Crédit Agricole S.A. is the second-largest banking group in France, supported by a large and stable domestic deposit franchise. Crédit Agricole S.A. plans to issue new SGD 12NC7 Tier 2 bonds at an initial price guidance (“IPG”) of 3.60% for accredited and institutional investors only. The issuer is rated A+ (S&P), A1 (Moody’s), and AA- (Fitch). This issuance is expected to be rated BBB+ (S&P), Baa1 (Moody’s), and A- (Fitch). This issuance comes with a first reset date of 25 May 2033 (Year 7), based on the prevailing SGD 5Y SORA-OIS (1.8975% as of 14 May 2026), with an estimated initial spread of 1.7025%.
Financial Highlights
Crédit Agricole S.A. delivered a solid Q126 (ending 31 March 2026), with revenues of €6,994m (+0.9% YoY) and gross operating income of €3,013m (+2.4% YoY), on the back of slightly lower expenses of €3,981m (-0.2% YoY). The cost/income ratio improved to 56.9%, down 0.6 percentage points versus Q125. Net income (group share) reached €1,676m (+1.8% YoY), while return on tangible equity came in at 13.7%. Overall, these results represent a continuation of resilient top-line growth, with decent improvements to bottom-line profitability.
Business momentum remained broad-based. The bank added 600k new retail customers in Q126, supported by digital channels in France and Italy. Loan growth continues to be resilient, driven by solid activity in home loans (France and Italy) and corporate loans. Asset management (Amundi) hit a record €2,398bn in assets under management (AUM), while within investment banking, M&A and equity markets activities delivered exceptional growth of +29.4% at constant exchange rates. These results build on a relatively stable Q425 (ending 31 December 2025) performance, during which Crédit Agricole posted revenue growth of over 1.6% YoY and operating income growth of 2.5% YoY.
Credit Profile
Asset quality remained sound. The NPL ratio was stable at 2.3% as of 31 March 2026, with a high coverage ratio of 72.6%. Cost of risk rose to 38bps (annualised), reflecting conservative provisioning related to the Middle East conflict and a legal provision for UK auto loans, rather than broad-based deterioration in asset quality.
Solvency is a key credit strength. Crédit Agricole S.A.'s phased-in CET1 ratio stood at 11.4% as of 31 March 2026, providing c.270bps of CET1 headroom above the regulatory minimum requirement of 8.7%. Liquidity remains strong, with a liquidity coverage ratio (LCR) of 142% and a net stable funding ratio (NSFR) at 114% for Crédit Agricole S.A., comfortably above the 100% regulatory threshold.
Overall, we think Crédit Agricole S.A. continues to maintain a strong investment-grade credit profile, supported by solid liquidity and capital buffers, resilient asset quality and a core retail banking franchise serving approximately 37m customers. Hence, on a forward-looking basis, we do not expect any material change to Crédit Agricole S.A.’s credit profile.
Recommendation
Table 1: Bond comparison
|
Issue |
Issuer |
Years to Call |
Ask Price |
Yield to Worst (%) |
Credit Rating (S&P / Moody’s / Fitch) |
|
ACAFP New Issue* |
Credit Agricole SA |
7.0 |
100.00 |
3.60% |
BBB+ / Baa1 / A- |
|
Credit Agricole SA |
3.7 |
104.72 |
2.88% |
BBB+ / Baa1 / A- |
|
|
Australia and New Zealand Banking Group Limited |
3.5 |
104.03 |
2.54% |
A- / A3 / A- |
|
|
BNP Paribas SA |
3.9 |
103.72 |
2.94% |
- / Baa2 / A- |
|
|
BPCE SA |
3.7 |
105.52 |
3.00% |
BBB / Baa2 / BBB+ |
|
|
HSBC Holdings PLC |
3.3 |
106.38 |
2.73% |
BBB+ / Baa1 / A- |
|
|
Westpac Banking Corp |
7.0 |
100.08 |
2.93% |
A- / A3 / A- |
|
|
*Not yet issued. Yield is based on IPG and is likely to be revised downwards. (“FPG”) Source: Bloomberg, Bondsupermart,
iFAST Compilations. |
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We compare Crédit Agricole S.A.’s latest issue with other SGD Tier 2 bonds issued by major banks. Factoring in the likelihood of the final price guidance (“FPG”) adjusting downwards and comparing with other bank Tier 2 bonds (note: there is only one comparable Tier 2 bond with similar tenors), we find these new Crédit Agricole S.A.’s Tier 2 bonds to be decently attractive. Against WSTP 3.000% 19May2038 Corp (SGD), this new issuance carries a decent yield pickup of 60+bps, though we note the slight difference in credit rating between the two issuances (Westpac’s issuance is rated slightly higher). We also note that compared to its other Tier 2 bond outstanding, the implied initial spread of this new ACAFP issue (roughly 1.7025%) is higher than that of its older issue’s 1.516%.
Finally, we emphasise that Tier 2 bonds in general (including this new issuance) may contain subordination risks, non-viability (write-off/conversion) risk, the possibility of non-call risks, and the possibility of extension and loss-absorption risks under stress scenarios. Investors who are comfortable with these Tier 2-related risks may consider this new issuance, considering Crédit Agricole S.A.’s solid market position as a leading French bank, with solid credit fundamentals.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds NIL positions. The analyst who produced this report holds NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.
