SOCGEN GOES BETTER THAN EXPECTED IN 2ND QUARTER, OFFSETS ROSBANK SALE
by Julien Pontus
PARIS (Reuters) – Societe Generale reported a smaller-than-expected second-quarter loss on Wednesday, as buoyant activities in both retail banking and markets offset the impact of the sale of its Russian affiliate Rosbank.
The third-largest French bank by market capitalization, which had warned that the sale of its activities in Russia to Interros Capital would cost it some 3.3 billion euros, announced at the same time new financial targets for 2025.
SocGen, which has launched a process to find its next chief executive to succeed Frédéric Oudéa, says it posted a net loss of €1.48bn in the second quarter, where analysts had expected a loss of around €2bn.
The bank has confirmed at the same time the launch of a share buyback program for 915 million euros.
In the stock market, shares of Société Générale opened more than 4%.
“These are clearly excellent results, with the good news of share buybacks and ambitious but achievable goals,” underlines Jérôme Legras, research director at Axiom Alternative Investments.
At €7.06 billion, its net banking income also beat expectations, while its expenses, above expectations, allowed the bank to generate a positive jaw effect.
In market activities, income grew by 23.3% to 1,520 million euros, with a jump of 50% in rates, credit and foreign exchange activities.
In retail banking, revenues increased 8.5% in France and 12.7% internationally.
At the group level, the bank has a return on equity (ROTE) ratio of 10.5%, a level that SocGen wants to maintain by 2025.
“These dynamics and performances give us confidence both in the short term, in an undeniably more uncertain environment, and in the medium term,” Frédéric Oudéa, CEO of SocGen, was quoted as saying in a press release.
“By 2025, … we confirm our ability to deliver a 10% return based on a tier one core target of 12%, while maintaining an attractive distribution policy for our shareholders,” he added.
LOOKING FOR A NEW CEO
By 2025, SocGen is also targeting a cost/revenue ratio of less than or equal to 62%, as well as a 50% payout rate.
Last May, the bank announced that it had completed the sale of its activities in Russia following the war in Ukraine and the sanctions of Western countries against Moscow.
This same month of May, during the general meeting of shareholders of SocGen, Frédéric Oudéa surprised the financial community by announcing that he would not seek the renewal of his mandate at the head of the bank in May 2023.
The chairman of the group’s board of directors, Lorenzo Bini Smaghi, later indicated that the name of Frédéric Oudéa’s successor would be known this fall.
The choice of the next CEO is a decision of the board of directors, but Frédéric Oudéa has declared himself in favor of an internal candidacy to lead the bank for the next ten to fifteen years.
Rumors of his successor revolve around Sébastien Proto, who is currently leading the merger of SocGen’s retail banking networks in France, and Slawomir Krupa, head of corporate and investment banking (BFI).
The names of former SocGen are also mentioned, such as Philippe Heim, the head of the Postal Bank, Jean-Pierre Mustier, the former CEO of Unicredit, or Jacques Ripoll, who has just left Crédit Agricole, without favorites being given. .
For its part, BNP Paribas reported results last Friday above expectations in the second quarter thanks to the drop in loan-loss provisions despite the economic slowdown and vigorous activity in market activities such as retail banking.
(Report Julien Ponthus and Ingrid Melander, French version Matthieu Protard, edited by Jean Terzian and Nicolas Delame)
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