[Article published at 9: 55 and updated at 18: 45pm]
Disappointment. After the excellent results of Natixis, on Tuesday evening, and those of BNP Paribas, last Friday, the Company Overall has not done better than expected in the second quarter, in particular in its market activities. Investors show their disappointment: the action Soc Gen has opened down more than 4% Wednesday morning at the Paris stock Exchange, while the title Natixis leapt by 4%. The action Soc Gen has ended down 4%. It has rebounded 68% in one year.
The net income is in sharp decline (-27,6%) to 1.05 billion euros in the second quarter, under the effect of an unfavorable basis for comparison linked to the capital gain on the disposal of securities Visa last year and an additional provision for litigation of € 300 million.
Last may, the Société Générale announced it had entered into a settlement agreement with the Libyan Investment Authority (LIA), the libyan sovereign wealth fund, which he claimed € 1.9 billion, for transactions suspected of being marred by bribes paid to the corporation of an intermediary linked to the Qaddafi family. This dispute has cost all of € 963 million and has leaded the banking net in the quarter, a decline of 25.6% to € 5.2 billion. The bank is afraid of the suites criminal of this case with the us authorities. The total amount of provisions for litigation amounted to € 1.9 billion.
No “tsunami” of banking mobility
The net banking “underlying” (excluding exceptional items) is in decline of-1.3%. In the retail bank in France, it is down 1.8%, due to the continued low interest rate environment.
“The conquest of net customer continues in our networks. The mobility bank [the act Macron entry into force on 6 February, editor’s note] has had little effect. A few of the thousands of accounts have moved from one part to another. There has not been a tsunami on the market, neither here nor elsewhere” responded Bernardo Sanchez Incera, deputy general manager in charge of retail banking in France and internationally, in financial services, and insurance, during a conference call Wednesday morning.
In the retail banking abroad (particularly in Africa) and the international financial services net banking income rose by 6.2%.
In the activities of markets, revenues were down 4.3% compared to a high base of comparison last year.
“The results are mixed, with good performance on the retail banking business offset by weaker performance at room temperature with the bank’s business and investment”, commented analysts at broker Jefferies in a note to their clients Wednesday.
Volatility is historically low
Société Générale has limited the drop to 6.8% on interest rate markets, currencies and commodities, against -15,9% at BNP Paribas. On the other hand, on the equity markets and derivatives, the activity is down 3.3% against an increase of 25% for BNP, and 33% in Natixis.
“I understand that some French rivals were better than us, but if we look at the market as a whole, all banks in the us and europe, we have not lost market share,” said Didier Valet, the director-general delegate, head of the bank’s funding and investment, private banking, asset management and trades in securities, during the conference call.
“The volatility is historically low has weighed on our results, but it will not remain forever as low,” he predicted.
In terms of prospects, the Soc Gen had given no indications very accurate. Frédéric Oudéa, the chief executive officer, said during the conference call :
“The priority of the coming months will be to continue the transformation of our business and improve profitability structural group, step-by-step. We also want to put the disputes of the past as quickly as possible behind us and prepare our new strategic plan, which will be presented on 28 November”.