The headquarters of the French bank Societe Generale in Paris.
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Societe Generale reported a net loss of 1.26 billion euros ($ 1.48 billion) for the second quarter of the year, losing market expectations as the bank set aside more capital due to the pandemic and reduced the value of its trading business.
Frédéric Oudéa, the Bank̵7;s CEO, told CNBC’s Squawk Box Europe on Monday that the second quarter had indeed been the worst in the midst of the Covid-19 crisis.
“We see the impact of the crisis on our businesses, with economies stalling. What I want to emphasize is that we actually saw a comeback in June or mid-May, starting in mid-May depending on the geographies for all activities. , “Oudéa said, while also adding” now we are ready to get back to economies “.
The French bank made provisions of 653 million euros to address the potential risks of the ongoing health crisis. What she calls her “risk cost” is now four times higher than it was at the same time last year.
Net income surprised traders with significant loss. Analysts expected a loss of 13.6 million for the quarter, according to Refinitiv, and shares sank about 4% in early trading on Monday. The bank had seen a loss of 326m euros in the first quarter and its stock has shrunk by about 58% since the beginning of the year.
Here are some highlights of the quarter:
- Revenues were 5.3 billion euros, compared to 6.3. billion a year ago.
- Expenditures fell to 3.9 billion euros, from 4.3 billion euros a year earlier.
- The CET 1 ratio (a measure of the bank’s solvency) rose 12.5% from 12% a year earlier.
The French bank said it would cut costs at its Global Banking and Investor Solutions businesses by about 450m euros by 2021-2023. The investment arm of Societe Generale, which has traditionally been strong in its equity business, struggled in the second quarter.
Earnings in its equity trading unit fell nearly 80% from a year earlier, although fixed income rose 38%. In this context, SocGen also said it would reduce the risk profile of its capital and credit products, in a move that is likely to affect revenues between 200m and 250m euros.
The French lender said its CET1 ratio, which sheds light on its capital strength, is expected to be between 11.5% and 12% by the end of 2020.