Science

Societe Generale has suffered big losses associated with the withdrawal from Russia

Branch of Rosbank, a subsidiary of Société Générale, on April 1, 2022 in Moscow (Kirill KUDRYAVTSEV/AFP/Archive)

Societe Generale announced on Wednesday a net loss of almost 1.5 billion euros in the second quarter, which was impacted by exceptional expenses on the sale of its Russian subsidiary Rosbank in May.

Its turnover-equivalent net banking income (NBI) was €7 billion from April to June, up 12.8% year-on-year thanks to all activities.

The second quarter of 2022 “completes two years of intensive and disciplined implementation of our various strategic projects,” comments CEO Frederic Oudea, quoted in a press release.

Retail banking, which combines the Société Générale and Crédit du Nord branch networks, which will be merged from next year, posted an 8.5% year-on-year increase in net banking income.

Boursorama, the group’s online bank, passed the 4 million customer mark in July.

International retail banking networks, grouped with insurance and specialty services, posted NBI growth of 15.8% year-on-year, helped by car leasing subsidiary ALD’s “record” quarter.

Corporate and investment banking, the last third of Société Générale’s revenue, grew 18.3%.

Societe Generale already had a comparable second quarter, posting a €1.26bn loss in the second quarter of 2020 related to the Covid-19 crisis.

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If the impact of the Rosbank sale is particularly strong, this will not come as a surprise to the market.

The French bank announced on May 18 that the sale of its Russian subsidiary to the Russian investment fund Interros, founded by oligarch Vladimir Potanin close to Vladimir Putin, would result in a net loss, then estimated at 3.2 billion euros.

“We have been able to withdraw from the Russian activities (…) without hindering the strategic development of the Group,” Mr. Oudea said in a press release.

Société Générale Managing Director Frédéric Oudéa in January 2020 in Paris. Société Générale Managing Director Frédéric Oudéa in January 2020 in Paris (ERIC PIERMONT/AFP/Archives)

This transaction “will have a high cost (…), but a limited impact on capital,” he specified on May 17 at the general meeting of the bank.

Rosbank told Société Générale about 115 million euros in 2021 on a turnover of 643 million euros, or 2% and 2.5% respectively of the entire group.

In terms of retail services, Russia was the third largest country in the group after France and the Czech Republic. And the second in terms of the number of employees, with more than 12,000 employees, or a tenth of the total.

Excluding Russian influence, the bank’s result was +1.5 billion euros. This is more than in the second quarter of 2021.

Societe Generale also said on Thursday that its solvency ratio stood at 12.9% as of June 30, above regulatory requirements.

Combining the 842 million euros earned in the first quarter, Société Générale only shows a loss of 640 million euros between January 1 and June 30.

The bank is finally looking for a successor, Frédéric Oudéa, who announced at the last general meeting of the group that he will no longer run when his current mandate expires in 2023.

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