Societe Generale announced better-than-expected results in the first quarter, company news

Paris (Agefi-Dow Jones)-Despite the uncertainties associated with the war in Ukraine, Societe Generale began in 2022 with higher-than-expected profits. The Bank of France announced Thursday that its first-quarter net income group share was € 842 million, compared with € 814 million in the year-ago quarter. According to FactSet’s consensus, analysts expected an average quarterly net profit of € 337 million.

As a result of the conflict between Russia and Ukraine, the cost of risk increased to 39 basis points compared to 21 basis points in the previous year. Approximately 60% of the risk burden in the first quarter is related to the group’s exposure to Russia, said Treasury Director Claire Dumas. Societe Generale announced last month that it had agreed to suspend banking and insurance operations in Russia and sell the shares of Russian bank Rosbank and its Russian insurance subsidiary to Interros Capital. The investment fund, owned by the oligarchs, was a former shareholder of Rosbank.

Rosbank was subject to a net cost of € 136 million. Excluding this effect, the cost of risk reached 31 basis points.

In 2022, Societe Generale revised up the cost of risk forecasting. The establishment estimates that it will be 30 to 35 basis points, compared to 13 points in 2021, but previously expected the risk cost for this year to be less than 30 basis points. The new forecast takes into account not only the burden of Russian assets that are about to be sold, but also the impact of the war on banks’ offshore portfolios. Claire Dumas revealed that the group is continuing its “careful provisioning policy” and has chosen not to perform the provisioning revocation performed during the Covid-19 pandemic.

Underlying net income increased by 21.3% in the first quarter to € 1.57 billion. “This first quarter confirms the robustness and resilience of our business model with sustainable performance of all businesses in a more uncertain environment, improved operating leverage, and reduced risk costs.” Frederick Udea, the director of the group, commented. , Quoted in a press release.

Net Bank Revenue (NBI), which is equivalent to sales, increased by 16.6% to € 7.2 billion in the previous quarter, driven by all businesses. According to FactSet’s consensus, analysts predicted an average NBI of € 6.23 billion.

Rosbank sale penalizes capital

La Banque de la Défense estimates that the sale of Rosbank will cost approximately € 3.1 billion. This loss is only reflected in the second quarter account. Meanwhile, the business has already affected the Group’s capital, costing 14 basis points in the regulated CET1 ratio in the first quarter. The latter was 12.9% at the end of March 2022, compared to 13.5% at the end of March 2021. “If the sale of Rosbank is completed within the next few weeks, the impact of the remaining 4 basis points on the Group’s CET1 will be recorded,” said the Chief Financial Officer.

French retail banking resisted. Excluding PEL / CEL, the company’s revenue was € 2.16 billion, an increase of 6.4% compared to the first quarter of 2021 due to fluctuations in margins and financial and service fees.

Activities in the retail banking and international financial services sector increased by 19.4% quarterly to € 2.2 billion. The long-term leasing and vehicle fleet management business recorded record net bank revenues of up 53% due to good performance and continued very strong demand for used vehicles. Claire Dumas recalls that the group, which has signed the framework agreement for ALD’s Lease Plan acquisition proposal, ultimately wants to make sustainable mobility the third pillar of its business model.

According to Societe Generale, corporate and investment banking revenues were strong, up 18.1% to € 2.75 billion, demonstrating the “relevance of the strategy presented in May 2021”.

Market activity recorded a strong performance of € 1.78 million in the first quarter, an increase of 20.5% compared to the first quarter of 2021. This is due to the stronger momentum of fixed income products, credit and forex than the equity business.

Financing and consulting revenues amounted to € 790 million, an increase of 24.4% over the year.

-Aurélie Abadie, L’Agefi. ed: ECH

Agefi-Dow Jones Financial News Wire

Dow Jones News Wire

May 5, 2022 00:35 ET (04:35 GMT)