(Boursier.com) — The gain of more than 5% quickly turned into a loss of almost 6% for the stock Societe Generale. Investors initially welcomed the financial institution’s quarterly results, which were down but higher than market expectations, before concerns about the net interest margin in France took over.
Société Générale, whose financial health is largely dependent on the results of its retail banking activity in France, and which no longer publishes the figures for its activity in the country separately, underlined in the press release presenting the accounts that the hedges at short term and the transfer of part of demand deposits to financial savings and interest-bearing deposits weighed on the first quarter. Then, during the conference call organized with analysts, the financial director, Claire Dumas, mentioned a level of net interest margin in France at the bottom of the forecast range. 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 the manager.
“The market was a little concerned about the net interest margin forecast which was fair but bullish before. I think that’s probably what caused the weakness,” Johann Scholtz told ‘Reuters’. analyst at Morningstar. Net interest margin – which measures the difference between interest received and interest paid on deposits – is a key indicator of bank profitability.
Jérôme Legras, managing partner and head of research at Axiome Investissements Alternatives, tells ‘Bloomberg’ that two problems emerged during the conference call. “The question relating to net interest income hedges is obviously not completely resolved… And the trajectory of the group’s capital is not clear and management has been reluctant to give precise indications on this subject “.
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