Crédit Agricole outlines 2028 targets that exceed market forecasts

Investing.com -- Crédit Agricole SA (EPA:CAGR) set out new medium-term targets through 2028 that exceed current market expectations and reshape the financial profile of the French banking group.

The bank’s new plan includes net profit of more than €8.5 billion and a return on tangible equity above 14%. Analysts at UBS said these objectives stand roughly 4% to 5% above consensus projections compiled by the company and Visible Alpha. 

The strategy is based on annual revenue growth above 3.5% and expense increases of 2.8%, leading to a cost-to-income ratio of less than 55% in 2028.

Financial tables in the report show consolidated profit of €9.43 billion in 2028 and profit before tax of €12.96 billion. Minority interests are projected at €1.08 billion. 

Contributions from equity-accounted affiliates and other items are expected to reach €870 million, which UBS noted is above both company-compiled and Visible Alpha consensus. 

The plan includes a 50% dividend payout ratio, with an estimated dividend per share of €1.80 in 2028, compared with €1.31 under the bank’s target framework. Crédit Agricole aims to maintain an 11% CET1 ratio.

UBS forecasts revenue of €30.94 billion in 2028, compared with company-compiled consensus of €30.12 billion. Expenses are estimated at €16.50 billion, slightly above the €16.31 billion consensus figure. 

Gross operating income is projected at €14.45 billion, ahead of the consensus €13.81 billion estimate. UBS calculates 2028 net profit at €8.35 billion, relative to Visible Alpha’s €8.16 billion.

Historical and forward-looking financial data show revenue rising from €22.49 billion in 2022 to €30.94 billion in 2028. UBS expects pre-tax profit to increase from €7.88 billion to €12.25 billion over the period. 

Net earnings under UBS methodology are projected to grow from €5.04 billion in 2022 to €7.81 billion in 2028.

The Tier 1 ratio remains stable at 13.8% from 2026 through 2028. Diluted earnings per share are forecast to rise from €1.66 in 2022 to €2.57 in 2028.

Detailed divisional forecasts show a broad rise in operating income. In French retail banking, revenue is projected to grow from €8.46 billion in 2025 to €9.03 billion in 2028, while operating income increases from €2.63 billion to €3.24 billion. 

International retail operating income is expected to rise from €594 million in 2025 to €1.92 billion in 2028. Specialised financial services pre-provision profit is forecast to expand from €1.65 billion in 2025 to €2.93 billion in 2028.

Large customers, including corporate and institutional activities, are projected to produce operating income of €3.82 billion in 2028, compared with €3.69 billion in 2027. 

The corporate center is expected to remain loss-making, with operating income of negative €1.32 billion in 2028.