Société Générale Returns to Profit in Second Quarter with Net Income of 900 Million Euros

Société Générale, the French banking group, has returned to profit in the second quarter with a net income of 900 million euros. This comes one year after incurring heavy losses due to the sale of its Russian subsidiary, Rosbank. However, like its counterparts, the bank is facing a slowdown in activity.

Profitability Goal for Boursorama

Similar to other French banks, Société Générale's decline in activity is mainly due to the rise in interest rates.

In the French retail banking segment, revenues decreased by 13.6% year-on-year in the second quarter, with profits halved. However, the bank highlights strong commission levels, record performance of its Private Bank, and a significant increase in Boursorama's revenues.

The increase in interest rates requires banks to offer higher returns on savings. However, the beneficial effect of this increase, higher interest rates on loans, takes longer to materialize for banks as it only applies to new loans granted.

Boursorama, the bank's online subsidiary, achieved a net income of 47 million euros and aims to reach 200 million euros this year, rather than by 2025. To achieve this, the bank, which had nearly 5 million customers at the end of June, is reducing its marketing expenses and prioritizing profitability over acquiring new customers.

Integration of LeasePlan

Excluding the impact of Rosbank, which was classified as "out-of-scope" in 2022, all divisions experienced a decline in profits. In addition to the decline in French retail banking, the corporate and investment banking businesses recorded a net income of 638 million euros, a decrease of 14%, in a less favorable market environment.

The net income of the international retail banking segment, which includes insurance and specialized services such as automotive leasing, decreased by 14.6%, despite a 6.3% increase in revenues. This can be attributed to a nearly 20% increase in management fees due to the integration of LeasePlan, which was acquired for 4.8 billion euros in May.

On the other hand, the cost of risk, which refers to provisions made to cover potential defaults on loans, decreased by 23.5% year-on-year in the second quarter to 166 million euros.

The bank released 38 million euros in provisions for performing loans, which are loans with no identified risk of default. However, it provisioned 204 million euros for doubtful loans, which include specific cases with identified risks. This provisioning amount is within the range observed in recent years, but it comes at a time when some banks have had to provision losses related to the difficulties of the Casino group, which is still facing challenges despite an agreement in principle with its buyers and key creditors.

Words of the day

revenues : revenus

loans : prêts