Credit Agricole Du Languedoc's Past Value Creation May Offer Insights Into Its Future Returns

I just had my first article published on Seeking Alpha in almost two years!

My most recent article was inspired by a message sent to me by a reader about my last article, which described how the publicly stated return on equity of the Crédit Agricole regional banks dramatically understates their profitability. Instead, he argued, a better way to analyze them is to look at their book value per share growth and annual dividends, the same approach I used in my previous articles about investment companies such as Anworth Mortgage, Dynex Capital, and Sixth Street Specialty Lending. 

After reading his message, I was inspired to write an article analyzing Credit Agricole Du Languedoc, one of the Crédit Agricole regional banks, using that methodology; you can check it out here.

The Impact of Local GDP Per Capita on the ROE of Crédit Agricole's Regional Banks

The Crédit Agricole group is not only the largest retail bank in France, but also the largest retail bank in the European Union. The Group consists of Crédit Agricole S.A., whose stock trades in the U.S. under the tickers (CRARY) and (CRARF), as well as a network of 39 regional Crédit Agricole banks, and a larger network of over 2,400 mutual banks. More than 11 million mutual shareholders own shares in the mutual banks, which themselves own shares in the regional banks, which in turn own over half the shares of Crédit Agricole S.A.

Of the 39 Crédit Agricole regional banks, 12 are publicly traded on European exchanges. Their shares have historically been cheap. One problem with investing in them, though, is deciding which ones to invest in. Since each Crédit Agricole regional bank operates in a different area of France with a different GDP per capita, I was curious if areas with higher GDPs per capita might have Crédit Agricole regional banks that earn higher returns. (Read More)