by Mathieu Rosemain
PARIS (Reuters) – Societe Generale reported on Friday a quarterly net profit down but above expectations, an announcement initially welcomed by the market before concerns about the net interest margin in France took over again. .
On the Paris Stock Exchange, Société Générale shares fell 5.23% to 24.44 euros at 1:09 p.m., after having gained more than 6% earlier in the session.
The stock turned lower during a conference call organized with analysts, during which the financial director, Claire Dumas, mentioned a level of net interest margin in France at the bottom of the forecast range .
Net interest margin – which measures the difference between interest received and interest paid on deposits – is a key indicator of bank profitability.
Societe Generale had said it expected a net interest margin for 2024 at least equivalent to that of 2022 for France.
“Indeed, the forecast was to rebound or to be at the 2022 level (…) We are today at the bottom of the range of this forecast and our projections,” declared Claire Dumas.
“The market was a little concerned about the net interest margin forecast which was honest but bullish before. I think that’s probably what’s causing the weakness,” said Johann Scholtz, an analyst at Morningstar .
DYNAMISM OF EQUITY DERIVATIVES
Societe Generale, whose financial health is largely dependent on the results of its retail banking activity in France, and which no longer publishes figures for its activity in the country separately, reported an improvement in the net margin of interest in the first quarter compared to the previous quarter.
But this margin remains under pressure, “mainly due to falling outstanding demand deposits due to the continued transfer towards interest-bearing deposits and financial savings”, explained the bank in its results press release.
This weakness overshadowed a quarterly net profit that came out above expectations thanks to the dynamism of equity derivatives activities.
The group’s net profit fell to 680 million euros compared to 868 million a year earlier while, according to a consensus provided by SocGen, analysts on average expected a result of 463 million euros.
Net banking income stood at 6.65 billion euros, down 0.4% but above analysts’ expectations, who expected 6.46 billion euros.
The performance was driven by the large customer bank and investor solutions which recorded a 26.4% increase in its net profit, to 690 million euros.
The group’s financing and advisory activities also contributed to the result, offsetting the 17% fall over one year in interest rate and foreign exchange businesses, a much sharper decline than the average of rival American banks and that of BNP Paribas, its main competitor in France.
TRADING INCIDENT
On the stock market, Société Générale shares have only increased by 9% over the last three years, compared to an increase of 26% for BNP Paribas and 13.5% for Crédit Agricole. The Stoxx 600 bank index rose 55% over the period.
Managing director Slawomir Krupa, who took office last year, is tasked with restoring the stock price but the presentation of a new strategic plan for 2026 last September was sanctioned by investors.
To improve the profitability of the red and black bank, Slawomir Krupa is committed to reducing costs while selling assets deemed non-strategic. He also wants to invest in the development of the online bank BoursoBank and in the listed car rental subsidiary Ayvens.
On Friday, the leader also returned to a trading “incident” which led to the departure of two traders based in Hong Kong, accused of having made unauthorized bets on the markets.
This incident took place late last year but came to light this week.
“The incident had no impact, neither on the group nor on the group’s customers. It was normally detected by the control system, which shows its effectiveness,” said Slawomir Krupa, adding that the measures “ appropriate” were taken, without detailing which ones.
(Report Mathieu Rosemain, written by Augustin Turpin and Blandine Hénault, edited by Kate Entringer)
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