(News Bulletin 247) – The Banque de la Défense published contrasting results, with net banking income lower than expected, weighed down by retail banking in France. But its profit and solvency ratio came out above expectations.

Societe Generale delivered a mixed report for its third quarter accounts, with Jefferies describing the whole as “dull”.

Over the period from July to the end of September, the La Défense bank generated net banking income, equivalent to bank turnover, of 6.189 billion euros, down 9.2% on a comparable basis, i.e. 1.8% less than the figure expected by analysts, notes Royal Bank of Canada.

The establishment was particularly penalized by retail banking in France (a sector which also includes private banking and insurance in France) where revenues fell by 14.7% excluding home savings plans and home savings accounts. , while analysts were counting on a decline limited to 6% over one year.

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Expensive blankets

Like all French banks, Société Générale is weighed down by the specificities of the French market, with loans at fixed rates, which means that the establishment only gradually benefits from the increase in interest rates on the market, the time for its outstanding credit to change with loans at higher rates.

On the other hand, it must immediately pass on the better remuneration of tax-free savings accounts to its customers’ accounts.

In addition, Société Générale, like other French banks, has chosen to hedge against a drop in rates. This coverage put in place at the level of its interest margins in retail banking proves costly and penalizes its results.

“The Group’s net profit is penalized by the negative effect in retail banking in France of short-term hedging of the net interest margin,” explained the general director, Slawomir Krupa, in a press release. The negative impact of these hedges has however reached a “peak”, indicated Société Générale.

Moreover, in its presentation, the bank estimates having reached the bottom of the wave on its net interest margin in retail banking in France, at 744 million euros, and thus anticipates a rebound from the fourth quarter. In other words, their level should probably start to rise again.

The disappointment of the investor day

The fact remains that for the moment “the revenue dynamic is as weak as suggested by the presentation of Société Générale’s strategic plan during the day dedicated to investors”, points out Royal Bank of Canada.

On this day, in mid-September, the strategic plan of the new general director, Slawomir Krupa, was sanctioned by the Stock Exchange, with Societe Generale shares losing 12% over the day. The apparent lack of ambition displayed by the company, particularly in terms of its revenue growth, had then gripped investors.

Apart from revenues, the operating ratio – an indicator which relates a bank’s expenses to its net banking income – deteriorated, reaching 70.4% compared to 62% a year earlier.

Profit better than expected

However, Jefferies qualifies the picture. If the group disappoints on its revenues, it has exceeded expectations in terms of profits and solvency ratio. Enough to bring the market into perspective, especially since the valuation of Société Générale is in decline, since it only represents 30% of the bank’s balance sheet value.

Societe Generale has, in fact, generated a net profit of 295 million euros, certainly divided by almost five over one year but higher than analysts’ expectations which stood at 168 million euros.

Likewise in terms of solvency, its CET 1 ratio (in short, the capital compared to the risk-weighted outstanding), an important indicator closely monitored by analysts, stood at 13.3% compared to 12.9%. expected by consensus.

On the Paris Stock Exchange, the market is finally putting Societe Generale’s failure in its revenues into perspective. The title of the La Défense bank rose 1% around 11:30 a.m., where the CAC 40 oscillated around equilibrium (-0.03%).