SocGen boosted by bumper trading revenues

Strong trading revenues helped Société Générale to report higher than expected profits in the third quarter, extending some signs of a turnround at the French bank as it prepares to usher in a new chief executive.

France’s third-biggest lender, which has appointed investment bank chief Slawomir Krupa to replace veteran boss Frédéric Oudéa from next May, reported net income of €1.5bn in the three months to the end of September. That was a 6 per cent drop on a year earlier, but much higher than the €1bn expected by analysts in a Refinitiv poll.

SocGen is trying to move past years of restructurings during Oudéa’s 15-year tenure and reap the benefits of the latest revamp that includes shedding some riskier products in its investment bank and beefing up its car leasing and financing business.

The bank joined many rivals in recording higher revenues from debt and currency trading in volatile markets, which jumped 34 per cent from a year earlier. It reported a 1 per cent rise in revenues in its equity trading unit at a time when some peers struggled, offsetting slower business from financing acquisitions and advising on share sales as recession fears spooked investors.

Investment bank revenues were up 6 per cent to €2.3bn.

However, SocGen’s retail business struggled to benefit as much as some European banks from rising interest rates. Most home loans in France are on fixed rates and a French mechanism meant to shield consumers limits the pace at which banks can reprice mortgages.

In the lender’s French retail business, net interest income — or the difference between the money it makes on loans and pays out to depositors — was down 4.5 per cent from the third quarter of 2021. SocGen’s larger domestic rival BNP Paribas bucked some of the pain in its results this week, in part thanks to a large retail and corporate loan activity outside France.

Banks across Europe have been reporting bumper earnings as interest rates rise, and in spite of concerns over the economic fallout from soaring energy prices that are squeezing household revenues.

SocGen bulked up some of its provisions on performing loans in the third quarter. The bank pointed to “an increasingly complex geopolitical and economic environment” in its earnings release.

Oudéa has been looking to reshape SocGen and boost a share price that has long underperformed those of European peers. The bank is doubling down on car leasing, with its ALD unit now close to completing the €4.9bn acquisition of rival LeasePlan. It is also finalising the merger of its two French retail networks.

SocGen had to rush to exit Russia after the invasion of Ukraine earlier this year, taking a €3.2bn hit on the sale of its Rosbank unit.