SocGen signs solid Q2 and offsets exit costs from Russia, Company news

Julien Pontus

PARIS, August 3 (Reuters). Shares in Societe Generale jumped on the Paris stock exchange after the bank reported a lower-than-expected second-quarter loss on Wednesday, despite the 3.3 billion euros it cost to exit Russia through the sale of its subsidiary. Rosbank.

France’s third-largest bank by market capitalization, which launched a search for its next chief executive to replace Frédéric Oudet, also announced new financial targets for 2025 and confirmed the start of a €915 million share buyback.

Thanks to the dynamic activity of investment banking and retail banking services, the results of the second quarter were appreciated by investors.

SocGen shares rose 4.07% to 22.52 euros at 11:09 a.m. and were the second-biggest gainer on the CAC 40 after Axa.

“These are clearly excellent results, with good news on share buybacks and ambitious but achievable targets,” emphasizes Jérôme Legra, director of research at Axiom Alternative Investments.

SocGen said it posted a net loss of 1.48 billion euros in the second quarter, while analysts had expected a loss of about 2 billion euros.

Its net banking profit of 7.06 billion euros also beat expectations, while its higher-than-expected expenses nevertheless allowed the bank to generate a positive impact.

In markets, revenues rose 23.3% to €1.52 billion, with a 50% jump in rates, credit and foreign exchange.

In the field of retail banking, revenues increased by 8.5% in France and by 12.7% abroad.

At group level, the bank has a return on equity (ROTE) of 10.5%, a level SocGen wants to maintain until 2025.

“By 2025 (..) we are confirming our ability to deliver a return of 10% based on a core Tier 1 target of 12%, while maintaining an attractive distribution policy for our shareholders,” stressed Frederic Udea, CEO of SocGen. .

By 2025, SocGen also aims to achieve a cost-to-income ratio of less than or equal to 62% and a 50% distribution of its results.

It also targets average annual revenue growth of at least 3% over the 2021-2025 period.

LOOKING FOR A NEW GENERAL DIRECTOR

Last May, the bank announced it had completed the sale of its Russian operations following the war in Ukraine and Western sanctions against Moscow.

That same May, during SocGen’s general meeting of shareholders, Frederic Udea 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.

Later, the chairman of the board of directors of the group, Lorenzo Bini Smaghi, said that the name of Frederic Udea’s successor will be known this autumn.

Responding to a press conference on the matter, Frederic Udea noted that a decision on the next CEO is still scheduled for this fall.

Rumors about his successor revolve around Sébastien Proto, who currently heads the merger of SocGen’s retail banking networks in France, and Slawomir Krupa, head of corporate and investment banking (BFI).

Also mentioned are the names of former SocGens, such as Philippe Heim, the boss of the Post Bank, Jean-Pierre Mustier, the former CEO of Unicredit, or Jacques Ripoll, who recently left Crédit Agricole. , but favorites are not mentioned.

For its part, BNP Paribas posted better-than-expected second-quarter results last Friday thanks to lower bad debt provisions despite a slowing economy and buoyant activity in market activities such as retail banking. (Reporting by Julien Pontus and Ingrid Melander, French version by Mathieu Protard, editing by Jean Terzian and Nicolas Delamet)