Rise of Societe Generale: Market activity beyond offsetting Russian exposure-May 5, 2022 11:42

(AOF) – Although always positive thanks to its good results, Societe Generale (+ 1.56% to € 23.38) reduced its profits. Banks of Ladefense exceeded expectations, as did competitor BNP Paribas, whose first-quarter account was opened on Tuesday. Its market activity was largely, but not exclusive, more dynamic than expected, and the cost of risk was low.

Group share of net income increased 3.4% to € 842 million and net bank income increased 16.6% to € 7.28 billion. The markets were € 53 million and € 6.17 billion, respectively.

Jeffreys estimates that net income, excluding exceptional items, is € 948 million, which is also much higher than expected. It is 224 million euros.

The cost of risk doubled to € 651 million, but the market was more pessimistic at € 877 million. That’s 39 basis points, an increase of 18 basis points compared to the first quarter of 2021. This is primarily due to the impact of the Ukrainian crisis on Russia’s exposure, which is € 651 million (compared to € 276 million in the first quarter of 2021). It is then categorized into a questionable unpaid allowance of € 313 million and a sound unpaid allowance of € 248 million.

With the exception of Russian activities for sale, the cost of risk remains limited to 31 basis points. By 2022, the cost of risk is expected to be 30-35 basis points compared to the previous 30 basis points.

All sectors exceeded expectations, but investment and corporate banking in particular stood out thanks to their market activity.

The latter recorded revenues of € 1,777 million, up 20.5%, “benefiting strong commercial momentum in all segments”. Of this amount, 1.01 billion (+ 19.5%) comes from equity activities “driven by strong customer activity in all businesses, especially listed commodities and prime services activities.” Fees, credit and foreign exchange activities recorded revenues of € 767 million, up 21.7%. The price was outstanding.

BNP Paribas grew 60.9% in equities and 47.9% in FICC.

As of March 31, 2022, the core capital ratio (CET1) was 12.9%, about 370 basis points above regulatory requirements and 80 basis points down for the entire quarter.

The group aims for a CET1 ratio that exceeds regulatory requirements by 200-250 basis points, including after the regulations that finalize the Basel III reforms come into force.

Frederick Udea, Group Chief Executive Officer, commented: For its employees and customers. ” Finalization is planned for the coming weeks.

The transaction will put pressure on Societe Generale’s accounts of approximately € 3.1 billion, including € 2 billion related to the depreciation of the net book value of the activities sold and € 1.1 billion of exceptional non-cash items. I warned.

AOF-Details

Key Point

1864 Bank, one of Europe’s leading financial services groups.

-Net banking revenue of € 25.8 billion generated by retail banking in France – Societe Generale, Crédit du Nord, Brusolama brand, international retail banking, financial services, insurance and retail banking solutions for customers and investors.

-A business model that claims to be a pioneer of positive transformation: 100% digital banks, open platforms and architectures, winners in the European leadership competition.

-Capital characterized by the presence of employee shareholders (6.65% and 11.9% of voting rights), 16 board of directors chaired by Lorenzo Bini Sumagi, managing director Frederick Udea.

-Equity of € 65.1 billion, CET 1 ratio of 13.7%, liquidity coverage ratio of 129%, leverage ratio of 4.9%, and therefore a solid balance sheet with debt rating A.

Task

-Vision 2025 Strategy Based on Merger with Crédit du Nord, Local Roots, Responsiveness, Adaptation to Customer Needs and Responsibilities:

-Group DNA-based innovation strategy focused on the emergence of data-driven banks with artificial intelligence: $ 200 million annual value creation with data and AI / 8/10 of servers in the cloud (2025 “” 2nd Generation “Cloud) Goals including 50% for private clouds and 25% for public clouds / new business models-Shine for individual customers, Forge for digital obligations, reezocar for vehicle and treezor rentals, payments Platform, digital currency.

-Environmental Strategy Aiming to Become a Global Leader in Sustainable Finance on Two Axis: Integration of Standards in All Businesses: Providing 100% Responsible Savings, Supporting Customers in Energy Transition, Building Hydrogen Solutions … / Efforts for Sustainable Transition: 10 Reduce global exposure to oil and gas mining by% by 2025, completely withdraw from hot coal by 2030-40, prepare by 2023 Completely withdraw from the money-guaranteed loan.

-Continuous integration of Crédit du Nord completed in 2023.

-Financial availability to refocus on mobility after refocusing on activities (discussion on the purchase of Lease Plan by subsidiary ALD and the provision of alternative banking services by Boursorama to ING’s French customers).

Task

-Net assets per share of 68.7 euros compared to the stock market price.

-Impact of the war between Russia and Ukraine: The disposal of Rosbank shares reduced the CET ratio to about 13.5% and net income to fall by about 2 billion euros.

-The 2022 goal is to sharply increase the cost / revenue ratio by 66-68% and reduce the cost of risk by 30 basis points.

-The dividend for 2021 is 1.65 euros and the stock program, that is, the total distribution rate is 50%.

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