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Credit Agricole profits hurt by its exposure to crisis-hit Greece

CREDIT Agricole yesterday warned it had been forced to make higher provisions for bad loans in Greece, tugging its first-quarter profits lower than expectations.

The French bank made a profit of €470m (£400.2m) for the first three months of the year, failing to hit analyst forecasts despite hauling in more than its profits over the same period last year.

Credit Agricole, which is seen as one of the most exposed French banks to Greece because of its local unit Emporiki, said loan provision charges had a €254m impact on its Greek operations in the first quarter.

The bank’s balance sheet was also hit by a loss made on the disposal of its stake in Intesa Sanpaolo, Italy’s biggest retail bank.

Credit Agricole’s exposure to Greece stands at €3.8bn, though this figure does not include Emporiki's private-sector exposure.

Emporiki, which is undergoing a dramatic overhaul to stem losses, is expected to return to break-even by 2011.

However, some analysts have expressed doubts the bank can meet this deadline, given the tough austerity measures planned for the Greek economy.