Societe Generale prints £1.14 billion of net loss in fiscal Q2

Societe Generale prints £1.14 billion of net loss in fiscal Q2
Written by:
Wajeeh Khan
3rd August, 12:13
Updated: 3rd August, 12:14
  • Societe Generale prints £1.14 billion of net loss in fiscal second quarter.
  • The French bank forecasts up to 12% of CET1 ratio for the full year.
  • The investment bank's revenue from equity trading tanked roughly 80%.

Societe Generale (EPA: GLE) revealed its loss to have ballooned to £1.14 billion in the second quarter on Monday. The French bank said that COVID-19 fuelled loan losses in the fiscal second quarter that resulted in £588.29 million in provisions.

Shares of the bank opened about 2.5% down on Monday and tanked another 0.5% in later hours. At £11.41 per share, Societe Generale is currently about 60% down year to date in the stock market. Learn more about how to invest in the stock market.

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SocGen’s Q2 financial results versus analysts’ estimates

SocGen’s loss came in as a shock for investors on Monday as experts had forecast a much lower £12.25 million of loss in the second quarter. In the first quarter, the investment bank had recorded its loss at £293.70 million. Societe Generale announced its partnership with Amundi last week.

According to the Paris-based company, its revenue came in at £4.77 billion in Q2. In the same quarter last year, its revenue was recorded at £5.68 billion. In terms of expenses, SocGen registered a decline from £3.87 billion in the comparable quarter of 2019 to £3.51 billion in the recent quarter. The financial services company also highlighted on Monday that its CET1 (common equity tier 1) ratio jumped from 12% last year to 12.5% in the fiscal second quarter.  

For 2021 to 2023, SocGen now has a target of cutting Global Banking and Investor Solutions costs by roughly £405 million. The company said its revenue that it generated from equity trading noted a nearly 80% decline in Q2 on a year over year basis. Fixed income, however, saw a growth of 38%.

SocGen forecasts up to 12% of annual CET1 ratio

By the end of 2020, the French lender forecast on Monday, its CET1 ratio will lie in the range of 11.5% to 12%. CEO Frederic Oudea of SocGen commented on the report on Monday and said:

“We see the impact of the crisis on our businesses, with the lockdowns of the economies. What I would like to highlight is that actually we saw a rebound in June or mid-May, starting in mid-May depending of geographies for all our activities. Now we are ready to rebound with the economies.”

SocGen performed fairly upbeat in the stock market last year with an annual gain of more than 10%. At the time of writing, the investment bank is valued at £9.77 billion and has a price to earnings ratio of 6.90.

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