Despite declining profits, the bank continued to grow its turnover. A situation that allows the action to jump 5% on the Paris Stock Exchange.
Societe Generale on Friday published a slight increase in turnover over one year in the third quarter, but a declining profit, weighted by the remuneration of regulated savings accounts and the provisions made in the event of unpaid debts. Net banking income (NBI), equivalent to turnover, amounted to 6.83 billion euros (+2.3%), from July to September, for a net result of 1.5 billion euros. euros (-6.4%). Figures welcomed by the Paris Stock Exchange, where prices jumped more than 5% at the opening this morning.
If it is more or less in line with the previous quarter (excluding the impact of the sale of Rosbank), Societe Generale has exceeded the expectations of analysts polled by the financial information provider Factset. “This quarter was marked by an increase in revenues, continued control of general expenses and a contained cost of risk“, commented in a press release the general manager Frédéric Oudéa.
Increase in the risk of non-payment
Retail banking, bringing together in particular the Societe Generale and Crédit du Nord branch networks set to merge from next year, is seeing its profitability fall compared to the same period last year: if the turnover activity is stable, its net profit is reduced by 27%, to 343 million euros. The accounts are affected in particular by the cost of risk, these sums provisioned to deal with any unpaid debts on the loans granted (nearly 200 million euros for the networks). It amounted to 456 million euros group-wide in the third quarter, more than twice that of last year at the same period. The so-called fragile individual customers and energy-hungry companies, on the front line of inflation, are the focus of the bank’s attention.
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The rise in the rate of the Livret A and the Livret de développement durable et solidaire – Societe Generale retained nearly 25 billion euros in outstandings at the end of last year – from 1% to 2% on August 1 , as well as those of associated savings products also weighed on the profitability of retail banking.
The net result of the international retail banking networks, grouped with insurance and specialized services, increased by 6.8% in the third quarter, as did that of the corporate and investment bank. , by 15.6%. The company also clarified on Friday that its solvency ratio, a key indicator of its strength in the event of a crisis, stood at 13.1% on September 30, above the regulatory requirement.
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Assignment in Russia
The profit earned in the third quarter allows the banking group to move into positive territory this year. Hit hard by the war in Ukraine, Societe Generale had to separate in the middle of the year from its retail banking subsidiary in Russia, Rosbank. This operation resulted in the accounts by a dead loss of more than 3 billion euros, passed in the second quarter. The profits of the first half of the year were not enough to fill this hole, it is done at the end of the third quarter: the bank has earned since January 858 million euros, for a little more than 21 billion euros in turnover.
The group is also in the process of restructuring its staff, echoing the announcement on September 30 of the successor to Frédéric Oudéa, Slawomir Krupa, the head of financing and investment activities, who will take the reins of the group. in May. The departures of three leaders have already been announced in recent weeks: the Director of Risks Sadia Ricke, the Director of Human Resources and Communication Caroline Guillaumin and especially the Deputy Director General, Gaëlle Olivier, in charge of IT, digital transformation and innovation.
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On the operational level, Societe Generale is carrying out several fundamental transformations in 2022, including the absorption of Leaseplan by its in-house car leasing subsidiary ALD and that of the Crédit du Nord network, which will switch to red and black colors. Societe Generale is the second major French bank to publish its third quarter results, after BNP Paribas on Thursday and before BPCE and Crédit Agricole next week.
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