SocGen’s turnaround plan on track as it increases revenue forecasts
- Predicts revenue growth across all businesses in 2021
- posts a profit of 1.44 billion euros in the second quarter
- Equities up 5.23%
PARIS, Aug. 3 (Reuters) – French bank Societe Generale (SOGN.PA) on Tuesday raised its forecast for the full year after posting a profit in the second quarter due to lower charges linked to the pandemic for bad debts and a rebound in its domestic retail business. banking activity, sending its actions higher.
As a sign that CEO Frédéric Oudea’s recovery strategy is starting to bear fruit, Societe Generale now expects revenue growth in all of its businesses this year, including retail banking in France, which was a weak point.
Under pressure to increase profitability, Oudea attempted to revive the lender after losses from equity-linked derivatives wiped out equity trading in the first and second quarters of 2020, while a heavy retail banking structure hampered the growth.
France’s third-listed lender, after BNP Paribas (BNPP.PA) and Crédit Agricole SA (CAGR.PA), said its cost of risk, which reflects provisions for bad debts, would be lower than expected in 2021 based on 20 to 25 points, down from a previous forecast of 30 to 35 basis points.
SocGen shares rose 5.23% to 26.15 euros at 08:01 GMT. The stock has more than doubled since falling almost 30 years to its lowest in the fall of last year when it closed at 10.90 euros on September 25, according to data from Refinitiv.
“The recovery of CIB (corporate and investment banking) is on track and the turnover of the French distribution also surprised positively with a strong rebound of + 8% year-on-year,” said analysts at JP Morgan Cazenove in a note.
SocGen said its cost of risk fell 88.9% in the second quarter, as did rivals such as Spain’s BBVA (BBVA.MC) and BNP Paribas, which reduced provisions for delinquent loans then that the global economy was gradually recovering from the worst of the COVID-19 crisis.
The lender recorded a second quarter net profit of 1.44 billion euros (1.71 billion euros), against a loss of 1.26 billion euros a year earlier. Turnover increased by 18.2% to 6.26 billion euros.
Oudea told a press conference that he expected the rebound in business to last.
In France, where the government ended a third nationwide foreclosure in mid-May, retail banking revenues rose 8.7%.
Revenues increased by 24.5% in its corporate and investment banking activities, which SocGen began to reorganize two months ago by reallocating resources to trading and reducing the exposure of its commercial arm. to market fluctuations.
Income from equity trading was five times higher than a year earlier, while fixed income and currency trading fell 33%.
($ 1 = 0.8420 euros)
Report by Matthieu Protard; Additional reporting by Rachel Armstrong in London and Clement Martinot in Gdansk; Editing by Christian Schmolllinger and Anil D’Silva
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