PARIS (Reuters) – Societe Generale reported quarterly results above expectations on Friday, while the solid performance of its investment and financing bank offset the sharp decline in its retail banking activities in France.

Over the July-September period, the third French bank by market capitalization published a net profit, group share of 295 million euros, while analysts on average anticipated an amount of 194 million euros according to a consensus reached by SocGen.

This is a decline of almost 80% over one year, due to a depreciation of 340 million euros on certain group activities and a provision of 270 million euros for deferred tax assets.

Société Générale had warned of these “cuts” upstream, during an investor day organized in September.

Its quarterly revenues decreased year-on-year by 6.2% to around 6.2 billion euros, almost identical to the consensus which stood at 6.24 billion euros.

Taking office last May, the group’s general director, Slawomir Krupa, is striving to relaunch the red and black bank on the stock market by achieving the cost cuts and prudent objectives that he presented in September.

Its mid-term forecasts, which include a target of annual revenue growth of between 0% and 2% by 2026, were met with disappointment by investors, who expected a greater return for shareholders, while Company General had touted its strategic plan for months. The bank’s stock plunged more than 10% during the presentation of the plan in London on September 18.

This year 2023, placed by the group under the sign of “transition”, is marked by the integration of the vehicle rental company LeasePlan, while the merger of its two French retail banking networks has also been finalized.

These two operations weighed on costs, in a context of reducing margins in the retail banking market in France – a contrast compared to other European countries – even though interest rates rose at an unprecedented pace. precedent for years.

Net banking income was affected by the strict control of borrowing costs, the increase in the rate of regulated savings accounts and the end of so-called TLTRO operations (targeted long-term refinancing operations) of the European Central Bank. (ECB).

In this context and compared to certain European rivals, the 0.4% decline in revenues of Société Générale’s investment bank appears competitive.

The rates, credit and foreign exchange activities recorded revenues down 4.6%, a performance however better than that of BNP Paribas but also of Deutsche Bank and Barclays.

Financing and advisory activities increased by 2.1%, contributing to the 7.7% increase in the group’s net profit from the investment division over the July-September period.

Société Générale has also revised its annual cost of risk objective to less than 20 basis points compared to a previous objective of less than 30 basis points.

(Report Mathieu Rosemain, written by Jean Terzian, edited by Blandine Hénault)

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