PARIS (Reuters) – Societe Generale on Friday reported generally better-than-expected results in the first quarter, but its activities in retail banking in France, where revenues fell by 11%, disappointed analysts.
In the context of the inflationary surge, which resulted in particular in an increase in the remuneration of regulated savings accounts such as the Livret A, the third French bank by market capitalization, after BNP Paribas and Crédit Agricole SA, saw its net interest margin down 18% over the quarter in retail banking in France.
At a press conference, SocGen chief executive Frederic Oudea, who will hand over to Slawomir Krupa at the end of the month, said the decline in net interest margin would be “temporary”.
The bank expects the interest margin to be down 15% to 20% this year compared to 2022.
“The benefit of positive rates will materialize as early as 2024,” the bank said.
On the Paris Stock Exchange, the SocGen title, which had opened lower, returned to positive territory. The action gained 0.87% to 21.99 euros at 10:26 a.m.
It nevertheless remains behind since the start of the year (around -7%) compared to its competitors BNP Paribas and Crédit Agricole, whose shares have posted increases of 7.70% and 17.51% respectively since January.
COST OF RISK REVISED DOWN FOR THIS YEAR
“Results are satisfactory in all divisions, but the main problem concerns retail banking in France,” JP Morgan analysts point out in a research note.
Societe Generale took advantage over the quarter of the decline in its cost of risk and its interest rate, credit and foreign exchange activities to generate net profit up 5.7% to 868 million euros.
According to a Refinitiv consensus, analysts on average expected a net profit of 449 million euros.
Over the quarter, its revenues fell by 5.3%, while its cost of risk fell by 67.6%.
Like its competitors, its corporate and investment bank benefited from a dynamic quarter for rates, credit and foreign exchange (FIC) activities where revenues grew by 16%.
The bank says it expects a cost of risk this year below 30 basis points, whereas it was expecting it to be between 30 and 35 basis points previously.
(Report Matthieu Protard, with Mathieu Rosemain, edited by Jean-Stéphane BRosse)
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