Societe Generale Cancels Dividend, Suspends Targets
April 01 2020 - 2:13AM
Dow Jones News
By Pietro Lombardi
Societe Generale SA has cancelled the dividend for 2019
following a recommendation from the European Central Bank and
suspended its targets for this year due to uncertainty related to
the coronavirus pandemic.
France's third-largest listed bank by assets is the latest
lender in the region to take a similar step on dividends--Italy's
UniCredit SpA and Intesa Sanpaolo SpA have already suspended
dividend payments--after the ECB asked the region's banks not to
pay dividends or buy back shares during the coronavirus
pandemic.
The ECB wants banks to boost their ability to absorb losses and
support the economy as the eurozone braces for a sharp economic
slowdown caused by the pandemic. For this reason, it asked banks
not to pay dividends for 2019 and 2020 at least until Oct. 1,
adding that lenders should also avoid buybacks.
The October deadline is incompatible with French laws, under
which dividends have to be paid by the end of September, so the
bank decided to scrap the payment even though it didn't have to
take a decision before October. SocGen said late Tuesday that it
would give new guidelines on shareholder returns in the second part
of the year. These may include an interim or exceptional
dividend.
The dividend cancellation boosts SocGen's core capital ratio to
13.2% as of December, up from 12.7%. It had proposed a cash
dividend of 2.20 euros ($2.42) a share for last year.
The bank also suspended the targets for the year it set in
February due to the high degree of uncertainty related to the
coronavirus pandemic. These included growing revenue and a lower
cost base, as well as an improvement of its return on tangible
equity--a key measure of profitability. It said in February that it
was unlikely to deliver a return on tangible equity of 9% to 10%
for the year, which it had targeted, but this remains a midterm
target.
"Given the uncertainties related to the magnitude and duration
of the Covid-19 pandemic, the group is currently analyzing
potential scenarios and their impact on the group's results, as
well as potential corrective measures," it said.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
April 01, 2020 01:58 ET (05:58 GMT)
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