Societe Generale posts sharp profit drop as net banking income slides

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Societe Generale posts sharp profit drop as net banking income slides

A logo in front of a Societe Generale SA bank branch in Paris, France.

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Societe Generale reported a sharp decline in fourth-quarter net profit on Thursday due to weaker net banking income, but launched a new share buyback program worth 280 million euros ($302 million).

The French lender posted consolidated net profit of 430 million euros, slightly above analysts' consensus forecast of 404 million euros, according to data from LSEG, formerly known as Refinitiv, but well below the 1.07 billion euros reported for the final quarter of 2022 The report comes after Societe Generale posted a consolidated net profit of 295 million euros in the third quarter, as the investment bank's robust performance offset a sharp decline in its French retail business.

Thursday's result pushed the annual net profit of France's third-largest listed bank up to 2.49 billion euros, slightly above analyst expectations of 2.15 billion euros.

However, quarterly net banking income fell 9.9% year-on-year to 5.96 billion euros, which the bank attributed primarily to a decline in net interest income in the French retail banking and private banking and insurance divisions, as well as the negative impact of the unwinding of hedges .

SocGen said it would propose a cash dividend of 90 cents per share to shareholders and launch a share buyback worth 280 million euros, equivalent to 35 cents per share.

Other key figures the bank reported included its CET1 ratio, which stood at 13.1% at year-end, its reported return on tangible equity for the fourth quarter of 1.7% and a cost-to-income ratio of 78.3%.

Group CEO Slawomir Krupa said 2023 would be “a year of transition and transformation” for the bank, which is targeting revenue growth of 5% or more in 2024.

“BoursoBank's exceptional dynamism, the strength of our Global Banking and Investor Solutions franchises, the performance of our international banking operations across all regions, as well as the ability of our new bank in France and Ayvens to implement unprecedented transformations are all strong evidence of ours Ability to perform at a high level,” Krupa said in a statement.

“While 2023 was negatively impacted by a sharp decline in net interest income in French retail banking and the increased costs of integrating LeasePlan, it was also characterized by disciplined cost, risk and capital management.”

A special highlight for SocGen was the online and mobile banking subsidiary BoursoBank, which had a record quarter with 566,000 new customers compared to the previous year. By the end of 2023, BoursoBank's total customer number increased to 5.9 million.