained at a level that reflected *prudent risk management*.
In *asset servicing (CACEIS)*, the acquisition of the activities of RBC Investor Services in Europe was completed on 3 July; the operations acquired will be consolidated in the third quarter of 2023. Uptevia, a 50/50 joint venture combining the issuer services business lines^41 of CACEIS and BNP Paribas, has been accounted for using the equity method since the first quarter of 2023.
In the second quarter of 2023, *assets* were up +2.1% compared with the first quarter of 2023 thanks to dynamic sales and a confirmed market recovery. *Assets under custody* rose by +1.7% at end June 2023 compared to end March 2023 (up +4.8% from end June 2022), to reach €4,273 billion. *Assets under administration* were up +2.8% this quarter (+5.4% year-on-year), to €2,278 billion at end June 2023. In addition, *settlement/delivery volumes* rose by 29% in the second quarter of 2023 compared with the second quarter of 2022.
*Results of the Large Customers division*
*In the second **quarter **of **2023*, stated *revenues* of the Large customers division amounted to €1,906 million, down -3.3% compared to the first quarter of 2022, buoyed by excellent performance in both corporate and investment banking and asset servicing, and remained close to the very high level of the second quarter of 2022. The division’s specific items this quarter had an impact of -€16 million on financing activities and comprised the DVA (the issuer spread portion of the FVA, and secured lending) amounting to -€15 million, and loan book hedging totalling -€1 million. *Operating expenses excluding SRF* were 8.2% higher than in the second quarter of 2022, notably in staff costs and IT investments to support growth. As a result, the division’s *gross operating income* was down from the second quarter of 2022, standing at €869 million. The division recorded an overall net addition for *cost of risk* of -€32 million in the second quarter of 2023, compared to a reversal of +€76 million in the second quarter of 2022, which included a +€14 million reversal of provisions related to the war in Ukraine. Stated profit before tax totalled €844 million, down -22.5% during the period. The tax charge was -€174 million. Lastly, stated *net income Group share* reached €622 million in the second quarter of 2023, compared with stated income of €843 million in the second quarter of 2022. Underlying net income Group share came to €633 million in the second quarter of 2023, versus €785 million in the second quarter of 2022.
*In first half 2023*, the *revenues* of the Large Customers business line amounted to a historic high of €3,957 million (+7.1% compared to first half 2022). *Operating expenses excluding SRF* rose +12.0% compared to first half 2022 to €2,159 million, largely related to staff costs and IT investments. *SRF expenses* fell sharply by -29.4% compared to first half 2022. Gross operating income for first half 2023 therefore totalled €1,486 million, up +12.2% from first half 2022. The *cost of risk* ended first half 2023 with a net provision of -€68 million compared to a net provision of -€202 million in first half 2022, which included the impact of the Russia-Ukraine war and its consequences in terms of provisioning on performing loans in the first quarter of 2022. The business line’s contribution to underlying* net income Group share* was at €998 million, a strong increase of +24.9% compared to first half 2022. Underlying net income Group share came to €1,033 million in first half 2023, versus €753 million in first half 2022.
The division contributed 30% to the *underlying net income Group share* of Crédit Agricole S.A.'s core businesses. (excluding the Corporate Centre division) at end June 2023 and 31% to *underlying **revenues* excluding the Corporate Centre.
At 30 June 2023, the *equity* *allocated* to the division was €12.8 billion, while its *risk weighted assets* were €135.1 billion.
Underlying *RoNE* (return on normalised equity) stood at 17.2% at end June 2023.
*Corporate and Investment banking results*
In the *second quarter of 2023*, Corporate and Investment Banking reported a high level of *stated revenues* of €1,535 million, down -7.4% from the second quarter of 2022, which was the best second quarter on record, thanks to excellent performance in all of its business lines. The division’s specific items this quarter had an impact of €-16million and comprised the DVA (the issuer spread portion of the FVA, and secured lending) amounting to -€15 million, and loan book hedging totalling -€1 million. *Operating expenses **excluding SRF* rose by +9.4% to -€807 million, mainly in staff costs (increase in FTEs in 2022 and adjustment of variable compensation) and IT to support the development of the business lines. *G**ross operating income was down -20.9% compared to the **second** quarter of 2022 *and reached €727 million. The cost/income ratio (excluding SRF) was 52.6%, a negative change of +8.1 percentage points over the period. However, it remains at a low level, below the target set out in the Medium-Term Plan 2025 (<55%). The *cost of risk* recorded a moderate net depreciation of -30 million compared to a significant reversal of +€75 million in the second quarter of 2022. Lastly, *pre-tax income* in the second quarter of 2023 stood at €697 million, versus €994 million one year earlier. The tax charge is -€136 million. All in all, stated *net income Group share* for the second quarter of 2023 stood at €547 million. Underlying net income Group share came to €558 million in the second quarter of 2023, versus €733 million in the second quarter of 2022.
