SocGen Strengthens Capital Again as IB Weakness Hits 3Q Net Profit
November 06 2019 - 4:27AM
Dow Jones News
By Pietro Lombardi
Societe Generale SA's (GLE.FR) third-quarter net profit and
revenue fell due to investment banking weakness but the bank
strengthened its capital for the third quarter in a row this
year.
The results come after French peer BNP Paribas SA (BNP.FR)
reported last week a smaller-than-expected drop in quarterly profit
helped by a strong performance in investment banking and as SocGen
executes a restructuring that includes cutting nearly 1,600 jobs
globally and slashing costs.
France's third-largest listed bank by assets reported Wednesday
a 35% decline in net profit for the period to 854 million euros
($948.1 million).
Net banking income, the bank's top-line revenue figure, fell
8.4% to EUR5.98 billion.
The results are "very much in line with our objectives and
priorities," Chief Executive Frederic Oudea said.
Analysts highlighted the capital improvement, with the core Tier
1 ratio, a key measure of capital strength, rising to 12.5% in
September from 12% at the end of June.
The bank "continues to deliver strong on capital," Jefferies
said.
SocGen shares trade 3.5% higher at 0827 GMT.
In April, the lender presented a plan to cut nearly 1,600 jobs
globally after a slump in investment-banking revenue in the fourth
quarter. The plan followed a cut to its 2020 profitability target.
The global markets and investor services--which includes fixed
income and equity trading and securities services--will bear the
brunt of the job cuts.
The performance of the bank's global banking and
investor-solutions business, which includes investment banking and
asset management, weighed on the results. Earnings at the unit
declined almost 27% on year, with revenue down 7.6%. The business
faced "an unfavorable environment," the CEO said.
It was a challenging environment for global markets and
investment banking, the bank said. Fixed-income revenue rose 1%
while equities revenue declined 20% "against a backdrop of lower
volumes and adverse market conditions, particularly in August," it
said.
The bank said it has already reached its target of cutting EUR10
billion in risk-weighted assets at the division by 2020.
"We expect the market to have an initial positive initial
reaction to the results driven by continuing improvement of in
capital [...], but this could be mitigated by the CIB revenues
trends, which are showing pressure," Citi analysts said.
Earnings fell 2.8% at the bank's French retail banking
operations while they were down 3.6% at the international retail
banking and financial services division.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
November 06, 2019 04:12 ET (09:12 GMT)
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