Banking humblebrag

4 May 2016 By Dominic Elliott

France’s third bank by assets added more capital than BNP Paribas, with better returns. It also trounced fixed income trading rivals with a 17 pct revenue increase. SocGen’s decision to cut 220 mln euros more costs could provide cover against future rises in bad debts.

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Societe Generale on May 4 reported a 6.5 percent increase in first-quarter earnings of 924 million euros versus the same period a year ago, beating consensus forecast.

Analysts in a Reuters poll had predicted a 7.7 percent decline in net income to 801 million euros on average.

First-quarter group revenue fell 2.8 percent year-on-year to 6.2 billion euros. SocGen’s cost of risk - its term for bad debt charges - fell 14.5 percent year-on-year to 524 million euros.

When adjusted for exceptional items, such as the revaluation of SocGen’s own debt, earnings were down 0.5 percent to 829 million euros.

SocGen reported a return on equity of 7.1 percent, but said this would have been 9.8 percent had it only taken a quarter of the charge for bank levies in this quarter - accounting rules force European banks to take the full annual cost in the first three months of the year.

The French bank said it would cut an additional 220 million euros by the end of next year in its wholesale division, on top of already announced savings of 323 million euros.

SocGen’s common equity Tier 1 ratio rose 20 basis points over the first three months of the year to 11.1 percent.

By 0805 BST, shares in Societe Generale stood at 34 euros, 3.8 percent higher than the previous day’s close.

Context News

Societe Generale on May 4 reported a 6.5 percent increase in first-quarter earnings of 924 million euros versus the same period a year ago, beating consensus forecast.

Analysts in a Reuters poll had predicted a 7.7 percent decline in net income to 801 million euros on average.

First-quarter group revenue fell 2.8 percent year-on-year to 6.2 billion euros. SocGen’s cost of risk - its term for bad debt charges - fell 14.5 percent year-on-year to 524 million euros.

When adjusted for exceptional items, such as the revaluation of SocGen’s own debt, earnings were down 0.5 percent to 829 million euros.

The French bank said it would cut an additional 220 million euros by the end of next year in its wholesale division, on top of already announced savings of 323 million euros.

SocGen’s common equity Tier 1 ratio rose 20 basis points over the first three months of the year to 11.1 percent.

By 0805 BST, shares in Societe Generale stood at 34 euros, 3.8 percent higher than the previous day’s close.

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