SocGens Q4 profit beats expectations, sees higher bad loan risks

SocGen's Q4 profit beats expectations, sees higher bad loan risks

By Mathieu Rosemain and Matthieu Protard

PARIS (Reuters) -Societe Generale, Frances third biggest bank, posted a higher-than-expected profit in the fourth quarter, driven by a strong performance of its corporate and investment banking division as it set aside more money for failing loans.

The reported group net income for the three months ending in December came at 1.16 billion euros ($1.24 billion), beating the analyst consensus of 834 million euros provided by Visible Alpha.

SocGen‘s quarterly net income was however 35% lower than the same period a year ago, as the bank’s hiked provisions for failing loans, which increased by close to fivehold to 413 millions in an uncertain economic environment.

Group revenues were up by 4% to 6.89 billion euros in the fourth quarter, also beating the Visible Alpha consensus.

Like its bigger French rival BNP Paribas, SocGen is enjoying higher revenues from debt and trading in volatile markets. Quarterly sales in this business jumped 56%.

SocGen is seeking to revive its stock valuation after years of restructurings and lackluster performance marked last year by its painful exit from Russia, where it had to take a 3 billion-euros write-off for the sale its Rosbank unit after the invasion of Ukraine.

Incoming CEO Slawomir Krupa, who will replace Frederic Oudea in May, will notably oversee the merger of networks between Societe Generales two domestic retail brands in France, where it is struggling to benefit as much as some other continental peers from rising interest rates.

Krupa was instrumental in ironing out a plan to form a joint venture with AllianceBerstein on global cash equities and equity research in a bid to keeep up with BNP and leading Wall Street banks Goldman Sachs and JP Morgan.

The French bank reaffirmed its 2025 financial targets, which include a cost to income ratio below 62% and an expected return on tangible equity of 10%.

It plans a 440 million-euro share buyback in 2023, on top of a cash dividend of 1.70 euro per share.

($1 = 0.9324 euros)

(Reporting by Mathieu Rosemain and Matthieu Protard;Editing by Ingrid Melander)

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