SocGen Q2 2022 Earnings

Headquarters of the French bank Société Générale in Paris.

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Société Générale reported better-than-expected earnings on Wednesday despite taking a 3.3 billion euro ($3.36 billion) hit from the exit of its Russian operations.

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

Analysts estimated a net loss of €2.85bn for the quarter, according to Refinitiv, however the bank posted a net loss of €1.48bn.

“We combined, in the first half of 2022, strong revenue growth and an underlying return of more than 10% (ROTE) and were able to manage our exit from Russian activities without a significant capital impact and without harming the strategic developments of the Group. “, Fréderic Oudéa, CEO of the group, in a statement.

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

“When you invest successfully for many years, it’s very sad, but when you look at the situation, it’s so difficult to manage, so risky in the future, with no clear outcome of all this, so it was clear that it was the best decision.” she told CNBC’s Charlotte Reed.

Other highlights of the quarter:

  • Revenue was €7 billion in the quarter.
  • Operating expenses reached 4,500 million euros.
  • The CET 1 ratio, a measure of banking solvency, stood at 12.9% at the end of June.

The French retail bank posted a net profit 18.7% higher than the previous quarter. International retail banking was also up 33% from the previous three-month period. The Global Banking unit also posted a nearly 50% increase in net income from the previous quarter.

Going forward, the French bank said it aims to achieve 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 above or equal to 3%. until then.

The stock is down 28% year-to-date.

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