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Credit Agricole Has Fourth-Quarter Loss on Writedowns

March 5 (Bloomberg) -- Credit Agricole SA, France's second- largest bank by assets, posted its first quarterly loss since the company went public in 2001 after it added to asset writedowns linked to U.S. subprime mortgages.

The fourth-quarter loss of 857 million euros ($1.3 billion), which missed analysts' estimates, compared with a profit of 1.1 billion euros a year earlier, the Paris-based bank said today in a statement. The company rose in French trading after saying it will increase its dividend 4.3 percent to 1.20 euros a share.

Credit Agricole's 3.3 billion-euro markdown was more than the 2.5 billion euros Chief Executive Georges Pauget forecast in December and prompted the company to say today it will beef up risk management. The lender is the most affected of the French banks by declining values of debt securities and rating downgrades of bond insurers, which have led to more than $180 billion of charges at the world's biggest financial firms.

``It's a disappointing set of results, but the market maybe feels that these are the last set of depreciations,'' said Clemence Bounaix, an analyst at Richelieu Finance which doesn't hold any Credit Agricole shares. ``The risks and exposures are now known and the market feels it can turn the page.''

Credit Agricole rose 40 cents, or 2.3 percent, to 17.61 euros at 9:36 a.m. in Paris. It has dropped 23 percent this year, while BNP Paribas SA, the largest French bank, has declined 21 percent. Societe Generale SA, the worst-performer among France's three biggest banks this year, has lost 25 percent.

`Unprecedented Crisis'

Because of the writedowns, Credit Agricole's Calyon investment-banking unit had a loss of 1.9 billion euros in the quarter, compared with a profit of 255 million euros a year earlier. Banks may face as much as $203 billion in additional writedowns, partially because of a bond-insurance crisis, UBS AG forecast last month.

``The results were affected by an unprecedented crisis in credit markets,'' Chief Financial Officer Bertrand Badre said on a conference call.

Net income at the French regional retail banks rose 1 percent to 223 million euros in the quarter, while profit from international retail banking fell 11 percent to 107 million euros because of the integration costs from acquiring banks in Italy and Greece.

``In this difficult and highly unstable environment, the group tightened up the impairment policy it applies to financial instruments exposed to the crisis,'' the French bank said.

Provisions

Societe Generale, France's second-largest bank by market value, had a 4.9 billion-euro trading loss and wrote down the values of debt securities by 2.05 billion euros in the fourth quarter, resulting in a record 3.35 billion-euro loss.

BNP Paribas last month reported a 42 percent decline in fourth-quarter profit to 1.01 billion euros after taking provisions and writedowns of 1.2 billion euros for the full year.

Credit Agricole decided to add to its provisions against bond insurers because several were downgraded or threatened with downgrades at the beginning of the year, Badre said.

``There were developments in January and February that made us think it was prudent to take a more conservative stance,'' he said.

Analysts surveyed by Bloomberg estimated a fourth-quarter loss of 554 million euros. Profit excluding the impact of the credit-market crisis would have been 1.29 billion euros, Credit Agricole said.

The bank doesn't plan any major acquisitions this year, Badre said.

``The focus is on integration and organic growth,'' he said. Badre declined to say if Credit Agricole will take advantage of the decision by Spanish banking regulators allowing it to raise its stake in Bankinter to 29.9 percent from the 20 percent it holds now.

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net.

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