By Mathieu Rosemain PARIS, Feb 4 (Reuters) – Credit Agricole on Wednesday said its fourth-quarter profit fell 39% due to a charge related to its increased stake in Italy's Banco BPM, rising costs and losses at its car-leasing business. France's third-largest listed lender said net income dropped to 1.03 billion euros ($1.22 billion), besting analyst expectations of 996 million euros. Revenue fell 1.8% to 6.97 billion euros, beating the 6.78 billion-euro expectation. The bank booked a 607 million-euro charge after raising its stake in Banco BPM above 20%, triggering a change in the treatment of the investment. The adjustment is non-recurring and does not involve any cash outflow. Like several European lenders, Credit Agricole has benefited from higher interest rates and resilient loan demand, particularly in its international and corporate businesses, even as French retail margins have remained under pressure. At home, its net interest margin rose by more than 11% in the quarter. In a note to clients on Wednesday, JPMorgan analysts pointed to a "messy Q4 with higher costs and provisions overshadowing decent top line." Credit Agricole is also focused on strengthening its position in the important Italian market. CEO Olivier Gavalda said the bank would seek greater influence at BPM: "We demand to have a position on the board that equals our 20% … so 20% representation on BPM's board." Banco BPM is set to strengthen minority shareholders' representation by doubling to six the maximum number of board seats they can secure. INVESTMENT BANKERS UNDERPERFORM RIVALS Credit Agricole's investment banking unit had a record fourth quarter thanks to growth in its fixed income, currencies and commodities business. Operating expenses rose 4.7% to 4.1 billion euros, exceeding analyst expectations of 3.9 billion euros. The increase was partly due to 65 million euros in restructuring costs in Italy aimed at boosting the bank's "digital dimension." Chief Financial Officer Clotilde L'Angevin said the bank would cut staff numbers in Italy by 500 to 11,500. Reflecting a more cautious outlook, the cost of risk, or money set aside for bad loans, rose 5.9% to 629 million euros as loan repayments became more uncertain. Leasys, Credit Agricole's car-leasing joint venture with automaker Stellantis, recorded a 111 million euro loss in the fourth quarter after writing down the value of secondhand cars. The French lender proposed a dividend of 1.13 euros for 2025, up 3% from a year earlier and in line with expectations. ($1 = 0.8462 euros) (Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes and Thomas Derpinghaus)
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