A few months before his departure – the name of his successor will be known next autumn for an effective departure before May 2023 – Frédéric Oudéa, CEO of the Société Générale group, can congratulate himself “two years of intense transformation and simplification of the business model”even if the many projects launched will take full effect from 2023. Like its competitor BNP Paribas, the group posted, in the second quarter, much better results than expected.
It is true that the results are weighed down by the accounting loss before taxes of 3,300 million linked to the forced sale of its Russian subsidiary Rosbank. Hence an accounting loss of 1,480 million euros in the second quarter. But the main thing is elsewhere.
Share repurchase confirmed
Excluding the exceptional item from Russia, the group posted an underlying net profit of €1.5 billion, better than in the second quarter of 2021, and, above all, achieved a full pension across all its activities. In total, quarterly turnover exceeds 7,000 million euros (+13%), costs are under control (+5%), which allows the cost/income ratio to be improved to 61.8%, the cost of risk is remains low (15 basis points on an average forecast for 2025 of 30 to 35 basis points) and the operating result jumps 19% to 2,390 million euros, more than half of the forecasts of financial analysts.
In the process, the bank confirmed its share buyback program for an amount of 915 million euros. Given the strong discount of the share on the stock market -the price represents approximately 40% of net assets-, the bank also intends to continue with its policy of repurchasing shares, up to a maximum of 40% of the distribution to shareholders (with capped at 50% of the underlying shares). net income).
Realization of all the activities.
In detail, all indicators are green. Retail banking in France posted a solid net profit of €539m for the quarter, with activity still strong in particular in credit. Margins are improving, although the two increases in Livret A (February and August) should have a negative impact of 150 million euros for the year. It is worth highlighting the good performance of the online bank Boursorama, which has just reached 4 million customers (including 250,000 from ING France), a year before its market plan. The profitability of the retail division in France reaches 14.4%.
International retail banking and specialized financial services (including car leasing) are doing very well, with a return of 25% and a net result of close to 700 million. Finally, the market activities and the main clients generated a net profit of 742 million and a profitability of 20%.
Frédéric Oudéa therefore sees the future with some optimism, despite a scenario of a sharp slowdown in growth and lower rates from the second half of 2023. “Now it will be a matter of reaping all the fruits of the creation of our new business models”, recalls Frédéric Oudéa, which will be completed in the next nine months.
Let us remember that the group is working on the integration of the Dutch group LeasePlan, a European leader in car leasing, an acquisition of 4.9 billion euros that should be completed by the end of the year. The group is also pursuing the merger of its retail banking networks in France, which will be legally effective on January 1, with an IT migration from the Crédit du Nord banks to the Societe Generale system effective at the end of the first half. 2023. Finally, Boursorama should finalize the acquisition of ING France’s clients by the end of the year, half of which have already been completed.
The CEO thus confirmed the group’s objectives for 2025, that is, an average annual growth in revenue of 3%, a cost/income ratio of less than 62%, a return on tangible assets of 10% and a CET1 solvency of 12% (after impact of the new Basel 4 Prudential Rules).
“We face the coming months with confidence, although we are clear-headed in a more uncertain economic and financial environment, but we believe that our momentum in the second quarter and our outlook remain extremely strong”concludes Frédéric Oudéa.
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