Société Générale reports best first-half performance in 5 years

Societe Generale updates

Société Générale has continued its resurgence from last year’s steep trading losses, reporting its best first-half performance in five years on Thursday morning.

The Paris-based lender, which was hit by the implosion of its equity derivatives products last spring as companies cancelled dividend payments during the first wave of the pandemic, said it had made €1.4bn of net income for the second quarter of 2021.

This was up from a €1.3bn loss for the same period last year and 68 per cent higher than analysts had predicted.

SocGen’s net banking income rose 18 per cent to €6.3bn, reflecting a strong performance across its business lines.

Frédéric Oudéa, chief executive, said the bank had worked to anticipate customer needs and had taken action to “improve the operational efficiency of the group and maintain the excellent robustness of the loan portfolio and risk management”.

The strong results come after a period of turbulence for SocGen. The bank was one of the worst-performing banks in Europe’s stress tests, announced last week.

Regulators used the scenario of a 3.6 per cent fall in EU gross domestic product and unemployment reaching 12.1 per cent to test how banks’ balance sheets would fare.

Under the scenario, which was heavily influenced by the impact of the pandemic, SocGen’s ratio of common equity to risk-weighted assets fell from 13.16 per cent to 7.54 per cent, well below the sector average of just over 10 per cent.

SocGen agreed to sell Lyxor, its fund management arm, in June to French investment group Amundi in a cash deal worth €825m.

The deal excludes about €16bn of Lyxor’s assets under management in areas such as structured products, which will be retained by SocGen.

The bank said it expected to book a capital gain of about €430m once the transaction was completed.

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