Societe Generale Q3 Profit Hit By French Retail Issues

French financial service provider Societe Generale S.A. reported Friday a sharp drop in its third-quarter profit amid weak revenues. According to the company, the net result was penalized by the negative effect of short-term hedges on net interest income in French retail, the impact of which peaked in the third quarter.

Slawomir Krupa, Chief Executive Officer, said, “This quarter was marked by a good commercial performance in most businesses, limited increase in operating expenses and a low cost of risk. Global Banking and Investor Solutions notably posted stable revenues compared to a high level last year, and International Retail Banking maintained a solid performance.”

For the three-month period to September 30, the company reported a net income of 295 million euros, a drop of 79.6 percent from 1.445 billion euros last year.

Earnings were negatively impacted by 610 million euros of exceptional items. This included the goodwill impairment of the African, Mediterranean basin and overseas activities, and equipment finance activities for a total of around 340 million euros, and the booking of a provision for deferred tax assets of around 270 million euros.

Impairment losses on goodwill were at 338 million euros, while there were no such charges last year.

Group net income excluding exceptional items was 905 million euros.

Operating income stood at 1.513 billion euros, down 26.6 percent as against previous year’s 2.061 billion euros.

Operating expenses were at 4.360 billion euros, up 6.8 percent from 4.083 billion euros a year ago.

Net banking income decreased 6.2 percent to 6.189 billion euros from 6.600 billion euros in 2022. At constant perimeter and exchange rates, net banking income dropped 9.2 percent.

The drop in revenues was mainly due to the decline in the net interest income in French Retail, Private Banking and Insurance, and negative revenue in the Corporate Centre.

Revenues recorded by French Retail, Private Banking and Insurance decreased 16.4 percent owing to the decline in the net interest income which continues to be impacted by short-term hedges that were taken until 2022. Insurance’s revenues climbed 11 percent.

In Paris, Societe Generale shares were trading at 21.82 euros, up 0.95 percent.

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