Credit Agricole S A : Transcript of the fourth quarter and full year results 2022

Credit Agricole Fourth

Quarter and Full Year

2022 Results

Thursday, 9th February 2023

Credit Agricole Fourth Quarter and Full Year 2022 Results

Thursday, 9th February 2023

Introduction

Philippe Brassac

CEO, Crédit Agricole S.A.

Agenda

Good afternoon to everyone. We can start with this meeting. First of all, I would like to thank you for being present or connected for this meeting. It is notably a good pleasure for me to meet some of you after three years of remote organisation for this kind of presentation.

In a few minutes, Jérôme will sum up the key or the main figures, the main metrics for Crédit Agricole S.A., both for the fourth quarter and for the whole year 2022. Actually, we shall try to answer to your questions. However, at this step, let me introduce Olivier Gavalda in this room, one of the new Deputy CEO with Jérôme Grivet since he was appointed in current summer last year.

Environment

Let me state a brief introduction speech to this presentation. I would like simply to come back first on the environment, the paradigm we have to face, and then on the situation of Crédit Agricole S.A. very briefly.

For the environment, for the paradigm we are living in, I would like to tell you that our diagnosis did not change at all since we launched our medium-term plan on June in 2022. Always, this very high level of opacity on the very short term, an opacity that is absolutely linked and due to the accumulation of many impacts of different shockwaves all around the world.

Normalisation of monetary policy

First of them, the necessary normalisation of the monetary policy, probably quicker than we thought, in terms of increase in rates. Then, of course, the war in Ukraine, the different turmoils about energy, both in terms of prices and even in terms of availability. Different geopolitical concerns you, of course, all know. However, the good points, the right ones, the positive points are, first of all, that risks are always still mastered.

Difficult to explain this point, but my idea, my assumption is that probably corporates succeed to adapt to this new paradigm more or less for most of them through pricing, probably. For households, and notably towards home loans and notably for Crédit Agricole within France, a very important territory for us, the fact that households are protected by fixed rates. Please do not underestimate this positive point for the economy and the impacts of banks. Risks are still mastered, of course, accepting the G8 consequences of the war between Ukraine and Russia.

Universal model of development of the Group

The second point - I would like to repeat this point and we would like for you to be convinced this is not a theoretical point. The universal model of development of the Group is made so that that this opacity does not entail any slowdow. I would like to be very concrete on this point. The fact is that we have on the very long-termthree-way free axis to develop on a

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Credit Agricole Fourth Quarter and Full Year 2022 Results

Thursday, 9th February 2023

commercial and then financial point of view. Each of these axes are, at the end of the day, create organic growth.

The first one is our ability to enlarge the range of offers linking or linked to the individual needs of customers and now to the collective needs of society. Our predecessors decided to launch insurance, then real estate solutions. Now, we are launching solutions for energy transition, for healthcare setups, and so on. The ability, being a bank of the global relation, to enlarge, in the very long-term, to new kinds of businesses, is for us a non-saturated axis on the very long term to develop.

The second one is naturally linked to the first one, our level of equipment. When you see our equipment rates, they are increasing, but they are absolutely not saturated. You can see our different market shares: the strongest one on savings and lending; the smallest one on the very new businesses. Our ability to cross-sell is linked to these differences. For us, we simply enlarge the global approach of our customer. This is very important and never saturated.

Creating and organising our business lines successfully

The third axis is the fact that we succeeded to create and to organise our business lines to serve these banks, as legal entities with their own autonomy. Each of these legal entities today are a main consolidator of their market in their business. Of course, we can speak about asset management, asset servicing, insurance life activity, consumer finance activity and so on. This proves that we have three axes. The range of offers, then the equipment, then the ability of business lines to develop partnerships on different countries, different other customers.

Commercial development pace

This is why we always insist that you look at our commercial pace in terms of development. Of course, we can see, and you can probably imagine, many headwinds to face. Notably in 2023, these headwinds, of course, exist. However, the main answer of Crédit Agricole Group to these headwinds is to face, to cope with, and probably to offset these headwinds and look at the development of Crédit Agricole Group.

The commercial development is very high and it is accelerating in the very long term. Just look at the main figures of our development. This is simply or mainly a matter of structure, architecture of the Group, in terms of offers, in terms of global approach of customers, in terms of ability of business lines to develop with partners. This is, regardless of the opacity on the short term, turned towards the very long term, and this is, of course, a singular discrepancy.

Summary

I have already stated that it was very surprising to have this high level of opacity in the short term and to be so able to see the future, at least the necessary future for 2030 in terms of energy transition, in terms of health setups for facing aging population, in terms of agri or agro process that have to shift, in terms of many things.

