Wed, July 24, 2024

SocGen Profit Drops, Plans Possible Buyback | WibestBroker

the entrance of French banking group Societe Generale headquarters

French investment bank Societe Generale SA reported on Thursday earnings miss in the fourth quarter of 2019. Although it announced plans for potential share buybacks and saw better profitability this year.

The Paris-based lender revealed that its net income dropped 4.6% to €654 million ($719.26 million) in the quarter. This missed analysts’ expectations of €665.8 million

Net income for the whole of 2019, on the other hand, ended slightly better. It reached €3.2 billion against forecasts of €3 billion.

Revenue also improved by 4.8% in the fourth quarter to €6.21 billion ($6.8 billion), compared to €5.9 billion generated in 2018.

SocGen’s common equity tier one (CET 1) capital ratio, which gauges a bank’s financial strength, climbed 12.7% at the end of December from 12.5% at the end of September.

Societe Generale 2020 Outlook

Societe Generale failed to impress analysts at the end of the third quarter as its net income ended below estimates, but a more solid capital position lifted appetite for the stock.

That momentum in its capital position was carried over into the fourth quarter, with the company stating that it would keep its CET 1 ratio above 12% this year.

The bank sees better profitability in 2020, although it did not mention the return on tangible equity (ROTE) target of 9% to 10% it established earlier for this year. The firm’s ROTE stood at 6.2% last year.

Societe Generale also estimated a revenue decline between 0% and 1% for its French retail segment in 2020.

The company’s domestic retail unit registered a 1.5% revenue drop in 2019. This was as a result of low-interest rates and the ongoing transformation of its French network.

European lenders have often expressed their disapproval of the ultra-loose monetary policy determined by the European Central Bank (ECB).

The central bank executed negative rates in 2014 and has not taken a positive stance since. Negative rates pose a risk on a bank’s balance sheet.

Societe Generale stated on Thursday that it will keep a 50% dividend payout ratio in 2021 when shareholders would be remunerated in cash or might include a stock buyback of up to 10%.

The bank expects to pay out a dividend of €2.20 per share in cash related to last year’s performance.

Shares of SocGen has inched up by 15% in the past twelve months.


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