CREDIT AGRICOLE SA : LCL Workshop today, financial targets in-line

研报英文原文证据摘录

CREDIT AGRICOLE SA : LCL Workshop today, financial targets in-line

Refinitiv

Investment case, valuation and risks

Crédit Agricole ADR (Neutral, Target Price USD10.2)

Investment case

Crédit Agricole SA is unusual among quoted banks, in being the partially-listed

subsidiary of a mutually-owned parent group. Its business mix includes a number of

specialised financial services businesses that work in conjunction with the regional

banks, some with lighter capital requirements and naturally higher RoTEs. It balances

the interests of minority shareholders with the corporate and social goals of the wider

mutual group. It already makes decent profitability levels, and has an emphasis on

growth, both organic and external, in France, Europe, and selected global activities. It

is a strong and healthy bank, but this is well understood and reflected in relative

valuation. It offers positives over time, with growth and compounding, but we see less

scope for major near-term positive surprises.

Valuation methodology

We set our price target based on 2027E returns on required capital, discounted back

together with capital surplus/deficit and dividends, to a 12-month-forward fair value.

Risks

To the upside:

French political and economic risks could improve, allowing the shares to shed some of

the current discount, and reflect profitability levels more fully. The new Medium-Term

Plan could encourage more positive perceptions among investors. More proactive

capital deployment could convert surpluses into additional earnings. Progress on the

EU's Capital Markets Union / Savings & Investments Union could provide a boost to

several of the bank's capital markets and asset gathering businesses.

To the downside:

French macro risks could worsen, weighing on valuation multiples, raising recession