*In first half 2023*, *stated* *revenues* rose +5.1% compared to first half 2022, to €3,226 million, the highest half-yearly level ever. The specific items this half-year had an impact of -€47 million and comprised the DVA (the issuer spread portion of the FVA, and secured lending) amounting to -€23 million, and loan book hedging totalling -€25 million. *Expenses* *excl. SRF* rose +14.2%, mainly in staff costs, due to the growth in FTEs in 2022 and continuing adjustment of variable compensation to activity, and in IT to support the development of the business lines. *The contribution to the SRF* fell significantly in the first half of the year, by -29.5% to -€271 million in first half 2023. As a result, *gross operating income* at €1,264 million was up sharply (+5.0% compared to first half 2022.) The *cost of risk* recorded an addition of -€65 million in first half 2023, compared with -€204 million in first half 2022, which included the conservative provisioning of Russian exposures (addition of -€346 million on performing loans in Russia in the first quarter of 2022). The tax charge came to -€298 million, a +19.7% increase in line with activity growth. All in all, stated *net income Group share* for first half 2023 stood at a record level of €879 million, an increase of +19.9% over the period. Underlying net income Group share came to €914 million in first half 2023, versus €687 million in first half 2022.
*Risk weighted assets at end June 2023 *rose by a moderate +€2.4 billion compared to end March 2023 to €126.0 billion. This change was mainly due to higher market RWAs (changes in VaR, SVaR and CRTB^42), positive model and exchange rate impacts.
*Asset servicing results*
*In the second quarter of 2023, stated *asset servicing *revenues* amounted to €371 million, a sharp increase of +18.4% compared to the second quarter of 2022 (+21.6% when adjusted for Uptevia^43, which contributed €8.1 million in the second quarter of 2022). This increase was driven by the net interest margin, which doubled over the period as a result of treasury activity, which itself benefited from interest rate levels. *Operating expenses *excluding SRF increased by +4.2% to -€231 million (+7.3% when adjusted for Uptevia^43, which contributed -€6.4 million in the second quarter of 2022). These figures reflect the impact of inflation on payroll and include -€6.3 million in integration costs relating to the acquisition of RBC Investor Services’ activities in Europe, which will be consolidated from the third quarter of 2023. As a result, *gross operating income* rose strongly (+55.1%) in the second quarter of 2023 to €142 million. The cost/income ratio excluding SRF thus came to 62.2% (60.5% excluding RBC integration costs), an improvement of 10.2 percentage points compared to the second quarter of 2022. The second quarter of 2023 also recorded €7 million in income from equity-accounted entities. This was the result of strong performance by the Latin-American entities and now includes the contribution from Uptevia^43. *Net income* thus totalled €109 million, up +39.8% compared to the second quarter of 2022. Adjusted for the €34 million share of non-controlling interests, the business line’s contribution to *net income Group share* totalled €75 million in the second quarter of 2023, up by +42.0% compared to the second quarter of 2022.
*Stated revenues for first half 2023* were up +16.9% compared with first half 2022, buoyed by strong commercial momentum and an interest margin that doubled over the period. Costs *excluding SRF* were up +4.8%, and include -€9.5 million in integration costs relating to the acquisition of RBC Investor Services’ activities in Europe. Meanwhile, *SRF costs* fell sharply by -28.3%. This resulted in a very strong +83.4% increase in *gross operating income* compared to first half 2022. *Net income* was thus up by +78.3%. The overall contribution of the business line to *net income Group share *in first half 2023 was €119 million, representing a +80.6% increase compared to 30 June 2022.
*Specialised financial services activity*
*In the second quarter of 2023*, *commercial production* at Crédit Agricole Consumer Finance (CACF) remained high at €13.6 billion, a +9% increase over the second quarter of 2022, driven by particularly brisk business in the Automotive channel^44 (+30%). At end June 2023, CACF’s total outstandings stood at €107 billion, i.e., +10.8% compared to end June 2022. Outstandings at the automotive entities amounted to €40.4 billion, of which €24.7 billion at Crédit Agricole Auto Bank this quarter. This follows the reorganisation of CACF’s “Mobility” activities and the execution of the agreement with Stellantis with effect from the beginning of April. Leasys, the 50/50 joint venture with Stellantis, contributed €5.9 billion in outstandings at 100%.
*Commercial production in leasing* at Crédit Agricole Leasing and Factoring (CAL&F) saw strong momentum in the second quarter of 2023 with a year-on-year increase of +4.9%. Leasing outstandings rose to €18.3 billion at end June 2023 (of which €14.7 billion in France and €3.6 billion abroad), for a year-on-year increase of +9.5%. By contrast, *commercial production in factoring* at Crédit Agricole Leasing and Factoring (CAL&F) f