French bank Societe Generale’s headquarters in Paris.
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Societe Generale on Wednesday reported better-than-expected earnings despite taking a 3.3 billion euro ($3.36 billion) hit from exiting its Russian operations.
The French lender saw every unit grow in the second quarter, which helped offset the impact of its departure from Russia in the wake of Moscow’s Ukraine invasion.
Analysts estimated a net loss of 2.85 billion euros for the quarter, according to Refinitiv, however, the bank posted a net loss of 1.48 billion euros.
“We combined, in the first half of 2022, strong growth in revenues and underlying profitability above 10% (ROTE) and we were able to manage our exit from the Russian activities without significant capital impact and without handicapping the Group’s strategic developments,” Fréderic Oudéa, the group’s chief executive officer, said in a statement.
Speaking to CNBC, Oudéa said the decision to exit Russia was “very sad,” but a necessary one.
“When you invest for many years successfully, it’s very sad but when you look at the situation it’s just so difficult to manage, so risky going forward, with no clear outcome of all this, so it was clear it was the best decision,” he told CNBC’s Charlotte Reed.
Other highlights for the quarter:
- Revenues were 7 billion euros for the quarter.
- Operating expenses reached 4.5 billion euros.
- The CET 1 ratio, a measure of bank 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 also rose 33% from the previous three-month period. The Global Banking unit also posted a jump of almost 50% 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% in 2025. It also wants an average annual revenue growth above or equal to 3% until then.
The stock is 28% lower year-to-date.