Credit Agricole Profit Dips 39% After Banco BPM Hit

Credit Agricole Profit Dips 39% After Banco BPM Charge

Credit Agricole, one of France’s largest lenders, reported a 39% drop in its fourth-quarter 2025 profit after booking a substantial accounting charge tied to its growing stake in Italy’s Banco BPM. Despite the hit, the bank managed to deliver slightly better-than-expected earnings, underlining both the challenges and long-term ambitions of its European strategy.

A €607 Million Accounting Hit Reshapes Investments

Credit Agricole’s net income fell to €1.03 billion in Q4 2025 from the previous year, weighed down by a €607 million non-cash charge. The charge stemmed from a shift to equity-method accounting after the bank increased its stake in Banco BPM beyond 20%.

This change — approved by the European Central Bank in January — allows Credit Agricole to treat its Italian investment as a long-term strategic holding rather than a market-traded stake.

What this means for investors:

The bank will no longer face quarterly fluctuations from Banco BPM’s share price.
Instead, it will report recurring income that reflects BPM’s profits.
Credit Agricole plans to raise its stake further — up to 29.9% by April 2026.

The two banks’ ties continue to deepen, with governance alignment expected. CEO Olivier Gavalda emphasized that Credit Agricole seeks board representation “proportionate to its growing stake,” as Banco BPM prepares to expand seats for minority shareholders.

Costs and Car-Leasing Losses Add Pressure

While revenue held relatively steady at €6.97 billion, rising operating costs hurt the bottom line. Expenses jumped 4.7% to €4.1 billion, partly due to Italian restructuring efforts and digital transformation investments.

Key cost drivers include:

€65 million in restructuring charges in Italy
Reduction plan to trim 500 roles, bringing staff to 11,500
Increased spending on digital banking and cross-border services

One weak spot was Credit Agricole’s joint car-leasing venture with Stellantis, called Leasys, which posted a €111 million loss after revising the value of used vehicles across Europe.

Provisions and Sector Comparisons

The bank also booked €629 million in provisions to cover:

UK motor finance litigation
Support for Italian lender Banca Progetto

On the brighter side, Credit Agricole’s investment banking arm delivered record full-year results, although its growth in the fixed income and commodities segment lagged behind regional and global rivals such as Deutsche Bank, JPMorgan, and Goldman Sachs.

Strategic Shift Points Toward Long-Term Stability

Despite the one-off charges, analysts see Credit Agricole’s strategic repositioning as a step toward more sustainable earnings. By reducing exposure to market volatility and deepening its foothold in Italy, the bank is positioning itself for steadier, albeit less spectacular, profit growth in coming quarters.

For investors and observers, the latest results underscore a wider trend among European lenders — prioritizing stability, diversification, and cost control amid a softer economic backdrop and tightening regulation.

The Bottom Line

Credit Agricole’s Q4 2025 results showcase the short-term pain of long-term positioning. The Banco BPM accounting change may have dented quarterly profits, but it strengthens the French bank’s influence across southern Europe and reduces exposure to stock market swings — a move that could pay off handsomely in 2026 and beyond.