Fortunately or unfortunately, the long term is very clear in terms of what we have to do today and what we have to invest, and what we have to develop on a commercial point of view today -- that means as soon as 2023 -- for the future. Yes, clearly, the matter of

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Credit Agricole Fourth Quarter and Full Year 2022 Results

Thursday, 9th February 2023

decarbonised energy, health setups or Agri transition, just to take this example, are immediate huge new drivers for business and, of course, new revenues.

This is for the vision we have, driving Crédit Agricole Group, about our paradigm in this opacity. However, the way to develop in the very long term is very clear. This feeds and fuels our development as soon at the present and notably for the next 2023.

Just very briefly a word about the situation of Crédit Agricole because, of course, Jérôme will be very concrete and very precise about this. Since I want to be very brief, let me try this exercise.

If I had only one figure to give to our shareholders about our performance, I think that altogether we could choose simply, at the end of the day at the summit of the Group, the profitability we succeed to reach above the equity that our shareholders give us: 12.6% in terms of return on tangible equity.

Only one figure, this figure because this is the sum-up of all the activities, all the efficiencies, all the mastering of the risk of Crédit Agricole Group. You perfectly know this is top, in terms of benchmark. I would like to highlight the fact that this is a regular performance for Crédit Agricole S.A.

I stop on this point. Jérôme, I give you immediately the floor to be much more precise than I was.

Fourth Quarter and Full Year 2022 Results: Introduction

Jérôme Grivet

Deputy CEO in charge of Steering and Control, Crédit Agricole S.A.

Record high Q4 net income, rolling out the 2025 MTP

Thank you, Philippe. Good afternoon, everyone. Happy to also share these results with you. I will try to make it brief in order to leave you time for your questions, of course. Let me start with this page on which, actually, you have all the main messages that we want to insist on when presenting those results. Actually, I could stick only to this page. Messages are here.

Historical Q4 net income

In terms of net profit, this has been an excellent Q4 for Crédit Agricole S.A. and actually the best Q4 ever with a record high level of profitability and a very sharp increase in revenues in all business lines.

All 2022 MTP profitability targets exceeded this year

It has been also a very good year. Let me just come back three quarters ago when we presented Q1 results. The net profit that we posted for Q1 was down 47% as compared to Q1 2021. What happened during the first quarter was the start of this war in Ukraine. We wanted to book significant prudent provisions in order to cover the risks incurred by us due to this event, so down 47%.

At the end of the first half of the year, the net profit was down 16%. The catch-up has started, indeed, quite rapidly. At the end of the first nine months of the year, net profit was

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Credit Agricole Fourth Quarter and Full Year 2022 Results

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down 12%. Now, in terms of stated figures, it is down only 7%. It means that for the rest of the year, we have been regularly catching up with this very important level of provisions that we wanted to book in the first quarter of the year.

In terms now of underlying figures, which is, of course, more readable and more usable in order to understand the underlying performance that we have produced. The net profit is slightly up for the full year and sharply up for the quarter.

In terms of financial targets for the full year, it is the final year for the previous medium-term plan. It is the occasion for us to come back on the targets that we had set for this previous medium-term plan. Of course, we are there and above the target on all profitability items.

It is the case for the net profit: €5 billion as the minimum, we are at 5.5 billion. It is the case for the cost income ratio. We wanted to be below 60%, we are at 58.2%. It is the case for the return on tangible equity, Philippe mentioned it, we targeted to be above 11% and we are above 12.5% at 12.6%. It is a very, very solid set of achievements for this previous medium-term plan.

Let me finish this page with two additional elements.

Dividend €1.05 per share

The first one regards the dividend. We are going to propose to the General Assembly Meeting to adopt a dividend of €1.05, as was the case last year, a combination of €0.85 regarding the, I would say, normal payout policy plus the last €0.20, in line with what we had said regarding the 2019 skipped dividend.

Strategic operations continued in 2022

Last point, it is very important to keep that in mind. We have continued to be agile last year in order to generate new partnerships, new activities that are going to fuel our future growth, going forward.

CASA key figures

In terms of main figures on the next page, you have the main figures here, maybe one or two additional elements to complete what I have said on the previous page.

Revenue

On the quarter, we are posting very dynamic revenues up 4.4%. We post also positive jaws between the evolution of the top line and the evolution of the cost line.

Cost of risk

Second element, the cost of risk is up as compared to last year, but we will dig a little bit into the composition of the cost of risk. You will see that actually more than all of the increase is due to this Russia-Ukraine conflict.

Solvency

Then, in terms of solvency, for CASA, we now stand at 11.2%. Again, it is perfectly in line with our target of being at 11%.

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