SocGen reports €1.5bn loss on Russia exit but higher than expected revenues

French bank Société Générale swung to a €1.5bn loss in the second quarter after selling out of Russia, but has reported higher than expected revenues across its business and set out new growth targets.

France’s third-biggest listed bank said on Wednesday that without the €3.3bn writedown from selling its Rosbank business in May, underlying net profit in the period would have risen 11.5 per cent from a year ago to €1.5bn.

Its revenues rose 12.8 per cent to €7.06bn, higher than the €6.6bn average expected in a Refinitiv poll of analysts, thanks to a strong performance across all of its business lines, from equities trading to its French retail bank.

It recorded particularly strong earnings from bond trading, up 50 per cent from a year earlier, while revenues in its investment bank were up 18.3 per cent.

Analysts had expected SocGen to drop to a bigger quarterly loss of closer to €2bn.

The bank also set out a goal to increase revenues by an average of 3 per cent a year until 2025, and to reach a return on tangible equity (ROTE), a key measure of profitability, of 10 per cent. That compared with a consensus ROTE forecast of 8.9 per cent, analysts at RBC Capital Markets said.

Its shares were up 3.7 per cent in morning trading.

SocGen has been through a series of restructurings in recent years under outgoing chief executive Frédéric Oudéa, including shrinking its investment bank following losses in 2020. It now hopes to capitalise on the potential for more profits from rising interest rates.

Before its exit this year it was one of the most exposed international banks to Russia.

Oudéa, one of Europe’s longest-serving bank chief executives after 14 years at the helm, unexpectedly announced in May that he would not renew his tenure in 2023. SocGen has since launched a search to replace him, and is looking at candidates outside the bank as well as internally, according to people familiar with the details.

Oudéa told reporters on Wednesday a decision on his replacement would come in the autumn.

He said the bank was in “cautious but not catastrophic” mode as economies across Europe faced a more difficult outlook because of high inflation and chaos in energy markets caused by Russia’s war in Ukraine.

“There are a lot of uncertainties. But today we don’t see anything from the point of view of our cost of risk,” Oudéa said, asked about the potential for rising defaults.

SocGen is in the process of merging two big French branch networks and closing some offices, and is expanding its car leasing business with the €4.9bn acquisition of LeasePlan.