Societe Generale: A better than expected Q4

  •   11/02/2021 - 13h45
  •   DEHOUI Lionel

Societe Generale's Q4 results were well received by investors. Although the figures posted were bearish, they still proved to be better than expected.

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Societe Generale: A better than expected Q4
Image copyright: Mohamed Yahya - Flickr

A welcome result on the stock market

On Wednesday morning, the SocGen share rose by 3.47% to 18.01 euros at around 11:00 a.m. It was also the best performance of the CAC 40, which for its part climbed by 0.11%. A new record that brings to 6% the rise that SocGen has begun since January 1, after its 45.1% drop in 2020.

The net profit share realized by the French bank for the last quarter of 2020 is 470 million euros. 470 million, a figure that is well below that achieved last year at the same period, a decline of 28.1%. As for its quarterly net banking income (NBI), it fell by 6.0% to 5.838 billion euros.

The net cost of risk for the quarter was estimated at 689 million euros compared to 371 million euros for the same period in 2019. Revenues from capital markets businesses also fell in the fourth quarter. Earnings from equity trading were down 7% year-on-year, while revenues from fixed income, credit and foreign exchange also fell 16%.


A poor performance against the major U.S. banks

Slawomir Krupa, Deputy Managing Director in charge of Corporate and Investment Banking (CIB) commented on the subject during an online press conference. He said that the group is now focusing much more on fixed income activities. It would therefore have strengthened its presence in Europe.

Moreover, SocGen's decline came at a time when the major Wall Street banks were performing well. They benefited in particular from the market volatility at the end of the year. This was the case for BNP Paribas, which grew 22% in Fixed Income, Currencies and Commodities (FICC). However, it declined by 4.5% in equities.

Societe Generale 's underperformance in bonds came at a time when the Group is doing everything possible to restructure its capital markets activities. The aim is to improve profitability.


SocGen's outlook

In order to get its finances back on track, the group has taken a number of measures. As a first step, it has withdrawn from certain business lines such as commodity trading. Secondly, it decided to stop selling certain products as announced last year. This is the case for products that are especially exposed to market fluctuations during the crisis.

On the retail banking side, a merger of the SocGen and Crédit du Nord networks is being considered. This is a project that involves, among other things, the closure of 600 branches by 2025.

For the year 2020 as a whole, the net loss attributable to the Group is EUR 258 million. However, its profit excluding exceptional items is estimated at €1.435 billion.