SOCGEN: PROFITS INCREASE IN THE FIRST QUARTER BUT THE PROVISIONS REGARDING UKRAINE ARE INCREASING
of Matthieu Protard
PARIS (Reuters) – Societe Generale reported better-than-expected quarterly results on Thursday, but raised its earnings forecast to cover the potential effects of the Ukraine war on its customers.
The third-largest French bank announced a 3.4% increase in its net income in the first three months of the year to 842 million euros, for a net bank income of 7.281 billion, up 16.6%, thanks to the dynamism of retail banking and market activities.
It now expects risk costs, which reflect provisions for doubtful receivables, to reach 30 to 35 basis points, or 1.7 to 1.9 billion euros this year, up from below 30 basis points.
These additional costs are in addition to the already announced impairments, including the sale of Russian subsidiary Rosbank to Interros Capital, a group affiliated with Russian oligarch Vladimir Potanin, which will lead to extraordinary charges of about 3.1 billion euros. .
SocGen CEO Frederic Oudea said he expected the sale to be completed within weeks, adding that Australian and Canadian sanctions against Vladimir Potanin should not complicate the process.
“The ‘closure’ should take place in the coming weeks,” he said.
SUSTAINABLE DEVELOPMENT OF MARKETING ACTIVITIES
The good results of the market activities reduced the impact of the conflict between Russia and Ukraine in the first months of the year: revenues from stock markets increased by almost 20% in January-March, to more than one billion euros, and interest rates , the credit and foreign exchange sector grew by 21.7%.
BNP Paribas, the group’s main rival in France, reported a 60.9% jump in earnings per share earlier this week and a 47.9% rise in interest income and foreign exchange earnings and commodities.
Jefferies analysts hailed SocGen’s results as “strong”, noting that all departments exceeded estimates.
On the stock market, the stock of Societe Generale gained 2.09% at 23.50 euros at the end of the morning while the CAC 40 strengthened by 1.73% and the European Stoxx index of banks strengthened by 1.25%.
The exit from Russia, however, resulted in the reduction of the core capital ratio (CET1), a key indicator of balance sheet power, to 12.9% at the end of March.
“Capital is shrinking slightly,” says Jefferies.
SocGen announced last month that it was leaving Russia to sell Rosbank to Interros Capital.
Vladimir Potanin, who mainly controls mining giant Norilsk Nickel, has been sanctioned by Canada as part of retaliatory measures taken by Western countries against Russian officials following the invasion of Ukraine.
The € 3.1 billion charge related to SocGen’s operations in Russia includes an impairment of approximately € 2 billion in the carrying amount of Rosbank’s divested assets.
(Report by Matthieu Protard, French edition by Jean-Michel Bélot and Marc Angrand, edited by Sophie Louet)