PARIS (Reuters) – Societe Generale reported on Friday net banking income below expectations in the third quarter, due to the decline in its retail banking activity in France which offset the good resistance of its investment bank.
The quarterly revenues of the third French bank by market capitalization decreased over one year by 6.2% to 6.189 billion euros, below the 6.3 billion euros expected, according to a consensus of 13 analysts compiled by the band.
Net interest margin, excluding the two regulated savings accounts PEL and CEL, fell 27% during the quarter, “well below expectations”, JP Morgan said in a note to clients.
It is penalized by the impact of hedging operations, by the increase in the rate of regulated savings accounts, by the consequences of the usury rate and by the end of so-called TLTRO operations (targeted long-term refinancing operations) of the European Central Bank (ECB).
In this context, Société Générale now anticipates a 20% drop in the net interest margin of retail banking in France in 2023 compared to 2022.
In 2024, the net interest margin of this division is estimated “at a level greater than or equal to that of 2022”.
Net profit, group share, amounted to 295 million euros in the third quarter, exceeding the 168 million euros expected by analysts, but down 80% year-on-year.
SocGen recorded an exceptional negative impact of 340 million euros of depreciation related to certain of its activities, in addition to a provision of 270 million euros for a provision of deferred tax assets.
Jefferies described SocGen’s results release as “lackluster”, marked by a mixed set of numbers.
On the Paris Stock Exchange, Société Générale shares gained 0.85% to 21.8 euros at 9:08 a.m., when the CAC 40 advanced at the same time by 0.08%.
MODERATE GROWTH
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.
In this context, the 0.4% decline in revenues of Société Générale’s investment bank appears competitive compared to European competitors.
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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