SocGen signs solid Q2 and offsets Russia exit costs, Company News

Julien Pontus

PARIS, Aug 3 (Reuters) – Shares of Societe Generale jumped on the Paris Stock Exchange after the bank reported lower-than-expected second-quarter losses on Wednesday despite a €3.3 billion exit from Russia cost him in connection with the sale of his subsidiary. Rosbank.

The third French bank by market capitalization, which has begun the process of looking for the next managing director to succeed Frédéric Oudéa, at the same time announced new financial targets for 2025 and confirmed the launch of a €915 million share buyback.

Thanks to dynamic activity in both investment banking and retail banking, the results of the second quarter are highly appreciated by investors.

SocGen shares rose 4.07% to €22.52 at 11:09 am and signed the second-biggest CAC 40 gain after Axa.

“These are clearly excellent results with good buyback news and ambitious but achievable targets,” emphasizes Jérôme Legras, research director at Axiom Alternative Investments.

SocGen reported 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 bank income of €7.06bn also came in above expectations, while its higher-than-expected spending nonetheless allowed the bank to create a positive jaw-dropping effect.

In market activities, revenues rose by 23.3% to 1.52 billion euros, while the growth of rates, credit and foreign exchange transactions amounted to 50%.

In retail banking, revenues rose 8.5% in France and 12.7% elsewhere.

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.

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

By 2025, SocGen is also aiming for a cost-to-revenue ratio of less than or equal to 62% and a dissemination rate of results of 50%.

It also targets an average annual revenue growth of at least 3% between 2021 and 2025.

LOOKING FOR A NEW CEO

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

That same May, during a general meeting of SocGen shareholders, Frederic Oudea surprised the financial community by announcing that he would not seek an extension of his mandate at the head of the bank in May 2023.

Group chairman Lorenzo Bini Smagi later revealed that Frederic Udea’s successor would be known this fall.

Answering this question at a press conference, Frédéric Oudéa indicated that a decision on the next CEO is still scheduled for this fall.

Rumors of his successor swirl around Sebastien Proto, who is currently leading the merger of SocGen’s retail banking networks in France, and Slavomir Krupa, head of corporate and investment banking (BFI).

Also mentioned are the names of former SocGen, such as Philippe Heim, boss of the Postal Bank, Jean-Pierre Mustier, former CEO of Unicredit, or Jacques Ripoll, who recently left Crédit Agricole, without naming favorites.

For its part, BNP Paribas reported last Friday better-than-expected second-quarter results, thanks to a reduction in bad debt reserves, despite a slowdown in economic growth and strong market and retail banking activity. (Report by Julien Pontus and Ingrid Melander, French version by Mathieu Protard, edited by Jean Tertian and Nicolas Delame)