PARIS, May 3 — Profits sagged at Societe Generale at the start of this year but its share price rose today as investors welcomed the French bank reinforcing the capital it holds to absorb possible losses.
The bank’s net profit tumbled 26 per cent to €631 million (RM2.92 billion), while net banking income slid 1.6 per cent to €6.19 billion.
But its shares rose nearly 3.5 per cent in morning trading on the Paris stock exchange, which was showing a modest 0.3 per cent rise overall.
“Societe Generale reported substantially lower earnings as the sluggish revenue environment took its toll on the growth numbers,” ING credit analyst Suvi Platerink Kosonen said in a note to clients.
“That said, the French bank managed to significantly improve its risk-based capital ratios with its (risk-weighted asset) management measures.”
In last year’s stress tests of European banks, Societe Generale did not fare as well as its French rivals, causing some concern among investors.
The bank trumpeted in its earning statement a 0.5-percentage-point increase in its CET1 capital ratio from the end of last year to 11.7 per cent.
The CET1 ratio is a measure of a bank’s core equity capital compared to its total risk-weighted assets, and is used by regulators to judge how well a lender can withstand financial stress.
Societe Generale, which also announced the sale of its SKB unit in Slovakia, said it would increase the ratio soon to 12 per cent.
Societe Generale unveiled last month an additional 1,600 voluntary job reductions, mostly in its BFI corporate and investment banking arm, as it implements a cost-cutting plan.
The bank reported higher-than-expected profits in 2018 but said it anticipated financial headwinds ahead.
Net banking income, the equivalent of revenue for lenders, fell by 3.2 per cent at Societe Generale’s French retail banking unit.
Retail banking and financial services operations abroad fared better, climbing by 4.4 per cent.
Chief executive Frederic Oudea said the “solid results are also based on good risk management and the controlled development of our costs, which will continue with the new cost-saving measures that we have recently introduced.”
Over the 2015-2020 period the bank aims to have cut 3,500 posts, closing some 500 branches, to generate savings of €1.6 billion.
The bank has a global workforce of around 148,000. — AFP
