(News Bulletin 247) – The Sino-British bank is excited by the asset management business of the listed structure of the mutualist establishment.

Crédit Agricole SA stood out on the Paris Stock Exchange this Friday. The listed structure of the mutual bank gained 2.3% to 14.115 euros and recorded the second highest increase in the CAC 40, at the start of the afternoon.

The green bank is buoyed by a recommendation upgrade from HSBC. The Sino-British establishment went from “hold” to “buy” on the stock while adjusting its price target to 17.5 euros against 16 euros previously. At Thursday’s closing price, this target gives the stock a potential of more than 25%.

HSBC is excited by the quality of Crédit Agricole SA’s “asset gathering” businesses, which include asset management, wealth management and insurance. According to the research firm, these activities alone can fuel a 20% increase in the share price.

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Politics in France is not everything

The institution believes that these businesses are not fairly valued by the market. “We believe that the market is not integrating the upside potential linked to recent small acquisitions, which are accelerating the evolution of the composition of profits in favour of ‘asset gathering’ (for example, the acquisition of wealth manager Degroof Petercam at the beginning of the year)”, explains the research office. Another point ignored by the market: “the drop in expectations regarding interest rates, which should trigger transfers of cash deposited into investment products”, underlines HSBC.

The bank also notes that the end of the political storm in France should encourage households to regain their appetite for risk in 2025, thus supporting positive flows towards investment products intended for individuals.

Moreover, the institution recalls that France remains a very stable “bancassurance” market, despite “the political noise” that can wrongly worry the market. “In past periods of economic and political turbulence (for example, the great financial crisis of 2008-2009, the sovereign crisis, Credit Suisse/SVB), we note that asset collection flows in France tend to be very resilient and stable,” recalls HSBC.

A more attentive market

This particularly developed “asset gathering” activity should attract more attention from investors to Crédit Agricole SA. HSBC believes that with the upcoming rate cuts from the major central banks in Europe, the market will value fee-based income (such as asset management) more than income based on interest rates.

“(Crédit Agricole SA’s) ability to offer a broad range of investment products provides useful protection against the pressure on deposit margins from falling rates,” the bank wrote. Furthermore, Crédit Agricole SA’s exposure to affluent areas of Italy “provides access to additional asset-gathering flows in an under-penetrated, high-margin market,” it added.

HSBC also considers that Crédit Agricole SA’s other businesses are also attractive, citing retail banking in Italy, securities management businesses in market activities and even automobile financing.

The Sino-British bank actually echoes UBS’s assessment last month. The Swiss bank also upgraded to buy, citing the group’s revenue structure as a good fit for standing out in an environment where rates are falling.