Fitch upgrades Credit Agricole

Fitch Ratings said it upgraded Credit Agricole’s long-term issuer default rating to A+ from A and its viability rating to a+ from a. The outlook is stable.

The agency said the upgrade reflects the implementation of a lower risk appetite, combined with further improvement in the group's capitalization, which is strong and in line with similarly rated peers. The group successfully implemented its 2014-2016 strategic plan. The plan included deleveraging actions, the derisking of corporate and investment banking activities and a substantial strengthening of capitalization and liquidity.

As with its domestic and European peers, Credit Agricole's profitability is suffering from the low-interest-rate environment, Fitch noted, and French retail banking revenue are under pressure from a recent increase in housing loan prepayments and a high number of rate renegotiations as well as the limited flexibility on the remuneration of deposits. The agency said the negative effect on revenue is partially offset by higher loan volumes, additional cross-selling and the diversification of the group's activities.

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