Agricultural approach to tech

9 March 2016 By Dominic Elliott

The French lender will invest 4.9 bln euros into digital banking. Yet cost savings won’t bring job cuts. That contradiction works given CredAg’s quirky rural model. But it neglects an inconvenient truth: for investors, fintech’s appeal is to help make staff and branches obsolete.

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Credit Agricole pledged on March 9 to boost cost savings and synergies by 2019 in a bid to offset earnings shortfalls resulting from the restructuring of complex shareholding ties.

Credit Agricole said it would aim for 900 million euros ($988 million) in annual cost savings by 2019 by simplifying the corporate structure, which combines numerous legal entities, and reducing IT costs. It declined to comment on possible staff cuts.

It said the new strategy included a 7.7 billion euro investment plan for 2016 to 2019, including 4.9 billion euros to develop its business lines and continue its digital transformation.

The bank is planning to grow revenue by a compound annual rate of 1.5 percent between now and 2019, while achieving a cost-to-income ratio of 60 percent.

It said that its listed entity, Credit Agricole SA, would aim for a return on tangible equity of greater than 10 percent by 2019, with a fully loaded common equity Tier 1 ratio of above 11 percent and a 50 percent payout ratio.

By 0930 GMT, shares in Credit Agricole SA were trading at 10.06 euros, up 2.6 percent from the previous day’s close.

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