Credit Agricole: Swings in bond and forex markets help trading rebound

According to the head of Credit Agricole SA’s corporate and investment bank, a trading recovery that started in the first quarter is persisting, supported by swings in bond and currency markets.

There’s “more volume both in rates and forex” in comparison with the previous year, Bloomberg reports referring to Jean-Yves Hocher as saying. Partly a result of the European Central Bank’s program of quantitative easing, price movements are driving demand from clients for hedging, he said.

Earnings at Credit Agricole and rivals such as BNP Paribas SA and Deutsche Bank AG were buoyed in the first quarter in a lot of ways due to rising income from buying and selling securities. As Bloomberg Intelligence research, volatility measures for Treasury bonds, foreign-exchange and commodities remain 35 percent to 75 percent higher than year-ago averages and near first-quarter levels.

The ECB’s largest-ever stimulus program pressed sovereign bond rates toward zero in the region’s key economies. Germany’s benchmark 10-year yields fell to an all-time low of 0.049 percent on April 17, before jumping to 0.78 percent by May 7.

Fluctuations in German bunds are unusual, said Hocher, adding that the higher yields signal that market professionals “judge these rates very low,” or even too low. He did not make any predictions, however, about the bank's revenue or profit in the second quarter.

Credit Agricole’s corporate and investment bank is focusing on debt trading, as well as providing financing to corporations and funding for infrastructure projects. An increasing portion of its clients are trading through its real-time electronic systems, Hocher says, enabling the bank to boost volumes without increasing staff.

He repeated the targets for 7 percent annual revenue growth in market activities through 2016, and corporate-financing sales growth of 2 percent a year.

Sales at corporate and investment bank - Hocher’s unit - rose 24 percent to 1.22 billion euros ($1.37 billion) in the first quarter as capital-markets revenue jumped by about 30 percent. The bank outpaced BNP Paribas and Societe Generale SA ranking third in arranging bond offerings in euros, data compiled by Bloomberg show.