SocGen’s Q4 earnings slide but retail bank helps it beat forecasts

FRENCH financial institution Societe Generale (SocGen) reported a pointy drop in fourth-quarter internet revenue on Thursday (Feb 8), though the lender beat analyst expectations due to indicators of restoration in its home retail enterprise and secure funding financial institution buying and selling income.

France’s third-biggest listed financial institution mentioned group internet revenue within the ultimate three months of 2023 tumbled practically 60 per cent from a 12 months earlier to 430 million euros (S$623 million), beating the 333 million euros median common of 13 analyst estimates compiled by the corporate.

Group income within the quarter dropped by virtually 10 per cent to about six billion euros, above the 5.9 billion euros estimate of the company-compiled consensus.

Sales from buying and selling in SocGen’s funding financial institution slipped by 0.8 per cent, the financial institution mentioned, as a robust exhibiting for equities offset a 22 per cent decline in fastened revenue and currencies.

SocGen has struggled lately, with its shares lagging rivals and analysts questioning its low profitability and reliance on risky funding financial institution earnings.

Chief govt Slawomir Krupa in September unveiled a strategic plan to revive its fortunes that promised little in the way in which of income development however pledges to slash prices and promote non-performing belongings.

The financial institution has some method to hit its targets: return on tangible fairness (Rote), a measure of profitability, stood at 1.7 per cent at end-2023, towards Krupa’s goal for 2026 of between 9 per cent and 10 per cent.

In 2024, the French lender targets a yearly development in gross sales of not less than 5 per cent and a Rote of greater than 6 per cent.

Thursday’s outcomes capped a difficult “year of transition”, SocGen mentioned, marked by the pricey acquisition of LeasePlan, a hedging coverage towards low charges on the retail unit that backfired when charges jumped, and the badly-received strategic plan.

French banks haven’t benefited as a lot as eurozone friends from hovering charges as a result of they have an inclination to pay extra curiosity to depositors, however SocGen mentioned the fourth quarter marked the “beginning of the rebound in net interest income”.

SocGen additionally introduced a proposed dividend of 0.90 euro per share, reflecting a payout ratio of 40 per cent, the underside finish of its vary, and mentioned it might purchase again 280 million euros price of shares.

This 12 months would see “the meticulous execution of our strategic plan”, notably by way of “improved operational efficiency”, Krupa mentioned on Thursday.

Krupa has promised to generate 1.7 billion euros price of value financial savings. The financial institution earlier this week introduced 900 job cuts in France. REUTERS