Paris (Reuters) -A buoyant business across retail and investment banking helped Societe Generale (OTC: SCGLY) record a smaller-than-expected loss in the second quarter as it took a 3.3-billion-euro charge following the sale of its Russia operation.
The French bank, which gave no update on its current efforts to appoint a new chief executive, said on Wednesday it posted a 1.48-billion-euro loss ($1.51 billion), whereas analysts on average had projected a loss of more than 2 billion euros.
Net banking income soared to slightly over 7 billion euros, almost 600 million euros higher than expected, while operational expenses came in lower at 4.46 billion euros, the bank said.
Revenue jumped 23.3 percent to 1.5 billion euros in the global markets unit, which saw stock trading grow by 7.5 percent to 833 million euros, while fixed income and currency activities increased 50 percent to 683 million euros.
French and international retail recorded a gain in net banking income of 8.5 percent to 2.26 billion euros and 12.7 percent to 1.27 billion euros, respectively.
All in all, the group claimed its ROTE (Return On Tangible Equity) profitability ratio remained at 10.5 percent, a level which it broadly wants to sustain at the 2025 horizon.
“We confirm our potential to generate profitability of 10 percent on the basis of a target core Tier 1 capital ratio of 12 percent,” CEO Frederic Oudea said in a statement, which also confirmed the commencement of a 915 million euro share repurchase programme.
Among other targets set for the next three years, the bank intends to provide a cost-to-income ratio of 62 or below and maintain a pay-out ratio of 50 percent of its profits.
In a note published before the results, Jefferies analysts said they were expecting a similar level of profitability as a mid-term aim.
“We expect SocGen will publish a 9-10 percent ROTE target for ’25 and deem it credible attributable to the benefit of recent business moves like the LeasePlan purchase, Boursorama profit flip, and the integration of French retail networks,” they said.
LOOKING FOR A NEW CEO
In May, Societe Generale concluded the sale of its Russian business, Rosbank, to the Interros group, a firm tied to Russian oligarch Vladimir Potanin.
In the same month, Frederic Oudea took investors by surprise when he revealed he would step down next year as the CEO after overseeing the lender for 15 years and that his successor would be announced some time this fall.
While the choice of his successor is a matter for the board of directors to decide, the outgoing chief executive indicated he is in favour of selecting an internal candidate to manage the French banking company for the next 10 to 15 years after he leaves.
Speculation on the future chairman of France’s third-biggest listed bank has so far centred around Sebastien Proto, currently entrusted with combining Socgen’s retail networks in France, and Slawomir Krupa, head of global banking and investor solutions activities.
Socgen executives mentioned as potential external suitors include Jean Pierre Mustier, former chief executive of Italy’s Unicredit (BIT:CRDI) and Jacques Ripoll, who just left Credit Agricole (OTC:CRARY) SA, but no outside candidate has emerged as a clear front runner.
Socgen’s results mirror rival BNP Paribas’ (OTC:BNPQY), which announced better-than-expected earnings on Friday as activity remained healthy across business lines.
With a 28.3 percent decrease so far in 2022, Socgen’s shares trail BNP Paribas, which dropped 23.7 percent , while the larger European banking industry was down 20.5 percent .
