Societe Generale Q2 Earnings: Profit More Than Doubles

Societe Generale Q2 Earnings: Profit More Than Doubles

France’s Societe Generale SA (OTCMKTS:SCGLY) (EPA:GLE)’s second quarter net profit more than doubled aided by strong investment banking business.

Societe Generale Q2 Earnings: Profit More Than Doubles

France’s second largest bank’s net profit doubled to €955 million ($1.27 billion) in the quarter ended June, up from €436 million in the year ago period, beating analysts’ estimates of €608 million.

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Confident of 10 percent ROE

The strong results enthused the bank to project a return on equity of 10 percent by the end of 2015.

France’s third-largest listed bank by assets reported a €59 million second-quarter net profit as against a loss of €231 million reported last year. The bank’s corporate and investment banking reported a net profit of €374 million, aided by higher demand for structured financial products.

Societe Generale SA (OTCMKTS:SCGLY) (EPA:GLE)’s results echoes consensus-beating second-quarter results posted by BNP Paribas. However, analysts feel BNP Paribas experienced several weak spots at its retail networks in France, Italy and Belgium with the retail networks experiencing escalating cost of risk. BNP Paribas reported weaker investment banking performance.

Basel III core capital at 9.4 percent for Societe Generale

Societe Generale SA (OTCMKTS:SCGLY) (EPA:GLE)’ Basel III core capital ratio rose to 9.4 percent, achieving the number six months ahead of schedule. The French bank’s Basel III leverage ratio, however, lags the sector. Its leverage ratio will exceed by year-end the 3 percent mandated by regulators by 2018.

Cost savings

France’s second largest bank chief executive officer Frédéric Oudéa was enthused by the bank’s performance on the French retail, strong growth of revenues plus 3 percent.

Societe Generale SA (OTCMKTS:SCGLY) (EPA:GLE) indicated the bank is on target to achieve its cost-cutting plan spelled out in the previous quarter. During the last quarter, the bank achieved cost savings to the tune of €170 million, as against targeted €900 million by 2015.

Retail income falls

France’s third-largest listed bank by assets reported 11 percent lower net income from its retail banking unit as the income fell to €319 million. However, the income beat five analysts’ average estimates of €301 million. The bank’s revenue rose 1.6 percent to €2.07 billion while the bank made over 29 percent increase in its provision for doubtful loans to €274 million from the year-ago period.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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