SocGen's Q4 earnings slide but retail bank helps it beat forecasts

Ayvens SA

08/02/2024 05:29

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      SocGen reports 60% drop in Q4 net income
    

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      Says a recovery in net interest income has started in
France
    

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      Sees sales grow by at least 5% in 2024
    

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      Proposes 40% dividend payout ratio, 280 mln-euro share
buyback
    

  
    By Mathieu Rosemain
       PARIS, Feb 8 (Reuters) - French bank Societe Generale
 SOGN.PA  reported a sharp drop in fourth-quarter net income on
Thursday, although the lender beat analyst expectations thanks
to signs of recovery in its domestic retail business and stable
investment bank trading revenue. 
     France's third-biggest listed bank said group net income in
the final three months of 2023 tumbled nearly 60% from a year
earlier to 430 million euros ($463 million), beating the 333
million-euro median average of 13 analyst estimates compiled by
the company. 
    Group revenue in the quarter dropped by almost 10% to about
6 billion euros, above the 5.86 billion-euro estimate of the
company-compiled consensus. 
    Sales from trading in SocGen's investment bank slipped by
0.8%, the bank said, as a strong showing for equities offset a
22% decline in fixed income and currencies.
    SocGen has struggled recently, with its shares lagging
rivals and analysts questioning its low profitability and
reliance on volatile investment bank earnings.
    Chief Executive Slawomir Krupa in September unveiled a
strategic plan to revive its fortunes that promised little in
the way of revenue growth but pledges to slash costs and sell
non-performing assets. 
    The bank has some way to hit its targets: return on tangible
equity (ROTE), a measure of profitability, stood at 1.7% at
end-2023, against Krupa's target for 2026 of between 9% and 10%.
    In 2024, the  French lender targets a yearly growth in sales
of at least 5% and a ROTE of more than 6%.
    Thursday's results capped a challenging "year of
transition", SocGen said in a statement, marked by the costly
acquisition of LeasePlan, a hedging policy against low rates at
the retail unit that backfired when rates jumped, and the
badly-received strategic plan. 
    French banks have not benefited as much as euro zone peers
from soaring rates because they tend to pay more interest to
depositors, but SocGen said the fourth quarter marked the
"beginning of the rebound in net interest income".
    SocGen also announced a proposed dividend of 0.90 euro per
share, reflecting a payout ratio of 40%, the bottom end of its
range, and said it would buy back 280 million euros worth of
shares.
    This year would see "the meticulous execution of our
strategic plan", notably through "improved operational
efficiency", Krupa said on Thursday.
    Krupa has promised to generate 1.7 billion euros worth of
cost savings. The bank earlier this week announced 900 job cuts
in France.  
($1 = 0.9284 euros)

 (Reporting by Mathieu Rosemain
Editing by Tommy Reggiori Wilkes)
 ((Mathieu.Rosemain@thomsonreuters.com; +33 1 8098 1239; Reuters
Messaging: mathieu.rosemain.thomsonreuters.com@reuters.net;
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