Societe Generale returns to profit as retail banking recovers
French bank Societe Generale swung back to profit in the second quarter of this year driven by a rebound in its retail banking arm.
The lender registered net income of €1.4bn in the second quarter of 2021, up sharply from a €1.2bn loss in the same period the year before.
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The French bank’s strong performance was driven by improved activity levels in its retail banking operations as the global economic rebound from the Covid crisis increased demand for credit among households and businesses.
Revenue for the period climbed 18.2 per cent to €6.2bn, much higher than analysts’ expectations.
International retail banking and financial services registered a 17 per cent increase in revenues compared to the second quarter of 2020, underpinned by strong insurance activity, the bank said.
The lender’s common equity tier one ratio – a measure of a bank’s strength – was 13.4 per cent, 430 basis points above the regulatory requirement.
Frédéric Oudéa, the Societe Generale’s chief executive officer, said: “Once again, Societe Generale enjoyed an excellent quarter, with a solid commercial and financial performance by all its businesses.”
Oudéa pointed to the contribution that the release of loan-loss provisions has had on the French bank’s resurgence to profitability.
The bank’s cost of risk – its internal measure of loan-loss provisions – in the second quarter fell to €142m, down significantly from €1.2bn in the same period the year before.
After a more positive second quarter, Societe Generale – France’s third-largest listed lender – now expects revenue growth across all its businesses this year.
“Second quarter was marked by the strong revenue momentum, continued cost discipline and a very low cost of risk resulting from very few loan defaults” Oudéa added.
“The results for H1 2021 are the best for 5 years, illustrating the strength of the business model and the Group’s capacity to rebound.”
The group’s share price shot up 5.89 per cent to €26.33 in morning trading.
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