CRARY - Credit Agricole: Limited Interest Rate Sensitivity Can Help Lift Shares

2024-06-14 19:05:01 ET

Summary

• Political developments in France may have sent Crédit Agricole shares down sharply this week, but Crédit Agricole has still comfortably outperformed wider European financials in recent years.
• While it has outperformed peers since the Eurozone's interest rate hiking cycle began in 2022, the bank's sensitivity to interest rates is actually fairly limited.
• This can help sustain profitability now that Eurozone interest rates are falling again.
• The shares trade for just 0.8x tangible book value, implying a mid-single-digit P/E ratio and high single-digit dividend yield based on though-the-cycle profitability.

Political developments in France may have sent French bank stocks tumbling this week, but Crédit Agricole S.A. ( OTCPK:CRARF )( OTCPK:CRARY ) has nonetheless been a solid performer in recent years, outperforming wider European financials ( EUFN ) by around 30ppt since the European Central Bank ("ECB") began hiking interest rates back in the second quarter of 2022....

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