The FINANCIAL — One of the leading European financial services groups – Société Générale, today announced second quarter 2020 financial results. Revenues at its equity trading unit dropped 79.5 % compared with the same period in 2019. Customer activity gradually picked up from mid-May, which resulted in the level of bank card transactions and corporate credit transfers in June close to the monthly average levels in Q2 19.
Societe Generale reported a net loss of 1.26 billion euros ($1.48 billion) for the second quarter of the year, missing market expectations, as the bank set aside more capital due to the pandemic and reduced the value of its trading business. The French bank made provisions of 653 million euros to deal with potential risks from the ongoing health crisis. What it calls its “cost of risk” is now four times higher than where it was at the same time last year, CNBC reported.
It was the second quarterly loss in a row for SocGen, with revenues falling 15.7 per cent compared with the same period last year to €5.3bn, roughly in line with analysts’ estimates. The market had expected the bank to record a small overall profit. SocGen unveiled a revamp of its core equities trading business, which was crushed in the first quarter after companies cancelled dividends to conserve cash during the coronavirus pandemic, resulting in big losses on derivatives linked to potential shareholder payouts. The division fared little better in the second quarter, with revenues down 79.5 per cent compared with the same period in 2019. Dividend cancellations cost the bank another €200m in the quarter, According to The Financial Times.
According to Frédéric Oudéa, the Group’s Chief Executive Officer the Group is already working on new initiatives to build its next strategic stage (2021-2023) focused around three priority objectives, customer centricity, corporate social responsibility and operational efficiency based on digital technologies.
After the substantial impact of the lockdown on activity in April and May, French Retail Banking’s commercial performance improved from mid-May. Customers substantially reduced their activity during April and May: accordingly, the level of bank card transactions and corporate credit transfers during this period was well below the average level observed in Q2 2019. Loan production was focused in particular on State Guaranteed Loans (PGE), with a slowdown in production on other categories. Customer activity gradually picked up from mid-May, which resulted in the level of bank card transactions and corporate credit transfers in June close to the monthly average levels in Q2 19.
According to the Group, operating expenses were down -7.0%* (-14.5%), at EUR -979 million, vs. Q2 19, which included a restructuring provision related to the simplification of the head office structure amounting to EUR 29 million. When restated for this provision, operating expenses were down -4.3%* vs. Q2 19, reflecting rigorous cost control. They fell -2.0%* (-9.5%) in the first six months, to EUR 2,125 million. The cost to income ratio stood at 55.9% in Q2 20 and 57.2% in H1 20.
Societe Generale is one of the leading European financial services groups. Based on a diversified and integrated banking model, the Group combines financial strength and proven expertise in innovation with a strategy of sustainable growth. Active in the real economy for over 150 years, with a solid position in Europe and connected to the rest of the world, Societe Generale has over 138,000 members of staff in 62 countries and supports on a daily basis 29 million individual clients, businesses and institutional investors around the world by offering a wide range of advisory services and tailored financial solutions.
While most banks have suffered badly in the coronavirus pandemic like Société Générale, its French peer BNP Paribas bucked the trend, managing to report Friday only a slightly lower second quarter net profit of €2.3 billion thanks to a surge in investment banking. BNP however was also forced to more than double provisions to €1.4 billion. Société Générale said the clear challenge now was to adapt to the changes brought by the pandemic, The Local France wrote.
Coronavirus caused the most drastic global economic crisis since the Great Depression. It also affected United Airlines. The Company had the most difficult financial quarter in its 94-year history, with a net loss of $1.6 billion, and an adjusted net loss of $2.6 billion. Total operating revenues were down 87.1% year-over-year, on an 87.8 percent decrease in capacity year-over-year. Read more.