Crédit Agricole S.A. demonstrated the excellent resilience of its results in 2020, with dynamic operating income absorbing a significant part of the cost of risk. Its operational agility allowed it to achieve the underlying cost/income ratio (excluding SRF) objective in its Medium-Term Plan (< 60% in 2022) two years early.
Underlying Net income Group share
Excluding specific items, net income Group share came to €3,849 million, down -16.0% compared to 2019. This moderate decline in income of -€734 million over the year is explained mainly by the increase in provisioning of performing outstandings; without this provision, income would have been up by +6.9% over the year.
The underlyingcost/income ratio (excl. SRF) comes to 59.6% for the year, a 1.4 percentage point improvement compared to 2019, and already achieves the target set in the Medium-Term Plan.
Expenses were stable thanks to the very good operational efficiency of the business lines: Asset Gathering reduced expenses by -2.4% compared to 2019, Retail Banking by -2.1% and Specialised Financial Services by -5.6% on the underlying scope and were stable (0.0%) without scope effect. The Large Customers business line reported a +6.0% increase in expenses over the year, but this was mainly due to a scope effect, with KAS Bank and Santander Securities Services (S3) integrated into Institutional financial services.
Cost of risk increased significantly during the period (x2.1/-€1,350 million) to -€2,606 million versus -€1,256 million in 2019.
77% of the increased cost of risk over the year was due to additional provisioning for performing loans (stages 1 and 2), related for the most part to prudent provisioning in sensitive sectors (such as aerospace, cruises, hotels, tourism, restaurants and certain other business sectors). The -€500 million charge in the third quarter breaks down into provisioning for performing loans (stages 1 & 2) for -€193 million and provisioning for proven risk (stage 3) for -€291 million. Over 2020, the cost of risk/outstandings worked out at 62 basis points (47 basis points on an annualised quarterly basis in Q4 2020).
