Earnings

Societe Generale beats expectations to post its best annual performance ever

Societe Generale beat analyst expectations on Thursday, posting its highest ever profit in 2021.

The lender reported a net income of 5.64 billion euros ($6.44 billion) for the full year 2021. Analysts had expected net income to come in at 4.4 billion euros for the period, according to Refinitiv.

Looking at just the quarterly numbers, the French bank reported a net income of 1.79 billion euros in the final three months of 2021, also higher than the 1.3 billion euros expected by analysts.

“2021 marks a milestone for the Societe Generale Group, which achieved the best financial results in its history,” Frederic Oudea, the bank’s chief executive officer, said in a statement.

The results got a boost from a strong performance in SocGen’s global banking and investor solutions division, where net banking income rose by 25.2% on the previous year.

“Equity activity enjoyed its best year since 2009,” the bank said in a statement, noting that revenues hit 3.15 million euros in 2021 versus 1.275 million euros in 2020.

SocGen’s asset and wealth management divisions also reported an annual jump in revenues, up 6.1%.

In contrast, revenue from fixed income and currency activities at the bank slipped 19.2% from the previous year, but this was offset by other parts of the global banking division.

Other highlights for the fourth quarter:

  • Group revenues hit 6.6 billion euros, up by 13.4% from a year ago.
  • Operating expenses rose by 4.9% from a year ago.
  • CET 1 ratio, a measure of bank solvency, reached 13.7%.

Share buyback

Societe Generale reported a much lower cost of risk in 2021 versus 2020. It came in at at 700 million euros for 2021, compared to 3.3 billion euros in 2020. Banks had to increase their provisions in 2020 to deal with potential defaults at the height of the pandemic.

“The cost of risk is expected to be below 30 basis points in 2022,” the bank said.

The bank is also proposing to pay a dividend of 1.65 euros per share and announced it is launching a buyback program for a total amount of about 915 million euros.

Shares of Societe Generale are up by around 100% over the last 12 months.

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