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What You Should Know About Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes’s (EPA:CRSU) Risks

David Owens

The banking sector has been experiencing growth as a result of improving credit quality from post-GFC recovery. As a small-cap bank with a market capitalisation of €890.05M, Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes’s (ENXTPA:CRSU) profit and value are directly affected by economic growth. This is because borrowers’ demand for, and ability to repay, their loans depend on the stability of their salaries and interest rates. Risk associated with repayment is measured by bad debt which is written off as an expense, impacting Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes’s bottom line. Since the level of risky assets held by the bank impacts the attractiveness of it as an investment, I will take you through three metrics that are insightful proxies for risk. See our latest analysis for Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes

ENXTPA:CRSU Historical Debt Jun 6th 18

How Good Is Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes At Forecasting Its Risks?

The ability for Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes to forecast and provision for its bad loans accurately serves as an indication for the bank’s understanding of its own level of risk. If it writes off more than 100% of the bad debt it provisioned for, then it has poorly anticipated the factors that may have contributed to a higher bad loan level which begs the question – does Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes understand its own risk?. Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes’s low bad loan to bad debt ratio of 75.34% means the bank has under-provisioned by -24.66%, indicating either an unexpected one-off occurence with defaults or poor bad debt provisioning.

How Much Risk Is Too Much?

By nature, Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes is exposed to risky assets by lending to borrowers who may not be able to repay their loans. Total loans should generally be made up of less than 3% of loans that are considered unrecoverable, also known as bad debt. Loans are written off as expenses when they are not repaid, which comes directly out of Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes’s profit. A ratio of 1.32% indicates the bank faces relatively low chance of default and exhibits strong bad debt management.

How Big Is Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes’s Safety Net?

Handing Money Transparent

Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes operates by lending out its various forms of borrowings. Customers’ deposits tend to carry the smallest risk given the relatively stable interest rate and amount available. The general rule is the higher level of deposits a bank holds, the less risky it is considered to be. Since Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes’s total deposit to total liabilities is very high at 93.30% which is well-above the prudent level of 50% for banks, Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes may be too cautious with its level of deposits and has plenty of headroom to take on risker forms of liability.

Next Steps:

Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes has maintained a safe level of deposits against its liabilities. Conversely its cash flow could be negatively impacted by its below-average bad debt management. Today, we’ve only explored one aspect of Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes. However, as a potential stock investment, there are many more fundamentals you need to consider. I’ve put together three pertinent aspects you should further research:

  1. Valuation: What is CRSU worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether CRSU is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Caisse Régionale de Crédit Agricole Mutuel Sud Rhône Alpes’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.