By
Bhushan Akolkar
January 3rd, 2024
Societe Generale reported revenue rose by 8% year-over-year to 28.1 billion euros.
French multinational financial services firm Societe Generale SA (EPA: GLE) has released its performance report for the fourth quarter and 2022 fiscal where it posted a huge slump in revenue and profit. According to the bank, its net profits came in at 1.16 billion euros ($1.24 billion) for the final quarter of 2022, and this pushed the bank’s annual profit to 2.02 billion euros.
The company’s performance, though bad, was better than what analysts were expecting. According to data polled by Refinitiv analysts, a net income of 905 million euros was expected for the quarter and 1.5 billion euros for the full year.
The unveiled annual profit showed that the banking giant recorded a massive 64% drop when compared to the year-ago period. The firm reported 5.6 billion euros for the 2021 financial year.
“The Group is confident of being able to reap the benefit of ongoing projects and business developments, confirms its financial guidance for 2025, and is embarking with determination on 2023, a year of transition in many respects,” CEO Fréderic Oudéa said in a statement.
With Oudéa set to leave the company later in the year having piloted the affairs of the firm for more than 10 years, a lot of ground-shifting business operations are currently in the works. The bank’s local division has notably not benefited much from the interest rate hikes from the European Central Bank (ECB).
With the inflation that plagued the broader global economy over the past few years, the ECB hiked its interest rate four times last year alone. With higher interest rates, banks can benefit from higher borrowing fees which naturally translates to higher revenue and profit. The bank said its earnings fell in the previous quarter and year because the manifestation of the impact of the rate hike is not immediate in France.
Other Highlights of the Societe Generale Revenue Report
According to Societe Generale, its reported revenue rose by 8% year-over-year to 28.1 billion euros. The operating expense soared by 5.9% to 18.6 billion euros which showed the firm needed a drastic cut in its spending.
The CET1 ratio which measures bank insolvency was pegged at 13.5%, a figure that surpasses the 13.1% reported at the end of the third quarter. Considering the 2022 financial year performance, Societe Generale is now looking to pay its shareholders a dividend of 1.7 euros. The firm said it is committing the sum of 440 million euros to share buyback this year.
While it remains optimistic that the firm will be properly administered by the incoming CEO, Slawomir Krupa, Oudéa warned of uncertainties ahead.
“We should see in this central scenario inflation peaking and going progressively down with also rates going down from 2024 onwards, that’s the central scenario, there is a lot of uncertainty that remains – let’s face it, you can have a scenario with higher inflation for longer and which would mean higher rates going forward,” he said.