By Mathieu Rosemain
PARIS (Reuters) -Credit Agricole on Tuesday set out a new net profit target of more than 8.5 billion euros ($9.0 billion) by 2028, beating analyst expectations as investors track the French bank’s interest in Italian lender Banco BPM.
The target compared with an average analyst forecast of 8.2 billion euros compiled by the bank, according to Barclays. The higher-than-expected earnings guidance underpins a return on tangible equity target for 2028 of above 14%, exceeding an expected 13.1%.
Credit Agricole projected a cost-to-income ratio below 55% by 2028, in line with expectations.
The listed entity of Credit Agricole Group, comprising 39 regional banks, said it planned to hit the targets through increased European investments, customer growth and improved efficiency via automation and streamlined IT infrastructure.
“Europe must strengthen itself to become more competitive and to ensure its strategic autonomy. And that means Europe will have to invest heavily,” Chief Executive Officer Olivier Gavalda told reporters.
The plan follows the bank’s achievement of its 2025 goals a year ahead of schedule. Credit Agricole has a reputation for publishing conservative targets it subsequently exceeds, according to analysts and past performance.
The French lender’s profitability target puts it ahead of some European peers.
Deutsche Bank on Monday announced its own three-year strategy, targeting ROTE above 13% by 2028. That matches BNP Paribas’ 2028 target.
Credit Agricole signaled renewed appetite for deals, noting its plan excludes potential earnings from future transactions.
“We will generate more capital than our organic growth will consume,” Deputy Chief Executive Officer Jerome Grivet said, adding that surplus organic capital could theoretically reach 6 to 7 billion euros by 2028 if no acquisitions materialised.
Investors are closely watching the lender’s positioning in Italy, its largest market outside France.
Credit Agricole increased its stake in Banco BPM to just above 20% and sought regulatory clearance to raise it to 29.9%, Reuters has reported.
Banco BPM’s chief executive, Giuseppe Castagna, has called a merger with Credit Agricole’s Italian arm the “clearest opportunity” among available options.
“We are very attentive to what BPM might offer us in a merger plan, and we would view it very positively if that were the case,” Gavalda said. “To date, we are focusing on our organic growth and our ability to continue to develop on our own in Italy.”
(Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes)
