SocGen profit tops forecast, France lags

By Silvia Aloisi and Matthieu Protard

PARIS(Reuters) – Societe Generale, France’s third-biggest listed bank, joined European rivals in posting a higher than expected net income in the third quarter thanks to bumper trading revenues as veteran CEO Frederic Oudea prepares to hand over the reins.

SocGen, which last month appointed its investment banking chief to replace Oudea from next May, said net income had come in at 1.5 billion euros ($1.46 billion)- down 6% from a year earlier but well above a Refinitiv consensus forecast of 1 billion euros. The shares rose nearly 6% by 0905 GMT.

The beat was driven by a 12% increase in Global Markets revenue, led by thriving trading in fixed income and currencies. This helped offset a decline in deal-making and share sales which weighed on investment banking.

SocGen also said its growing car leasing business, ALD, had performed strongly over the period, and its online bank Boursorama – France’s biggest – had seen a 40% jump in the number of clients compared to a year ago, thanks to a partnership with ING.

Overall revenue edged 2.3% higher, held back by a decline in the net interest income – the difference between what banks receive from borrowers and pay out to depositors – in SocGen’s France retail business.

French lenders traditionally take longer than their continental peers to reap the benefits of rising interest rates, though SocGen’ bigger domestic rival BNP Paribas, which reported results on Thursday, is doing better on this front.

This is because more than 90% of French mortgages are on fixed rates, the remuneration rate on popular savings accounts is regulated by the government, which also limits how quickly banks can reprice loans to customers.

Rising rates as central banks across the globe seek to contain inflation have helped European banks including HSBC, Deutsche Bank and UniCredit report strong results for the quarter.

In a call with reporters, Oudea – one of the longest serving CEOs in European banking, having led SocGen for 14 years – said he did not plan to step down sooner than the end of his mandate next May. The months-long handover with CEO-in-waiting Slawomir Krupa is unusual for the industry.

“It’s very good to have the time to finish things off and also give Slawomir the time to prepare himself well,” he said.

Krupa is also a SocGen old hand, having been with the bank since 1996. He was one of two internal candidates for the job alongside with the head of retail banking.

The bank, which has seen a series of high-profile departures in recent weeks, on Thursday appointed a new chief of risk.

($1 = 1.0256 euros)

(Reporting by Silvia Aloisi and Matthieu Protard; Editing by David Evans)