SocGen performs better than expected in Q2, offsetting sale of Rosbank
SOCGEN PERFORMS BETTER THAN EXPECTED IN Q2, BALANCES ROSBANK SALE
by Julien Pontus
PARIS (Reuters) – Societe Generale on Wednesday reported a lower-than-expected second-quarter loss, with the momentum of its activity in both retail banking and markets offsetting the impact of the sale of its subsidiary, Russia’s Rosbank.
The third largest French bank by market capitalization, which had warned that the sale of its operations in Russia to Interros Capital would cost it around 3.3 billion euros, simultaneously announced new financial targets for 2025.
SocGen, which has started a process to find its next CEO to succeed Frédéric Oudéa, said it posted a €1.48 billion net loss in the second quarter, while analysts expected a loss of around €2 billion.
Net banking income was also ahead of expectations at €7.06 billion, while the bank’s better-than-expected expenses nonetheless allowed for a positive jaw effect.
In market activities, revenues rose 23.3% to 1.52 billion euros, with a 50% jump in interest, credit and foreign exchange operations.
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) of 10.5%, a level SocGen aims to maintain through 2025.
“These momentum and achievements make us confident both in the short term in an undeniably more uncertain environment, and in the medium term,” said Frédéric Oudéa, CEO of SocGen, in a press release.
“By 2025 (…) we confirm our ability to deliver a 10% return based on a 12% headline target while maintaining an attractive distribution policy for our shareholders,” he added.
LOOKING FOR A NEW CEO
By 2025, SocGen also targets a cost-to-income ratio of less than or equal to 62% and a payout ratio of its earnings of 50%.
Last May, the bank announced that it had completed the sale of its operations in Russia following the war in Ukraine and Western countries’ sanctions against Moscow.
In the same month of May, during the general meeting of SocGen shareholders, Frédéric Oudéa surprised the financial world by announcing that he would not seek to renew his mandate at the helm of the bank in May 2023.
Group CEO Lorenzo Bini Smaghi later hinted that the name of Frédéric Oudéa’s successor would be revealed this autumn.
The choice of the next chief executive is a decision of the board of directors, but Frédéric Oudéa has advocated an internal candidacy to lead the bank for the next ten to fifteen years.
Rumors of his successor surround Sébastien Proto, who is currently leading the merger of SocGen’s retail banking networks in France, and Slawomir Krupa, the head of Corporate and Investment Banking (BFI).
The names of former SocGen such as Philippe Heim, the head of the Postbank, Jean-Pierre Mustier, the former general manager of Unicredit, or Jacques Ripoll, who has just left Crédit Agricole, are mentioned without being named as favorites.
BNP Paribas on Friday reported better-than-expected second-quarter results thanks to a decline in bad debt provisions despite the economic slowdown and brisk activity in market activities such as retail banking.
(Report Julien Ponthus, French version Matthieu Protard, edited by Jean Terzian and Nicolas Delame)
