SocGen earnings Q2 2022

The headquarters of the French bank Societe Generale in Paris.

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Societe Generale reported better-than-expected profits on Wednesday, despite a 3.3 billion euro ($3.36 billion) blow from exiting its Russian operations.

The French lender saw each unit grow in the second quarter, helping to offset the impact of the exit from Russia following Moscow’s invasion of Ukraine.

Analysts estimate a net loss of 2.85 billion euros for the quarter, but according to Refinitiv, the bank recorded a net loss of 1.48 billion euros.

“We combined strong top-line growth and underlying profitability of more than 10% (ROTE) in the first half of 2022 and we were able to manage our exit from the Russian business without significant capital impact and without hampering the Group’s strategic developments Fréderic Oudéa, the group’s chief executive officer, said in a statement.

Speaking to CNBC, Oudea said the decision to leave Russia was “very sad” but necessary.

“When you invest successfully for years, that’s very sad, but when you look at the situation, it’s just so hard to manage, so risky to move forward, with no clear outcome of all this, so it was clear that this is the best decision.” he told CNBC’s Charlotte Reed.

Other highlights for the quarter:

  • Sales were EUR 7 billion for the quarter.
  • Operating costs reached 4.5 billion euros.
  • The CET 1 ratio, a measure of bank solvency, stood at 12.9% at the end of June.

The French retail bank posted a net profit that was 18.7% higher than in the previous quarter. International retail banking also increased by 33% compared to the previous three-month period. The Global Banking unit also posted an almost 50% increase in net income from the previous quarter.

Going forward, the French bank said it aims for a return on tangible equity, a measure of profitability, of 10% and a CET 1 ratio of 12% by 2025. It also wants average annual revenue growth of more than or equal to at 3% until then.

The stock is down 28% so far.

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